Health Policy Update: Virginia’s 2017 Session, ACA Repeal and Medicaid

Virginia's 2017 Legislative Session

The General Assembly concluded its short session on February 25. Of note:

Dental Hygienists Under Remote Supervision

Dental hygienists, including those employed by safety net sites, will be able to provide preventive services under remote supervision in community-based settings, like schools and Head Start. The legislation passed the legislature unanimously, and the Board of Dentistry will draft appropriate regulation within 280 days of the Governor signing the bill. 

Joint Health Care Committee

The legislature will create a joint subcommittee charged with monitoring, evaluating and responding to federal legislation related to the Affordable Care Act (ACA), Children's Health Insurance Program (CHIP, known as “FAMIS” in Virginia), and Medicaid. The committee will also provide oversight to ongoing reforms to the commonwealth's Health and Human Resources agencies. As federal policy changes become more concrete, this group will be pivotal in sharing how Virginia responds. 

ACA Repeal and Medicaid – Republican Proposal

Congressional Republicans released a summary of their proposed ACA replacement. While no bill has been filed, the policy brief provides a snapshot of key components. The proposal repeals the individual mandate to purchase insurance, repeals most taxes and fees which provide funding for the components of the ACA, and makes no mention of pre-existing conditions and several other components of the ACA that are popular among voters. The proposal does not provide any details about how the Republicans will pay for the programs outlined. Of note, the proposal does stipulate the following: 

No More Income-based Subsidies

In the current marketplace subsidy model, people who buy insurance through the individual market receive income-based tax credits to offset the cost of insurance premiums and out-of-pocket expenses. In the Republican proposal, the marketplace subsidy model is repealed; all individuals will receive a fixed dollar tax credit based on age – tax credits will increase as an individual ages, with no regard to household income or affordability. 

For context, in 2016, 378,838 Virginians purchased insurance through the individual market. Of those enrollees, 84.2% received premium subsides that average $276 per month. For perspective, the average pre-subsidy premium for those who enrolled during open enrollment was $366 per month; the subsides offset the majority of that cost for those who are eligible. With a switch to age-based tax credits, low-income Virginians will find insurance premiums unaffordable. 

Medicaid Converted to Block Grant or Per Capita Cap

Per the proposal, states will be offered an option to change Medicaid to a block grant or per capita cap (for more details on this, see our January update). Both of these models are designed to save the federal government money and each establish a set amount of funding for the Medicaid program, which will likely be a percentage of past spending (it is unlikely that current Medicaid funding levels will remain). With this fixed amount of money, states will have flexibility in program operations. While the proposal indicates states will be required to provide services for the most vulnerable, elderly and disabled, no other populations groups or types of services are mentioned. If Medicaid is changed to a block grant or per capita cap, Virginia will likely face tough decisions about its future, as it will be forced to operate the program with less money. Choices will include lowering provider rates, lowering eligibility and trimming services. 

Medicaid Expansion is Repealed

The proposal indicates the 32 states that have expanded Medicaid will continue to receive an enhanced match for a “transition period.” States that did not expand Medicaid, like Virginia, may receive additional funds for safety net clinics. Given the funding limitations states will face under a block grant or per capita cap, it will be difficult for states to maintain the program. The proposal does not provide any details about baseline funding or growth rate.

No Mention of FAMIS Funding

Virginia's CHIP program is known as Family Access to Medical Insurance Security or “FAMIS.” This program can seem identical to Medicaid but it provides coverage to children and pregnant women who have a higher household income (less than $39,500 for a family of three) than those enrolled in Medicaid. Like Medicaid, the program is funded with both state and federal money. In Virginia, FAMIS provides quality, affordable, comprehensive medical and dental coverage to 105,000 children and pregnant women. Federal funding for FAMIS ends in September, 2017; without congressional action, federal funding for the program will stop, effectively eliminating coverage. Historically, this funding has enjoyed bipartisan support; however, given the current environment, this funding cannot be taken for granted. 

Repeals Cuts to Hospital DSH Payments

The proposal rolls back cuts to disproportionate share hospital or “DSH” payments that hospitals received pre-ACA to offset costs related to uncompensated care.

Increase Health Savings Account Contribution Limits

This proposal increases the maximum contribution allowable to Health Savings Accounts (HSA). An HSA is a tax-advantaged savings account available to taxpayers who are enrolled in a high-deductible health plan. Funds contributed to the account are not subject to income tax at the time of deposit, and funds can be used for health care expenses. HSAs are often criticized because they are only beneficial if a person has extra money to put away, and they give a bigger tax cut to people with higher incomes. 

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Sarah Bedard Holland