New state budget helps 200K Virginians afford health insurance

The long and hard fight over a new state budget is proving its worth by extending a lifeline to 200,000 Virginians who either have lost their health insurance coverage or are struggling to keep it.

The budget that took effect last week includes $150 million to help Virginians afford monthly premiums for health insurance they will buy on the state-run marketplace next year to partly offset the loss of federal enhanced subsidies at the beginning of this year.

They need the help, according to the Virginia Health Benefit Exchange, an arm of the State Corporation Commission, which estimates 100,000 Virginians lost their health insurance coverage this year after Congress failed to extend the enhanced federal premium tax credits.

The state budget money will help those Virginians recover their insurance, as well as others who are walking a fine line with their household expenses to maintain coverage and some who may yet enter Virginia's insurance marketplace.

But it won't happen until Jan. 1, when the next round of health insurance plans on the marketplace will take effect.

"Unfortunately, the timing of the budget just did not leave us enough runway to get it done in this plan year," said Keven Patchett, director of the health exchange.

The new estimate of the number of Virginians who lost coverage is more than double the last estimate that state Sen. Creigh Deeds, D-Charlottesville, said he had heard. As a senior member of the Senate Finance & Appropriations Committee and a budget negotiator, Deeds said it underscores the challenge that Virginia and other states face to fill a void left by the loss of federal subsidies and impending cuts to eligibility for health coverage under Medicaid.

"From my view, it's one of the most important problems we have to address," he said. "We can't match the federal cuts dollar for dollar. We have to be smart about it."

The state exchange targets households that earn between 138% and 250% of the federal poverty level: $22,024 to $39,900 for a single person and $45,540 to $82,500 for a family of four. The exchange currently provides coverage for more than 100,000 households in that income range under subsidies through the Affordable Care Act, signed into law in 2010. Medicaid — a program shared by the federal and state governments — provides the primary healthcare coverage to households below that income range.

The federal government still provides insurance premium subsidies for eligible households, but the loss of enhanced tax credits first provided during the COVID-19 pandemic has made health insurance less affordable for many families, including those with higher household incomes who still couldn't pay health insurance premiums that rose 22% this year.

The number of households that stopped paying monthly premiums without enhanced subsidies initially accounted for about 5% of the 380,000 people who bought insurance on the state marketplace last year and then rose to about 20% at the end of March, when the grace period for nonpayment expired. It has continued to rise dramatically ever since, including 3,000 families that lost their policies in June for failing to pay their premiums.

Virginia's uninsured rate had reached a record low of 7.6% in 2023, but now sits at 8.1%.

"In one fell swoop, our federal representatives, through an abrogation of responsibility, let it lapse," Deeds said.

President Donald Trump, who took office at the beginning of last year, and the Republican-controlled Congress let the enhanced premium tax credits expire at the end of last year after the issue triggered a 43-day federal government shutdown. Faced with mounting public concern over the loss of healthcare coverage, the U.S. House of Representatives passed a three-year extension in January, but the Republican leadership of the U.S. Senate has refused to bring the legislation to a vote.

The loss of the enhanced federal subsidies put pressure on the Virginia General Assembly to address the issue in the new two-year budget. Former Gov. Glenn Youngkin didn't include state funding for health premiums in the budget he introduced in December. The Democrat-controlled legislature vowed to address the need, but didn't agree on the amount of state funding or the revenues needed to pay for it and other gaps in the social safety net because of federal cuts in Medicaid and the Supplemental Nutrition Assistance Program, otherwise known as SNAP or food stamps.

The House of Delegates included $76 million in its version of the budget, and the state Senate proposed $200 million. When they finally approved a compromise the day before the current budget was to expire, they provided $150 million for the Virginia Health Insurance Affordability Fund.

"Most people losing Marketplace coverage this year do not have any other options for health insurance coverage," Patchett said. "The new affordability program will go a long way toward helping to ease the cost burden, allowing more Virginia families to enroll in and maintain high-quality health coverage."

But the challenge won't go away for Virginia lawmakers, who will have to face the issue again in the revised budget that Gov. Abigail Spanberger will submit in December for the General Assembly to act on next winter.

"It's a short-term solution ... but decision-makers and lawmakers are going to have to continue to talk about what's next," Patchett said.