Subsidies are safe
The King v. Burwell saga came to a close on June 25, when the Supreme Court ruled 6 – 3 that subsidies are legal in every state, regardless of whether the exchange is run by the state or federal government. If the Court had ruled that subsidies were not allowed in states that use the federally-facilitated marketplace (ie, Healthcare.gov), 276,000 people in Virginia would have lost their subsidies.
And rates in the individual market – even for people who don’t have subsidies – would have increased by an average of 35 percent (or even 55 percent), in addition to the regular annual rate increases due to medical cost growth. As Charles Gaba explained, a ruling for the plaintiffs would have been disastrous in states like Virginia. Fortunately, that didn’t come to pass, and subsidies will continue to be available during the upcoming open enrollment that begins on November 1.
Virginia has a robust health insurance market, with nine carriers offering plans in the exchange. Rate increases for 2016 have been filed, but Healthcare.gov’s rate review tool only shows plans that have proposed increases of ten percent or more. In Virginia, eight individual, on-exchange carriers that have proposed double digit rate increases for at least some of their plans.
The rest of the plans offered in the Virginia exchange have proposed rate hikes of less than ten percent, which is why it’s important to not draw too many conclusions from simply looking at the rate review tool on Healthcare.gov. And of course, the rates that have been submitted won’t necessarily get approved as-is (here’s a great summary of what to keep in mind when looking at proposed rate increases).
On July 22, the Board of Insurance will conduct a public hearing in Richmond regarding 2016 rates, and insurers will be required to present their justifications for the proposed rate increases. The review process will be completed this summer, and rates will be announced in the fall.
By the end of the 2015 open enrollment period, including the extension through February 22, the Virginia exchange had enrolled 385,154 people in private plans, including 2014 enrollees whose plans were renewed. 84 percent qualified for premium subsidies, and 54 percent were new to the exchange for 2015. Of the 176,642 enrollees who renewed coverage from 2014, nearly 99 thousand actively renewed their plans, while the rest were auto-renewed. Of those who actively renewed, nearly half (43,555) picked a new plan for 2015.
But as expected, some enrollees didn’t pay their initial premiums, and. some cancelled their exchange plans because they obtained coverage elsewhere. By the end of March, 335,033 people in Virginia had effectuated private plan coverage through the exchange. 85.3 percent of them are receiving premium subsidies, and nearly 56 percent are receiving cost-sharing subsidies.
An additional 36,569 exchange enrollees in Virginia had enrolled in Medicaid or CHIP between November 15 and February 22. That enrollment is year-round, but volume usually increases during the open enrollment period for private plans because of the increased outreach from navigators and exchanges.
Open enrollment for 2015 has ended, so enrollment (on or off-exchange) is now closed, unless you have a qualifying event. There are some exceptions however: Native Americans and applicants who qualify for Medicaid can enroll year-round, without a qualifying event. The penalty for not having health insurance is much steeper in 2015 than it was last year: $325 per uninsured adult (half that amount for kids under 18), or 2 percent of taxable income, whichever is greater.
Funding to promote the exchange
Although Virginia’s exchange is run by HHS, the state has a website – Cover Virginia – that provides information about Medicaid and FAMIS, along with eligibility for premium and cost-sharing subsidies in the exchange. And Virginia is currently using $2 million in federal funding to provide outreach and education to residents about the exchange and the Cover Virginia website.
In October, the state contracted with Big River Advertising – based in Richmond – to run a marketing campaign that includes radio, TV, and online advertising designed to boost awareness of the exchange. The advertising is designed to make people aware of the assistance that’s available through the exchange, and to reiterate the fact that exchange-based coverage is affordable.
Carriers and rates for 2015
In the Richmond area, the average price for a 40 year old non-smoker selecting the second-lowest-cost Silver plan (benchmark plan) is increasing by only 2.7 percent in 2015, from $253 per month to $260 per month (for people who qualify for premium tax credits, the difference will be mostly absorbed by slightly higher subsidies).
The Commonwealth Fund conducted an analysis of rate changes across all plans and metal levels in the exchange, and found a breathtaking average rate decrease of 56 percent. But their report explains that this is because Optima Health, which had previously offered a silver plan that cost $2,000 a month (seven times the average rate), stopped offering that plan for 2015, which brings the average cost way down even though the change would be much more muted without taking into consideration the very high-priced Optima plan (which probably wasn’t purchased by many shoppers in 2014).
