The General Assembly at its 1960 Session drastically changed the pattern of regulation theretofore in effect applicable to those contracts and plans for future hospital, medical and surgical services, generally known as Blue Cross and Blue Shield Plans. Although in their inception these plans had operated without any regulation by the State, they had been for many years subject to control by the State. Corporation Commission through its Securities Division. The 1960 legislation brought them, in limited respects, within the coverage of the laws applicable to insurance· and placed the supervisory power in the State Corporation Commission through its Bureau of Insurance. The control formerly exercised by the Commission over charges to subscribers of such plans was eliminated. The General Assembly, feeling that it should have as much information as possible as to the general operations of the plans and as to the effect of these changes, adopted Senate Joint Resolution No. 54 directing the Virginia Advisory Legislative Council to make a study of the plans.

The Council selected Dr. J. D. Hagood, Clover, member of the Senate and member of the Council, as Chairman of a committee to make the initial study and report to it. Selected to serve with Dr. Hagood on the Committee were: Howard P. Anderson, Attorney and member of the House of Delegates, Halifax; Floyd L. Boddicker, Plant Manager, Hercules Powder Company, Hopewell; H. B. Boyd, President, Virginia AFL-CIO, Richmond; Roy R. Charles, Smith-Douglass Company, Incorporated, Norfolk; Mrs. Martha Elizabeth Foxwell, Falls Church; Dr. E. E. Haddock, member of the Senate, Richmond; William H. King, Attorney and Counsel for the Virginia Hospital Service Association and Virginia Medical Service Association, Richmond; Dr. John P. Lynch, Richmond; Harold Prather, Administrator, Richmond Memorial Hospital, Richmond; William R. Shands, Vice-President and General Counsel, The Life Insurance Company of Virginia, Richmond; and James M. Thomson, Attorney and member of the House of Delegates, Alexandria.

The Committee organized and elected Dr. Haddock as Vice Chairman. John B. Boatwright. Jr;, and G. M. Lapsley were appointed Secretary and Recording Secretary, respectively.

The Committee collected information concerning the operations of Blue Cross and Blue Shield plans and other plans offering hospital, medical, and surgical services on a prepayment basis, both in Virginia and throughout the nation. For comparative purposes (since many problems are common), it secured much information as to experience of insurance companies which write policies indemnifying for expenses incurred for hospitalization and medical and surgical care. It secured copies of the major studies which have been made of problems related to prepayment plans for hospital, medical and surgical service in the nation. It held a public hearing to which the public, as well as representatives of the prepayment plans and of insurance companies, were invited. It conferred extensively with administrative officials of the major plans operating in Virginia and· with the staff of the State Corporation Commission charged with enforcement of the regulatory statute. It formed an Executive Committee and subcommittees which gave detailed study to data bearing on the several aspects of the study.

Based upon the voluminous data before it, and the views expressed to it, the Committee submitted its report to the Council. The Council has carefully considered the report of the Committee and now submits - its conclusions and recommendations, and a synthesis of the factual data upon which the same are based.