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The Associated Press August 17, 2010, 8:20AM ET

Health panel gets McDonnell's charge: lower costs

A new panel of corporate and professional health care heavyweights, political figures and medical policy experts was tasked Monday with devising "uniquely Virginia" ways to cut the cost of health care and improve its delivery.

Chief among problems Gov. Bob McDonnell told the 24-member panel to address is Medicaid, the federal-state health services program for the needy, aged and disabled that will demand billions of dollars more each year from Virginia's budget.

"The growth of Medicaid spending is unsustainable. I will not pass on a broken Medicaid system to another governor," said McDonnell, who began his nonrenewable four-year term in January.

Virginia's Medicaid spending has increased from about $220 million annually in 1985 to about $3.5 billion now, and officials expect it to grow by nearly $1.7 billion in the next 10 years because of mandates in the new federal health reforms enacted this year.

The Republican governor, who opposes federal health care reforms enacted this year, wants recommendations on how to implement facets of the federal law. McDonnell backs Attorney General Ken Cuccinelli's lawsuit that seeks to void a key piece of the reforms passed by a Democratic Congress and signed by President Barack Obama.

McDonnell and fellow Republican Cuccinelli contend the requirement in the law that individuals either buy health insurance or pay a penalty is unconstitutional.

"That case is going to take a long time," McDonnell said. But until then, the federal reforms are law, he said, and "the purpose of our health care reform initiative, then, is to implement those pieces of the federal bill that are out there."

"What I've asked them to do ... is to come up with a uniquely Virginia approach to health care improvement and systematic reform," McDonnell said.

The panel -- the Virginia Health Reform Initiative Advisory Council -- includes three Republican state legislators and two Democrats. Two of them, state Sen. R. Edward Houck, D-Spotsylvania, and Del. S. Chris Jones, R-Suffolk, are senior budget writers who will have to factor the rising costs of health care into General Assembly budgets for years to come.

"We talk about the estimated 1 million Virginians who are uninsured, ... and certainly that's an issue," said state Sen. R. Edward Houck, D-Spotsylvania and chairman of the Senate Education and Health Committee. He said the hospital industry calculates that it provided nearly $400 million of uncompensated charity care for those who lack insurance.

"Well, someone's picking up the tab for that care. It can't just be written off," Houck said.

Among the panel's members are executives from major hospitals and the corporations that own them; doctors and medical industry advocates; and representatives of major health insurance providers.

Health and Human Resources Secretary Bill Hazel, who heads the panel, said the reforms will also examine private-sector costs, including soaring premiums for health policies that employers provide their workers.

"If it was just about Medicaid, then we'd have a task force just about Medicaid, but it's about health insurance reform, it's about delivery and payment reform, it's about work force, it's about technology, it's about how private insurers buy insurance for their employees, so I think it's the whole shebang," said Hazel, himself a physician.

The panel will deliver its initial findings and recommendations to McDonnell in December.

The panel was appointed the same day the federal government awarded Virginia's Bureau of Insurance $1 million to crack down on soaring health insurance premiums.

The bureau, a regulatory arm of the State Corporation Commission, was given the money to help it oversee proposed premium increases and take action against those it finds unreasonable, U.S. Health and Human Services Secretary Kathleen Sebelius said.

SCC spokesman Ken Schrad said the bureau would use the money in part to hire an actuarial consultant who would assess changes to group and individual health premiums under the new federal health care laws.

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