Report: Virginia Families, Employers Face Rising Health Insurance Premium and Deductible Costs Despite State Health Care Spending that is Below the National Average

January 30, 2024

Analysis of Virginia Health Care Spending in 2022 by Non-Partisan Research Firm Altarum Shows State Health Care Spending, Spending as Share of GDP Below National Average Even as Insurance Premium and Deductible Costs Rise

Virginians Don’t Financially Benefit from Lower State Health Care Spending at a Time When Insurance Costs are Rising at a Rate Higher than Growth in Insurance Company Spending on Health Care Services

RICHMOND, VA – When it comes to health care spending, Virginia is in the enviable position of having expenditure rates that remain well below national levels. The same cannot be said for health insurance costs, unfortunately.

On the contrary, the amount that individuals and families across the Commonwealth spend on annual health insurance premiums and out-of-pocket deductibles continues to rise sharply year-over-year. Meanwhile, the gap between what individuals and families pay for insurance, and what insurance companies pay for health care services, continues to widen. Those findings are part of a new report from the non-partisan research firm Altarum that examines 2022 health spending in Virginia based on data from the Centers for Medicare & Medicaid Services (CMS), Virginia’s All-Payer Claims Database, and other public sources.

The Altarum analysis shows that the average single health insurance premium in 2022 was $7,400 and the average family health insurance premium was $21,400 for people with private sector employer-sponsored health care coverage. When the average cost of deductibles is included, the averages increase to “$9,400 for single coverage and $25,200 for family coverage.” The report further notes that “premiums for single coverage of a private-sector employee are up 76.6 percent and family premiums are 79.3 percent higher” since 2008. When increases in cost-sharing co-pays and deductibles for single and family plans are factored in, total plans costs in 2022 were 89.1 percent higher over that span in both categories. (see image below) Those increases have been a consistent trend, as a previous Altarum report on 2021 health care spending in Virginia similarly found significant growth in the total average cost of single and family health insurance premiums as well as growth in out-of-pocket costs.

While insurance costs impacting Virginia families and employers are rising, growth in total health spending has been restrained: personal health care spending in the Commonwealth remains below national averages across several measures including total spending as a percent of state gross domestic product (GDP) and per capita health care spending. The Altarum report found that “Virginia’s total health spending” as a percent of GDP “mainly stayed constant between 2015 and 2020 but has been declining in 2021 and 2022.” In fact, the share of state GDP spent on health care declined from 15.8 percent in the fourth quarter of 2020 to 14.7 percent in the fourth quarter of 2022, reflecting an amount of spending in Virginia that “is the lowest since 2011 and well below the national average.” (see image below)

In evaluating health care spending, the report notes that “Virginia’s estimated health spending per capita in 2022 was over $1,800 less than the national average.” That includes Virginians spending less than the national average on “professional, physician, and clinical services ($260 less per capita); hospital care ($570 less per capita); nursing home, residential, and home health ($130 less per capita); prescription drugs ($340 less per capita) and other care ($510 less per capita).”

The latest analysis from Altarum, which also produced reports on Virginia health care spending and employment trends in 2019, 2020, and 2021, further notes that:

  • The largest payer for personal health care (PHC) products and services in Virginia is private health insurance, which spent an estimated $27.3 billion PHC in 2022. Next is Medicare at $18.5 billion and Medicaid at $15.3 billion.
  • Total health spending as a percentage of the state Gross Domestic Product (GDP) in Virginia fell from 15.8 percent in the fourth quarter of 2020 to 14.7 percent in the fourth quarter of 2022, an amount that is the lowest since 2011 and well below the national average (17.2 percent) of the economy that is spent on health care.
  • If Virginia had spent the same share of its GDP on health care as the U.S. average (17.2%), spending would have been $14.9 billion dollars more than the actual 2022 spending level ($113.7 billion versus the actual amount of $98.8 billion).
  • Even though aggregate health care spending in Virginia has been less than the national average, what privately-insured individuals and families in Virginia paid in premiums and out-of-pocket insurance costs in 2022 were similar to those paid by the average American.
  • The health care sector continues to be a significant employer in Virginia, accounting for 389,000 individuals employed in the fourth quarter of 2022, which is equivalent to about 11.5% of the total private sector employed population.
  • As of 2022, the unemployment rate in Virginia among those in health care industries was just 2.7% and even lower (2.1 percent) among those with health care-specific occupations.

About VHHA: The Virginia Hospital & Healthcare Association is an alliance of 111 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’s 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, X (Twitter), Instagram, TikTok, LinkedIn, and YouTube.