For people who get their health insurance through the Affordable Care Act, recent years have seen some massive premium hikes. But now lawmakers in Virginia may be on the verge of stabilizing the marketplace for the individual market.
One of the reasons insurance companies raise premiums is that they never know when they’re going to get hit with a few outliers, top-dollar claims for people with catastrophic health problems. So they end up overestimating unexpected costs to protect themselves from losses. But what if the insurance companies had insurance policies?
Sabrina Corlette at Georgetown University says three states have already created state reinsurance programs and four more are moving forward with some kind of reinsurance.
“Some have taken money from state surplus funds. Some have taxed insurance companies. New Jersey is taking money they’re raising from an individual mandate penalty to pay for this program.”
Earlier this year, the General Assembly authorized Virginia to apply for a waiver to create a reinsurance pool here in Virginia. It’s an idea that the Trump administration actively supports.
“They have approved seven state waiver programs and by all accounts are working very constructively with states on the program. So I think the odds are good if Virginia were to move forward.”
They stumbling block would be money that's involved. Those insurance companies would be reimbursed by taxpayers, although different states have set up different percentages: Alaska pays only 3% while Minnesota pays 52%. If the feds approve a waiver, lawmakers could craft an approach that is specific to Virginia.