For all 14 carriers in the individual market in Virginia (including off-exchange plans), PricewaterhouseCooper data shows a weighted average finalized premium increase of 10.2 percent for 2015.
But for people who have the benchmark Silver plan, price increases are more muted, mostly averaging 3 percent to 6 percent in much of the state, especially for enrollees willing to shop around this year in order to make sure they still have the second-lowest-cost Silver plan in 2015. The Virginia Association of Health Plans has called the price increases “relatively modest” for people who were enrolled in an exchange plan in 2014 and are renewing it or switching to another exchange plan for 2015. In Fairfax county, both the lowest and second-lowest cost silver plan are offered by different carriers in 2015 than they were in 2014.
Plans in the exchange are sold by nine carriers: Optima Health, Anthem Blue Cross and Blue Shield, CoventryOne, CareFirst BlueChoice, Inc. Innovation Health Insurance Company, CareFirst BlueCross BlueShield, Kaiser Permanente, Aetna and Anthem Health Plans of Virginia.
In the Richmond area, a 40 year old non-smoker purchasing the lowest-cost Silver plan from Anthem would have paid $258/month in 2014, and that is going up just slightly to $264/month in 2015. The lowest cost Silver plan from Coventry for the same enrollee is increasing in price from $230/month in 2014 to $241/month in 2015. Compared with rate increases in the individual market before the ACA, these are minimal changes. And for people who qualify for subsidies, they are offset by higher subsidies in 2015.
Virginia leading to protect premium subsidies
Two very important legal challenges to the ACA’s premium tax credits are currently underway, and a ruling against the tax credits could have far-reaching consequences, not only for the millions of Americans who are relying on those subsidies to make their coverage affordable, but also for anyone who purchases health insurance in the individual market at all, since the loss of billions of dollars in subsidies could cripple the markets in some states.
Halbig v. Burwell and King v. Burwell both argue that subsidies are not allowed in states (including Virginia) where HHS is running the exchange. King v. Burwell is scheduled to go before the Supreme Court in March 2015, and a ruling is expected by June.
The US Court of Appeals, DC Circuit originally ruled (with just three judges) that ACA subsidies are not allowed in states with HHS-run exchange. The court had agreed to rehear Halbig v. Burwell with its full panel of judges on December 17, but cancelled those plans once the Supreme Court added the King case to its 2015 docket. At this point, it’s all eyes on King and the Supreme Court.
Virginia’s Attorney General, Mark Herring, is leading a group of 18 states that filed an amicus brief in the Halbig v. Burwell case in early November, urging the court to rule in favor of keeping the subsidies in the federally facilitated marketplace(FFM). Of the 18 states represented in the amicus brief, five – including Virginia – have a federally-facilitated marketplace, six have partnerships with HHS to operate their exchanges, and seven have fully state-run exchanges but are concerned that insurance market collapse in states with federally-run exchanges could impact the markets in their states as well, given how many health insurance carriers operate regionally or nationally.
Virginia is leading the amicus brief, and attorney general Mark Herring has been outspoken in the past about the importance of keeping the premium subsidies available in states like Virginia where HHS is operating the exchange. Virginia Governor Terry McAuliffe is also a proponent of keeping subsidies available in all states. FFM states have the first half of 2015 to figure out a contingency plan for how to retain subsidies in the event of a Supreme Court ruling in favor of the King plaintiffs.
Of the 216,000 Virginia residents who enrolled in the exchange in 2014, 82% are receiving premium subsidies. The state estimates that up to 495,000 people are eligible for subsidies, and the average subsidy works out to $2,900 per household. Because of the significant impact of the subsidies on access to healthcare as well as stability in the insurance market, the Attorney General is pushing to make sure the subsidies remain available for Virginia residents.
More money for enrollment assistance
Two Virginia advocacy organizations – the Virginia Poverty Law Center and Advanced Patient Advocacy LLC – received $1.9 million in federal grant money (out of a total of $60 million awarded nationwide) in order to operate and expand the enrollment assistance they provide as ACA navigators.
