The Commission to study the Containment of Health Care Costs was established in 1978 pursuant to Senate Joint Resolution No. 5.

To begin its study, the Commission approved a list of projects to be undertaken by the Bureau of Insurance of the State Corporation Commission and the State Health Department. Upon-completion of the projects, reports were submitted to the Commission. The reports included:

1. "Alternatives for Regulation of Blue Cross and Blue Shield Plans in Virginia," Bureau of Insurance, 1978.

2. "Recommendations for Increasing Price Competition in the Health Care Delivery System," Bureau of Insurance, 1979.

3. "Rate Levels and Policy Forms for Individual "Health Insurance Contracts," Bureau of Insurance, 1978.

4. "Mandated Health Insurance Coverage - A Study of Review Mechanisms," John C. Larson, 1979.

5. "Virginia Rate Review Study," Arthur Young and Company, 1979.

The Commission held numerous hearings to receive the suggestions of interested persons and to receive comments of interested persons on the reports and the various recommendations made in the reports or being considered by the Commission.

Recommendations

On the basis of the information and testimony submitted to it, the Commission makes the following recommendations:

1. That legislation specifically applicable to health maintenance organizations (HMO's) should be considered by the General Assembly in order to encourage the development of HMO's, to strengthen the State's regulatory posture with respect to HMO's and to assure the financial and administrative soundness of HMO's without State subsidization thereof.

2. That prepaid health plans and insurers issuing accident and sickness policies be required to offer deductibles of not less than $100 and co-insurance options under which the individual pays 20 percent of the first $1,000 in covered expenses.

3. That the General Assembly memorialize the United States Congress to enact tax incentives to purchase health insurance coverage with deductibles or co-insurance provisions.

4. That the State tax on gross premium income derived from the issuance of accident and sickness insurance policies be reduced from 2-3/4 percent to 2 percent.

5. That the Commission be continued to study the issue of mandatory insurance coverage of various providers and services, the advisability of laws limiting the coordination of health insurance benefits, and such other matters related to the containment of health care costs as the Commission may deem advisable and that the General Assembly enact no laws mandating coverage of additional services or providers until the Commission completes its study.