Every year, the refrain from Virginia lawmakers about health insurance is the same: It’s too expensive and prices in the individual market especially are out of control (though they might be stabilizing).
Republicans often like them while Democrats tend to be opposed, though bills submitted this year were supported by both parties in the Senate. They only narrowly passed the House on Wednesday.
Last year, Gov. Ralph Northam vetoed similar legislation, and in an email a spokesperson for his office said he “remains strongly opposed” to the bills.
This year, Sen. Siobhan Dunnavant, R-Henrico, is trying something different. She has floated a big idea that she hopes will garner bipartisan support, offering a solution for those who can’t afford individual market rates because they don’t get subsidies, and saving money on coverage for an otherwise expensive population in one fell swoop.
“This isn’t a Republican/Democrat conversation,” she told the Senate Commerce and Labor committee. “This is a Virginia conversation.”
The lawmaker and OB/GYN has proposed essentially overhauling Virginia’s individual market, removing the state from the federally-operated exchanges and creating a new market modeled after employer-sponsored health plans. It’s a novel idea that no other state has done, she said.
“I would like to see Virginia lead on this,” she said in an interview. “I think the whole country needs something different.”
The Affordable Care Act‘s exchanges were intended to provide affordable coverage to lower-income Americans, but many thought they would be attractive to the middle class as well, possibly even eventually weaning the country off its dominant, employer-sponsored insurance model.
But the population that actually signed up for individual plans was sicker than anticipated, which drove up the costs for insurers and caused some to abandon the market altogether — reducing competition and further increasing costs.
The exchanges have achieved one goal: The uninsured rate nationwide has fallen significantly, from 18 percent before the ACA to 13.7 percent at the end of last year (though it has inched up over the last several years).
But for people who don’t receive the subsidies on the market, plans can be prohibitively expensive. That’s why lawmakers, including Dunnavant, have supported policies that would give those people more affordable options outside of the exchanges.
The downside to carving those who don’t get subsidies out of the market, though, is that they’re generally healthier and they’d leave behind people who are sicker and more expensive.
Dunnavant thinks she may have come up with a solution to the multifaceted problems facing the individual market. She submitted legislation that, in its original iteration, would have created the Commonwealth Care Division, which would oversee what she has dubbed the Commonwealth Care Health Benefits Program. The bill has been amended so it now orders the state to conduct a study on the idea.
The program would essentially function like the self-funded health plans that are operated by large employers, which, Dunnavant explained, negotiate separately for the four basic elements of insurance: physician networks, pharmacy benefit managers, reinsurance and third-party administrators.
It would retain the subsidies and cost-sharing reductions that people with low incomes currently get through the exchanges, but it would also include services that are often unique to employer-sponsored plans, like wellness or chronic disease management services.
“I’m not reinventing the wheel here,” Dunnavant said. “Big business has been doing this for a while. And where do we get our best innovations? Big business.”
Employer-sponsored plans often have programs that they use to get their members to make healthier choices, promising lower premiums if they participate.
“They reduce the cost of health care by making people healthier,” she said. “This is a way for me to lower the cost of health care because I drill down on making the patients better, and therefore less expensive, but I’m also improving the population, which is what I’ve been trying to get at at the same time.”
In 2018, 400,000 people in Virginia had enrolled in a marketplace plan.
Dunnavant said she doesn’t think of her legislation as political. She’s been seeking support from both Republicans and Democrats, speaking to not only fellow senators but the governor’s administration and the Centers for Medicare and Medicaid Services, as well.
“There’s enough of a spark where they say, ‘We have a lot of questions,’ but it doesn’t start with a no,” she said.
Even the Bureau of Insurance, she noted, and the office of the secretary for health and human resource didn’t say it can’t be done.
“That’s a good starting point,” she said.
Marvin Figueroa, deputy secretary of health and human resources, said during a Senate Commerce and Labor Committee meeting that the administration doesn’t have a position on the legislation, but that it does have concerns about what the program would do to premiums and how it would keep subsidies for low-income Virginians.
A Bureau of Insurance representative added that, while the agency doesn’t have a position, it has concerns as well, particularly around how the program would operate.
The bill didn’t get bipartisan support initially, making it through the Committee on Commerce and Labor on a party-line vote. It was then amended to become a Joint Legislative Audit and Review Commission study to review the program’s potential implications.
Dunnavant conceded that it’s hard to get consensus for a new, big idea, but said she’s still happy about where the legislation stands because a JLARC report will answer a lot of questions that even she still has about what the program could look like.
The second version of the legislation passed the Senate unanimously. It’s now waiting to be heard by the House Rules Committee.