Virginia: Medicaid expansion for 400,000 hinges on...a Republican wanting to help out those earning >400% FPL?

2019 OPEN ENROLLMENT ENDS (most states)

Time: D H M S

OK, I'm just seeing this now so I could be seriously misreading the article, but if I'm not, this is quite the eye-opener:

Virginia is on the cusp of expanding Medicaid to 400,000 low-income residents, after a veteran Republican state senator said Friday that he is willing to split with his party and help Democrats realize a goal they have been chasing for years.

Virginia state Sen. Frank Wagner (Virginia Beach) said he supports allowing more poor people to enroll in the federal-state healthcare program on two conditions.

He wants the plan structured so that Medicaid recipients do not suddenly lose coverage if their earnings rise. And he wants a tax credit or some other help for middle-income people who already have insurance but are struggling to pay soaring premiums and co-pays.

...Democrats need two Senate Republicans to pass Medicaid expansion in that chamber as part of a state budget, the most conventional route for passage. The House already passed a version of Medicaid expansion earlier this year.

A second Republican, Sen. Emmett W. Hanger Jr. (Augusta), has supported certain forms expansion for years but has objected to some aspects of a plan that passed the House. Hanger has been working with the Northam administration to overcome his objections in recent weeks, expressing optimistic they could work something out.

...The two Republican senators at the center of negotiations - Hanger and Wagner - seek different goals. Hanger, for instance, seeks the elimination of a hospital “bed tax” that would be used to pay for the state’s share of the expansion. Wagner supports the tax but wants the money used to cover the cost of the health care tax break he seeks for middle-income residents.

As far as I can figure, Wagner is basically insisting on using a new state-level tax to pay for tax credits (or some other type of financial subsidy structure) to help out individual market enrollees earning too much to receive federal APTC tax credits...which is something I and other healthcare wonks have been shouting from the rooftops for several years now.

The article says that the details would have to be worked out, of course, but that's what Wagner's requirement amounts to: Instead of Congress removing the 400% FPL APTC cap nationally and providing tax credits at the federal level, this amounts to simply doing so with state money instead.

My best estimate of the unsubsidized individual market in Virginia is something like 200,000 people (around 74,000 on-exchange and perhaps another 125,000 or so in off-exchange policies), plus perhaps another couple hundred thousand middle-class residents who would likely consider signing up for ACA policies if their net premiums weren't so high.

The average unsubsidized premium in Virginia jumped from $405 to $648/month this year, or nearly $7,800 per enrollee. Let's say the average middle-class target enrollee earns around 500% FPL. That's $60K for a single adult. Removing the 400% FPL cap on tax credits would mean none of them would have to pay more than 9.6% of their income on premiums, or $5,760. That means in order to bring costs for these folks down to the same level as those in the 300-400% FPL range, Virginia would have to come up with something like $2,000 per single adult.

Now, if all 200,000 of those people were single adults, that would amount to $400,000,000 per year...but of course the vast majority of them would actually be grouped together in family policies. Assuming about 2.5 people per household on average, an average policy probably runs more like $14,400/year. I'm not sure how that would work out in terms of family premiums or tax credits, but this at least gives a general idea of how much money we might be talking about.

This is presumably similar to a bill proposed in the California state assembly, AB2459:

A.B.2459: Would provide a state-based tax credit to offset the cost of individual market coverage that exceeds a certain percentage of the enrollee’s income. As of March 2018, the percentage of income has not yet been determined, but the legislation refers to the difficulties faced by people who have to pay more than 10 percent of their income for a bronze plan.

Assuming I have this right and there's no poison pills attached, I'm all for it...especially if it also means Medicaid expansion goes through!