And in mid-October, it was announced that Virginia is receiving another $9.3 million federal grant that will be used to hire 100 enrollment assisters for the state. Virginia is one of just four states to receive this additional grant. Governor Terry McCauliffe is planning to use this money together with $4.3 million that the state has in remaining federal funds that were allocated towards establishing a state-run exchange – which Virginia did not do. The money will all be used to boost enrollment efforts in the state during the 2015 open enrollment period.
One of the enrollment challenges facing Virginia is the relatively high percentage of the population living in rural areas (13 percent), and also a high rural poverty rate (18 percent). In-person assistance can be harder to come by in rural areas, and internet connection can often be unreliable or slow in those areas.
Navigator organizations are working to develop strategies to reach out to the “high pockets of uninsured folks” in the state’s rural areas, and get them enrolled in the exchange during the open enrollment period that began November 15 and continues until February 15. People who enroll between now and January 15 will have coverage that begins February 1; those who enroll between January 16 and February 15 will have coverage effective March 1.
In addition to exchange enrollment assistance, in December 2014 Virginia received a $2.6 million grant from CMS that will be used by the state to develop innovative new public health care models to address a wide range of issues, including tobacco use and mental health care. The aim is to improve public health while also holding down costs. It’s a joint project between the Virginia Center for Health Innovation and hundreds of public and private organizations and individuals.
Grandmothered plans ending in Virginia
Policy cancellations are once again in the news in Virginia, as the state is one of 15 that did not accept the HHS proposal to allow grandmothered (transitional) health plans to renew again into 2015.
People with non-grandfathered pre-2014 health plans will need to select an ACA-compliant plan to replace their old coverage, and although some have estimated the number of upcoming policy cancellations in Virginia to be 250,000, the actual number is unknown at this point.
It’s important to remember however, that these individuals are not losing coverage. They will all be eligible to select a new ACA-compliant plan, either through the exchange, or directly through a carrier. Income-based subsidies to help pay for coverage and possibly lower enrollees’ out-of-pocket costs will be available to those who enroll through the exchange.
In the state legislature, Will Morefield, a Republican from Tazewell, is planning to renew debate on House Bill 5011 from last year once the legislature convenes on January 21. The bill would allow health insurance carriers to renew health plans that would have been terminated under the ACA. But at this point, the measure is unlikely to generate much interest from health insurance carriers, since all of those plans were already terminated and replaced in 2014. Renewing them now would require the carrier to start all over again in terms of pricing their products, despite the fact that those plans wouldn’t be eligible to be sold to any new enrollees.
By April 19, 216,356 people had selected a private plan in the Virginia exchange. An additional 48,660 exchange enrollees had been found to be eligible for Medicaid or CHIP by mid-April, under the state’s existing guidelines.
Uninsured rate slightly higher in 2014
In 2013, the uninsured rate in Virginia was 13.3 percent. According to a Gallup poll, that rate had climbed slightly, to 13.4 percent, by mid-2014. Virginia was one of only three states where the uninsured rate increased during the first half of 2014. The state’s failure to expand Medicaid is no doubt a significant factor in the lack of progress on insuring the uninsured.
Medicaid expansion… or not
Virginia has not expanded Medicaid (meaning that there are nearly 200,000 people currently in the coverage gap), but has considered the “Virginia way” that political leaders are offering as an alternative to Medicaid expansion.
Governor Terry McAuliffe, who took office in early 2014, has said that Medicaid expansion is one of his main priorities, and considering pushing it through without the support of the state legislature. The GOP legislature in Virginia has strongly rejected Medicaid expansion, utilizing every legal – and possibly not-so-legal – measure they can to block it.
In early April, the Virginia Senate finance committee approved a state budget that included funding to create a private marketplace (Marketplace Virginia) that would use federal funds to help provide private health insurance to people who would otherwise be covered by Medicaid if the state were to expand the program.
But when it came time to vote on the budget, Republicans in the Senate rejected it because of the Marketplace Virginia inclusion, and a stale-mate ensued. A government shut-down was looming if an agreement wasn’t reached before the July 1 start of the new fiscal year. But in early June, Democratic Senator Phillip Puckett resigned, giving the GOP control of the state Senate; the budget quickly passed.
