There are a lot of people who think it is important to extend coverage to an estimated 250,000 Virginians caught in a health insurance no-man’s land known as the “coverage gap.” One group of people you might not expect to be focused on this issue is Virginia’s business community.
Many people, including policymakers in Richmond, are surprised to learn that leaving people in the coverage gap hurts the bottom line for businesses. Through a series of cost shifts, leaving people in the gap raises health insurance premiums for businesses that provide coverage. This makes the state less competitive and weakens our health care system.
Virginians in the coverage gap are typically lower-income workers who do not receive health insurance through their employer. They earn too much to qualify for Medicaid but not enough to afford private health insurance, even with subsidies.
Right now, when these Virginians seek health care, they are forced to go to a hospital emergency room because they do not have the money to see a physician. This hurts the state’s economy in a number of ways.
The cost of providing care to uninsured Virginians is passed on to businesses and individuals in higher health insurance premiums. Hospitals must make up at least some of the costs of treating uninsured Virginians who cannot afford to pay by charging health insurers more for services and treatment. Insurance companies pass on those higher costs by raising premiums. As much as 10 percent of premiums is due to cost-shifting to care for uninsured Virginians — a huge hit for businesses straining to provide coverage for their employees.
Virginians are paying billions to the federal government to cover the uninsured, but the money is not coming back to the state. Washington is offering to return money to the states to cover the uninsured, but Virginia has refused to take the steps to accept those funds. As long as the state refuses to claim our fair share of the taxes we already pay, businesses and individuals who pay for health insurance will shoulder the costs.
Leaving workers in the coverage gap could result in reduced services at hospitals. While some costs are passed on, hospitals provided $600 million in care to uninsured Virginians without any reimbursement. That is unsustainable. Many hospitals are considering service and staffing cuts. In rural areas, some may close completely. Without a robust health care system, Virginia will have a tougher time competing for new jobs.
These are real concerns for businesses, with a real impact on the bottom line. That is why Virginia’s business leaders, including the Hampton Roads Chamber of Commerce, are calling on the General Assembly to act.
The General Assembly needs to find an approach that provides coverage to the uninsured in a way that is brings Virginia’s tax money back to the state, is fiscally responsible and does not embrace traditional Medicaid expansion.
The best approach is what many call the “private option.” Variations of this approach are being used by some other states to reclaim their tax money to close the coverage gap without expanding traditional Medicaid.
Under the private option, the state rejects the traditional Washington approach. Instead, Virginia would use federal tax money to purchase basic private insurance for those in the coverage gap.
Participants would be told that their policies would be cancelled if the federal government reduces or cancels its share of the funding, or if a participant’s income is such that they no longer fall into the gap. The program also would have work requirements for participants.
The private approach respects free markets and leverages the efficiencies of the private sector, rather than creating more government bureaucracy. It protects state taxpayers should the federal government not meet its commitment in the future. It reduces cost shifting to businesses and should hold down future increases in insurance costs.
And the private option will make sure that health care providers can afford to continue to provide a full range of services to the community, keeping Virginia’s health system robust — and even creating new jobs.
The time to enact the private option is now. Insist that your senator and delegate act now so Virginia can reclaim these tax dollars, protect our health care system, reduce the burden on businesses and extend coverage to those caught in the gap.