State officials warn that tens of thousands of Virginians could lose access to health care coverage after Congress failed to renew insurance premium tax credits in a spending bill passed in early July.
Senate Majority Leader Scott Surovell, D-Fairfax County, sent a letter Thursday to Virginia Bureau of Insurance Commissioner Jacqueline Cunningham that sought “urgent analysis” of how Congress’ inability to renew health care enhanced premium tax credits could affect Virginians. Language needed to renew the tax credits was not included in H.R. 1, the so-called One Big Beautiful Bill that was signed into law July 4. The tax credits are set to expire in December.
Enhanced premium tax credits were introduced in 2021 as part of the American Rescue Plan, a COVID relief package established under the Biden administration. It lowers the monthly health insurance premiums to a set percentage of an individual’s income. These credits apply to people purchasing coverage through the health insurance marketplace whose incomes fall between 100% and 400% of the federal poverty level.
Those credits were extended under the Inflation Reduction Act in 2022, and enrollment soared as a result.
Surovell noted in his letter that, since November 2023, more than 400,000 people have used the Virginia Insurance Marketplace to choose a health plan. He added that the uncertainty in Washington means that insurance providers won’t be able to assume that the premium tax credits will remain in place, and that could affect pricing and benefits, as well as where coverage is even available.
“I have seen some projections that premiums could easily increase by 75% which would potentially result in more than 17% of enrollees discontinuing coverage which would amount to at least 60,000 Virginians cancelling coverage due to affordability,” Surovell wrote.
Keven Patchett, director of the Virginia Health Benefit Exchange, painted an even more dire picture for the Senate Health and Human Resources Oversight Joint Subcommittee last week. By his estimate, about 100,000 Virginians are expected to fall off of their insurance due to the cost if Congress doesn’t take action. Out-of-pocket premiums could rise in Virginia by 30% to 50% on Jan. 1, he said.
Premium tax credits aren’t completely going away in December — only the enhanced credits that have made health insurance significantly more accessible for middle-income enrollees. Credits will revert to pre-2021 levels, and fewer people will qualify, and those who do may receive smaller subsidies.
“That will really impact moderate-income to upper-middle-class folks who access their health coverage through the marketplace,” said Freddy Mejia during a phone interview Thursday. Mejia is the policy director for the Commonwealth Institute, a nonpartisan, nonprofit policy research organization.
A snowball effect on costs
Older populations and those with greater health needs will likely opt to keep their insurance despite higher costs, while younger, healthier people will drop out, Mejia said. That leads to a higher-risk pool for insurers, making them likely to raise premiums even more.
Del. Mark Sickles, D-Fairfax County and chair of the House Health and Human Services Committee, concurred.
“We’re going to lose a lot of people,” he said in a phone interview Thursday. “When premiums go up, people will drop insurance, especially if they don’t need it.”
Sickles outlined a snowball effect on the cost of health care. The expiration of the tax credits would lead to increased insurance premiums that may cause more people to drop their coverage. If the number of uninsured people goes up, he said, health care providers may have to raise their rates for service if they want to continue to be financially viable, because they may have to provide more uncompensated care for more uninsured patients.
The state should consider stepping in to address the expiration of the health insurance premium tax credits in a “holistic way,” he said.
Sen. David Suetterlein, R-Roanoke County, who sits on the Senate Education and Health Committee, said he anticipates the issue will be discussed at an upcoming Senate Finance meeting.
Surovell said that the expiration of the tax credits and subsequent increase of health care premiums could be a topic addressed if a special session were to be called before the 2026 session is slated to begin. The General Assembly is in the process of determining whether a special session is necessary at this point, he added in a text message Thursday.
What can the state do?
Virginia has a few options to address rising premiums, Mejia said. One is to offer state-based, targeted subsidies for certain populations.
Maryland, for example, implemented subsidies for young adults to stabilize the insurance risk pool. By keeping healthier enrollees, insurers can offset the cost of covering sicker individuals.
The second tool is something Virginia already has in place: the Commonwealth Reinsurance Program. This program, funded in part by federal dollars, helps cover the cost of the most expensive services for customers on the health insurance marketplace. Reducing insurers’ exposure to high-cost procedures helps keep premiums lower overall.
The federal government also benefits. Because the program lowers overall premiums, the amount the government spends on premium tax credits decreases. The savings are then redirected to help fund Virginia’s reinsurance program, Mejia said.
Free clinics prepare for an influx of patients
Free and charitable clinics in Virginia are scrambling to expand capacity in preparation for a wave of newly uninsured patients who previously relied on the health insurance marketplace. Since most free clinics rely heavily on private donations, finding the resources to meet that demand is difficult, said Rufus Phillips, CEO of the Virginia Association of Free and Charitable Clinics.
Currently, the state’s 71 free clinics serve a total of 110,000 Virginians. Many of those clinics are already at or near capacity, Phillips said. With the addition of work requirements for Medicaid eligibility, another influx of uninsured patients is expected in 2027.
Many Medicaid enrollees are likely to fall through the cracks due to difficulty filing and processing additional paperwork, not because they’re not working. Federal data shows that 64% of Medicaid adults work either full time or part time, while 12% care for dependents and 10% are disabled or in poor health, according to the Commonwealth Fund, a private foundation that supports independent research and policy analysis.
Demand has already been growing steadily. At the Bradley Free Clinic in Roanoke, staff treated around 1,200 individuals annually before the pandemic. Now, that number is quickly approaching 4,000, according to Janine Underwood, the clinic’s CEO.
Underwood, who has worked at the clinic for a decade, said the past six months marked the first time she’s seen waitlists for services. With looming federal policy changes, she said those lists will only grow longer.
Reimbursement from Medicaid helped offset clinics’ cost of treating uninsured patients. But with a growing number of people expected to lose their coverage, Underwood said the financial strain on free clinics will deepen.
“We are heading into an unknown, uncertain time where more and more people are going to be uninsured. How are we going to take care of them?” Underwood said. “The health in our community is going to get worse.”
Clinics are doing their best to plan ahead, Phillips said. However, the timeline doesn’t work in their favor. There’s little time to build up the resources they’ll need before the impact of policy changes fully hits.
“Let’s say there’s an opportunity to invest in the clinics. … You would assume it might occur, hopefully, as a result of the next General Assembly session. But that money might not be available until this time next year. And so then you’ve already gone six months past the [marketplace] change,” Phillips said.
Over the next year and a half, free clinics are bracing for a surge. While some service lines may shrink or shift, Underwood said most clinics will do everything they can to keep serving their communities.
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