Reinsurance program and state exchange brace for federal changes that could shrink marketplace enrollment

Brad Marsh of the Bureau of Insurance and Director Bob Padgett of the Virginia Health Benefit Exchange briefed the Joint Subcommittee for Health and Human Resources Oversight on the Commonwealth Health Reinsurance Program (CHRP) and marketplace developments.

Marsh explained CHRP is a Section 1332 state innovation waiver program that reimburses carriers for a portion of very high-cost claims to lower premiums in the individual market. The waiver is currently approved through benefit year 2027. The program uses federal pass-through funds (derived from savings to premium tax credit payments) and state general funds to reimburse carriers; unused federal pass-through funds may be carried forward.

For benefit-year design, the bureau set parameters targeting a roughly 15% premium reduction (the statute permits up to 20%). Marsh warned that the value and federal share of CHRP depend on the Advanced Premium Tax Credit (APTC) structure: if enhanced APTCs expire as currently scheduled, federal pass-through funding to CHRP would decline and Virginia's state share would likely rise. The bureau's actuarial scenarios show a range of potential state exposures depending on enrollment, the number of people receiving tax credits and changes to the risk pool.

Marsh said CHRP has contributed meaningful premium reductions so far — carriers' filings and bureau analyses show average monthly premiums roughly $98 lower per member over the first two years — and that enrollment growth in the marketplace accelerated after CHRP. But he warned that the federal calculations are prospective and payments to carriers occur after benefit years; that timing produces carryover dynamics and uncertainty. Marsh said the waiver must be renewed by Dec. 31, 2026, if the state wishes to continue CHRP beyond its current approval.

Padgett, director of the state exchange, described marketplace metrics and consumer outreach. He said Virginia's state-based marketplace helped lower uninsured rates and that, in 2025, a large share of enrollees receive substantial premium assistance: about 35% pay premiums of $10 or less after subsidies and more than 40% pay $25 or less. Padgett said the average out-of-pocket premium across enrollees is about $88 per month after federal assistance.

Padgett and Marsh both warned about federal regulatory and legislative changes. The Congressional Budget Office analysis cited during the briefing estimates that changes in federal rules could reduce marketplace enrollment by roughly 83,000 nationally in Virginia's context; Padgett noted additional modeling that suggests Virginia could see as many as 100,000 people leave the individual market if expanded APTCs expire and other federal changes take effect. He said expiration of the expanded tax credits would boost many consumers' monthly premiums by 30%–50% on average and that some households would see larger increases.

The exchange described operational steps: Easy Enroll, which uses state tax-return opt-ins to prepopulate accounts for taxpayers who want marketplace information, and support for navigators, brokers and a customer-service center. Padgett said the exchange will continue marketing and consumer-assistance investments to reduce churn and to encourage younger/healthier people to enroll, because their participation lowers premiums for all.

Marsh and Padgett said the bureau and exchange will publish actuarial and rate materials in August as part of the routine rate-review calendar, and they recommended the General Assembly consider the timing of any direction about target premium reductions or an extension application under the section 1332 waiver process.

Both officials urged the committee to weigh whether to increase the CHRP premium-reduction target (the law permits up to 20%) or to provide additional state funding for FY28 if federal pass-throughs fall when premium tax credit policy changes.