Gov. McAuliffe approved the budget on June 20, and the shut-down was averted. But he used his line-item veto powers to remove several Republican additions to the budget that would have blocked Medicaid expansion. Republicans are sure to push back against what they consider an over-reach of executive powers, although McAuliffe vowed to expand Medicaid with or without their support.
In September however, McAuliffe pulled back from his push for Medicaid expansion, proposing instead a ten step plan that will gradually get health insurance to about 200,000 Virginia residents – roughly half as many as would gain coverage under Medicaid expansion.
McAuliffe’s plan involves enrolling people who already qualify for health coverage but are not yet receiving benefits, as well as expanding coverage for 20,000 people with severe mental illness and for 5,000 children of low-income state employees.
In December 2014, McAuliffe unveiled his 2015 budget, and it includes Medicaid expansion – and an associated $105 million in savings for the state in fiscal year 2016. But insiders note that it’s very unlikely that Medicaid expansion will be approved by lawmakers in Virginia in the 2015 session that begins in January.
McAuliffe has made it clear that he’s pushing for Medicaid expansion once again in 2015, but lawmakers continue to oppose the measure.
A private exchange
The Virginia Chamber of Commerce announced in early June that it is working with ChamberSolutions to create a new small business private health insurance marketplace called Virginia Benefits Market.
The private exchange for employer-based coverage (initially, two or more employees) is expected to be available for use during the 2015 open enrollment period, and plans to offer health coverage as well as dental, vision, life, disability, and critical illness plans.
The private exchange should not be confused with the SHOP exchange run by HealthCare.gov, but all of the health plans that will be sold through the Virginia Benefits Market will be ACA-compliant.
History of the Virginia exchange
Former Virginia Gov. Bob McDonnell, a Republican, opposed the Affordable Care Act. But along with the Republican-controlled General Assembly, he was conflicted as how best to resist the law’s implementation in the state.
In a 2011 letter to state legislative leaders, McDonnell wrote of extreme difficulty in determining whether “ceding control of an exchange to the federal government or creating our own is in the Commonwealth’s best interest.” The governor’s and General Assembly’s actions over the next few years reflected their shared reluctance to implement either option.
In August 2010, McDonnell appointed the Health Reform Initiative Advisory Council. The council issued a report in December 2010 and recommended that Virginia implement a state-based exchange.
The Virginia General Assembly passed legislation in 2010 to invalidate the individual mandate of the Affordable Care Act, and the state attorney general filed a lawsuit against Kathleen Sebelius, the secretary of the U.S. Department of Health and Human Services, based on the new law. After a series of legal actions, the state law was ultimately ruled invalid.
In 2011, the General Assembly passed legislation that was supportive of a state-based exchange, and McDonnell signed the bill into law. However, throughout the 2012 session the General Assembly failed to pass additional legislation necessary to move ahead with exchange implementation.
In January 2014, Governor Terry McAuliffe was inaugurated in Virginia, and unlike McDonnell, McAuliffe is very supportive of the ACA and of Medicaid expansion in Virginia.
HHS-run exchange, but some state oversight
Finally, after President Obama’s re-election, McDonnell notified HHS that Virginia would not proceed with a state-based exchange nor Medicaid expansion. While the norm for the federally operated exchange leaves no role for the state, McDonnell did lobby for oversight of the health plans that will operate on the exchange within the state.
HHS approved McDonnell’s request in March 2013, and the federally-run exchange opened for business on October 1 with health plans overseen by the state Division of Insurance.
In good news for the exchange, on February 18 a Federal Judge in Virginia rejected the arguments of three Virginia plaintiffs in a lawsuit claiming that subsidies were only to be available in states running their own exchanges. This latest decision comes on the heels of similar rulings on other lawsuits that made the same challenge to the ACA.
Virginia health insurance exchange links
Virginia Consumer Assistance Program
Assists people insured by private health plans, Medicaid, or other plans in resolving problems pertaining to their health coverage; assists uninsured residents with access to care.
(877) 310-6560 / email@example.com
State Exchange Profile: Virginia
The Henry J. Kaiser Family Foundation overview of Virginia’s progress toward creating a state health insurance exchange.