Insurance costs cuts at risk due to impasse

Virginia's state budget impasse is casting a shadow over a new state program that this year meant an 19.5% reduction in the cost individuals pay for health insurance.

As a result, that could mean a sharp rise in premium rates if the House of Delegates and state Senate can't figure out how to resolve their $1 billion worth of differences over the budget.

The program uses state funds and a larger sum of matching federal grants to run a reinsurance program – basically, a backstop plan that covers the cost of health insurers' biggest claims.

That reinsurance allows the insurers to cut their premium rates to reflect the benefit of that backstop. For 2023, the reinsurance program reduced premiums by that 19.5%, the State Corporation Commission Bureau of Insurance said in response to questions from the Richmond Times-Dispatch.

But to offer the reinsurance next year, the draw from the state's Commonwealth Health Reinsurance Program Special Fund should increase by $10 million from what was originally budgeted for fiscal year 2024, to $38.9 million, budget documents show.

And to draw down the necessary federal money, the federal government requires a commitment that the necessary state funds will be there.

That sum would be $216 million if the reinsurance program is to yield a 15% savings on individuals' premiums and $293 million for a 20% reduction, according to a General Assembly financial analysis when it authorized the program in 2021.