SD21 - Study of Health Insurance Purchasing Cooperatives PUrsuant to SJR 132 of 1994

Executive Summary:

Authority for Study

Senate Joint Resolution (SJR) 132 of the 1994 Session requests the Joint Commission on Health Care, in cooperation with the Bureau of Insurance and other state agencies and private groups, to continue its study of Health Insurance Purchasing Cooperatives (HIPCs). The study continues the work completed in 1993 under the authority of SJR 332 of the 1993 Session.


In its 1993 study, the Joint Commission found that establishing and implementing an HIPC is a significant undertaking requiring a substantial amount of advanced planning. In its 1993 Annual Report, the Joint Commission outlined the major operational functions of an HIPC; identified the key features of an HIPC; and summarized the role that HIPCs would play in each of the major federal health care reform proposals. The Joint Commission concluded that further analysis and study were necessary prior to making any final recommendations to the General Assembly.

SJR 132 requests that the Joint Commission address specific planning and operational issues regarding HIPCs, and make recommendations to the General Assembly. These issues include:

• the potential for HIPCs to expand coverage to the working uninsured, uninsured children and others;

• the potential to serve Medicaid and state employee plans;

• the appropriate organizational model and governance structure;

• whether participation should be mandatory or voluntary;

• the appropriate rating, underwriting, risk adjustment and open enrollment requirements;

• the anticipated costs of establishing cooperative(s); and

• the pertinent legal issues surrounding the creation of cooperatives.

In addition, the resolution requires that the Joint Commission obtain information on the target population's interest in purchasing coverage through a cooperative.

This paper provides an overview of the principles which support the establishment of an HIPC; summarizes the status of the major national health care reform proposals with respect to HIPCs; outlines the experiences of other states which have established an HIPC; and identifies options for establishing an HIPC in Virginia.