Virginia’s birth-injury fund may only run 20 more years

By BILL MCKELWAY
RICHMOND TIMES-DISPATCH
Published: May 14, 2008

A state program for infants injured at birth remains tens of millions of dollars short of cash to preserve benefits but is still capable of operating for another 20 years.

An audit released yesterday shows that assets of the 20-year-old program climbed to $227 million at the end of last year but that those assets are $127.6 million short of the amount needed to assure lifetime benefit payments to infants admitted into the program.

The state’s Birth-related Neurological Injury Compensation Fund was the first effort in the nation promising lifetime medical care to a small class of infants whose injuries at birth represented a severe malpractice threat against doctors and hospitals.

Only Florida has copied the program, which precludes malpractice suits against participating doctors and hospitals.

The program began losing its financial soundness in the late 1990s as benefits exceeded income from fees paid by doctors, insurers and hospitals and because financial projections underestimated the life spans of program children.

The program has gone from a long-term solvent position in 2000 to its current deficit of $127.6 million.

But its asset base means that, like Social Security, program benefits will be available for as long as 20 years at current costs and income projections.

For the first time, however, children born in the past year are likely to outlive the current benefit structure. Children in the program now are expected to live 23.4 years, three years more than the life expectancy of the program. The program deficit will not be fixed by the current program financial structure, according to financial studies.

Efforts to significantly increase funding or add new controls to decrease spending have failed to get through the General Assembly in recent years.

In 2007, the program spent more than $9 million in benefits for 109 children and generated almost $40 million in income from investments and fees, the audit shows. The program uses no state money.

Accounting changes are expected to produce reductions in long-term cash obligations, perhaps as soon as this fall.

Contact Bill McKelway at (804) 649-6601 or .