This second annual report analyzes the effect of Virginia's 2023 legislation eliminating tobacco surcharges from health insurance premiums. Building on the initial premium analysis from the 2024 report, this second report focuses on enrollment patterns in the individual health insurance marketplace (i.e., Health Benefits Exchange) across Virginia's localities following the policy change.

The data demonstrates distinct enrollment patterns across different regions. While overall marketplace enrollment increased by 14% to 395,461 participants, new enrollments declined by 23.6% compared to 2023. This decline showed significant geographic variation correlated with local smoking rates. Of the 24 localities that experienced increases in new enrollment, 21 had above-average smoking rates, suggesting the policy may have improved marketplace accessibility in traditionally higher tobacco use areas.

However, the relationship between tobacco use rates and enrollment changes is not straightforward. Among localities with the highest smoking rates (25.7% to 27.0%), enrollment changes ranged from a 66.7% decrease to a 26.3% increase. Localities with the lowest smoking rates (8.4% to 10.9%) consistently showed significant declines in new enrollments, ranging from 16.6% to 59.3%.

These variations suggest that while the rate of tobacco use may influence enrollment patterns, other factors such as income levels, alternative coverage options, and local economic conditions may play substantial roles in marketplace participation. Additional years of data will be necessary to determine whether or not these changes represent a temporary market adjustment or a lasting shift in insurance enrollment patterns.