New Report Shows Virginia Health Insurance Premiums, Out-of-Pocket Expenses for Families Surge Even Though Virginia Health Care Spending is Lower Than the National Average

February 2, 2023

Non-Partisan Altarum Institute Report on Virginia Health Care Spending Trends Shows that Health Care Spending Growth Rates, Spending Per Capita, and Spending as a Share of GDP are Below National Levels; Average Insurance Premiums and Deductibles have Risen 89.1% for Single Coverage and 91.3% for Family Coverage in Recent Years at a Rate Much Higher Than What Insurance Companies Spend on Health Care Services

RICHMOND, VA – A new report on health care cost and spending data in the Commonwealth shows that while Virginians spend less on health care than the national average, their out-of-pocket costs for health insurance premiums and deductibles continue to surge year-after-year.

The Altarum Institute, a non-partisan, non-profit research and consulting organization, examined 2021 Virginia health care spending based on data from the Centers for Medicare & Medicaid Services (CMS), Virginia’s All-Payer Claims Database, and other public sources. The analysis shows that the average single health insurance premium was $7,300 and the average family health insurance premium was $21,300 for people with private sector employer-sponsored health care coverage. According to the Altarum report, these rates are “nearly identical to national averages, despite Virginia’s lower-than-average per capita health care spending.”

Growth in Virginia insurance premiums has steadily risen, increasing from “22.5% and 21.5%, respectively, between 2015 and 2021, while combined premium and deductible totals have increased even faster (31.1% for single coverage and 27.7% for family coverage).” Looking over a longer horizon, the report finds that since 2008 “single annual premiums have increased 74.3%, and family premiums have increased 78.9%,” while the “combined totals of average premiums and deductibles have risen even faster, 89.1% for single coverage and 91.3% for family coverage.” (see image below)

The sharp increase in premium and out-of-pocket costs is also “significantly greater than the underlying private per-enrollee health care spending trend, which has risen by 45.7% over the same period.” These trends are even more glaring when viewed in context of the COVID-19 pandemic peak period of 2020 and 2021 when health insurance premiums and cost-sharing expenses for individuals and families continued to rise despite a sharp drop in health care utilization and health care spending.

In contrast to health insurance cost trends, Altarum’s Virginia’s Health Care Spending and Employment Trends in 2021 report shows that the Commonwealth’s health spending growth rates “have averaged 3.8% annually since 2015, lower than the national average of 4.7%.”

The report notes that “health spending per capita in 2021 was over $1,700 lower than the national average in Virginia, with all major spending categories lower than their national comparators.” That rate actually represents a consumer-friendly improvement from Virginia’s 2020 per health care spending of “$1,400 per person” as compared to the national average.

The latest report from Altarum, which also produced reports on Virginia health care spending in 2019 and 2020, also notes that:

• The largest payer for personal health care (PHC) products and services in Virginia is private health insurance, which spent an estimated $28.0 billion PHC in 2021. Next is Medicare at $17.8 billion and Medicaid at $13.3 billion, though Medicaid has been the fastest-growing payer in spending and enrollment since 2015.
• Total health spending as a percentage of the state Gross Domestic Product (GDP) in Virginia fell to an estimated 15.3% in the fourth quarter 2021, representing the smallest share since at least 2015. The percentage of the economy going to health care in Virginia is well below the national average of 17.8%.
• If Virginia had spent the same share of its GDP on health care as the U.S. average (17.8%), spending would have been $15.8 billion dollars more than the actual 2021 spending level.
• The health care sector continues to be a significant employer in Virginia, accounting for 370,000 individuals employed in the fourth quarter of 2021, which is equivalent to about 11.3% of the total private sector employed population. Those figures represent a slight (1.2%) increase in employment compared to the fourth quarter of 2020, but overall sector employment was below the pre-pandemic peak of 381,000 workers.
• As of 2021, the unemployment rate in Virginia among those in health care industries was only 2.1% and even lower among those with health care occupations, adding further evidence for a very tight health care labor market in the Commonwealth.

About VHHA: The Virginia Hospital & Healthcare Association is an alliance of 110 hospitals and 26 health delivery systems that develops and advocates for sound health care policy in the Commonwealth. Its mission is to achieve excellence in both health care and health to make Virginia the healthiest state in the nation. Its vision is through collaboration with members and stakeholders, to ensure the sustainability of Virginia health care system, transform the delivery of care to promote lower costs and high value across the continuum of care, and to improve health for all Virginians. Connect with VHHA through Facebook, Twitter, YouTube, LinkedIn, and Instagram.

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