HOUSE JOINT RESOLUTION NO. 102 Offered January 9, 2008 Prefiled January 8, 2008 Directing the Joint Legislative Audit and Review Commission to study providing an income tax credit to employers that provide health insurance for their employees in the Commonwealth. Report. ---------- Patron-- Hogan ---------- Committee Referral Pending ----------

WHEREAS, according to a Henry J. Kaiser Family Foundation report released in October 2006, the majority of Americans under age 65 receive their health insurance coverage through their own employer or the employer of a family member; and

WHEREAS, the long-standing link between work and employer-sponsored health insurance is weakening, with the percentage of American employees covered by employer-sponsored health insurance falling from 81.2 percent in 2000 to 77.4 percent in 2004, with about half of the decline due to the loss of employer sponsorship; and

WHEREAS, the reduction in employer-sponsored health insurance may be attributable in part to the rising cost of health insurance; and

WHEREAS, total U.S. health benefit costs rose by 6.1 percent in both 2006 and 2007, to an average of $7,983 per employee, according to the National Survey of Employer-Sponsored Health Plans conducted by the Mercer consulting firm and released November 19, 2007; and

WHEREAS, the Mercer report observes that health insurance costs are increasing at more than twice the rate of inflation, and health cost growth is outpacing wages and material costs and eroding business profitability; and

WHEREAS, declining levels of employer-sponsored health insurance may increase the number of uninsured Virginians who will receive emergency health care for which providers will not be reimbursed, thereby shifting the costs of their health care to other segments of society through higher insurance premiums, provider charges, and taxes; and

WHEREAS, providing financial incentives for corporations and other employers to provide health insurance for their employees may reduce the societal costs of addressing the needs of the uninsured population; and

WHEREAS, prior to making a policy decision regarding the advisability of providing tax incentives for employers to offer health insurance coverage for their employees, the General Assembly needs additional information; now, therefore, be it

RESOLVED by the House of Delegates, the Senate concurring, That the Joint Legislative Audit and Review Commission be directed to study providing an income tax credit to employers that provide health insurance for their employees in the Commonwealth.

In conducting its study, the Joint Legislative Audit and Review Commission shall (i) quantify the cost to the Commonwealth of employer decisions not to sponsor employee health insurance; (ii) determine the effects, including but not limited to effects on (a) employers not currently providing such insurance, (b) the societal costs of dealing with the uninsured population, and (c) general fund revenue, of providing a reduced income tax rate, implemented through a tax credit program, for corporations and other business entities that provide health insurance for their employees; (iii) identify a mechanism by which the net societal savings resulting from such an income tax credit may be earmarked for funding health care in the Commonwealth; (iv) determine an appropriate threshold level of employer expenditures on employee health insurance that would be required to qualify for such an income tax credit; (v) identify the policy ramifications of providing such a tax credit only for employers that do not provide such coverage rather than to all employers in the Commonwealth; and (vi) determine what amount of an income tax credit would be sufficient to incentivize employers that are not currently providing health insurance for employees to do so.

Technical assistance shall be provided to the Joint Legislative Audit and Review Commission by the State Corporation Commission's Bureau of Insurance and the Department of Taxation.  All agencies of the Commonwealth shall provide assistance to the Joint Legislative Audit and Review Commission for this study, upon request.

The Joint Legislative Audit and Review Commission shall complete its meetings by November 30, 2008, and its Director shall submit to the Division of Legislative Automated Systems an executive summary of its findings and recommendations no later than the first day of the 2009 Regular Session of the General Assembly. The executive summary shall state whether the Commission intends to submit to the General Assembly and the Governor a report of its findings and recommendations for publication as a House or Senate document. The executive summary and report shall be submitted as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents and reports and shall be posted on the General Assembly's website.