RD162 - Review of Health Care Cost

Executive Summary:

Senate Joint Resolution 4 of the 2006 General Assembly Session directed the Joint Commission on Health Care (JCHC) to examine “factors leading to rising health care costs in the Commonwealth; derivative effects of rising health care costs including increases in health insurance premiums and denial of coverage; and ways to reduce health care costs in the Commonwealth and alleviate the burdens associated with the rising cost of health care." A report was presented to JCHC in 2006; however, specific findings were delayed until 2007.

The rising cost of health care is a significant concern in the United States. According to a report by the Kaiser Family Foundation and Health Research and Educational Trust, health care spending has increased at an average annual rate of 9.8 percent since 1970, thereby increasing national health care expenditures from $75 billion in 1970 to $2.0 trillion in 2005. In Virginia, an estimated $35.8 billion was spent on health care in 2004.

Many states have taken steps to make health care more affordable. Virginia has undertaken such strategies as allowing for pooled purchasing of health insurance by small employers, advancing the provision of consumer-directed health plans, and improving the collection and publishing of health-related information.

Although no legislation was introduced related to this study in 2008, JCHC members voted to continue the examination of health care costs within the 2008 JCHC work plan. The 2008 study will examine the advisability of: i) establishing a Virginia health insurance exchange targeted for small businesses, ii) assisting employer adoption of Section 125 (cafeteria) plans, and iii) examining any other health insurance issues as deemed appropriate.

On behalf of the Joint Commission and staff, I would like to thank representatives of the Connecticut Business and Industry Association, National Conference of State Legislatures, Office of the Secretary for Health and Human Resources, and Virginia Association of Health Plans who assisted in this study.

Kim Snead
Executive Director
June 2008