Rep. Jim Wood, a Democrat from Ukiah, urged the board at the meeting to send a clear message to Californians that the state takes affordability seriously. Wood spearheaded legislation to create the agency in 2022.
“It's no exaggeration to say that people are deciding between putting food on the table and getting medicine,” Wood said. “This is not an exercise. This is an effort to impact the real-life experiences of Californians.”
How do healthcare providers reduce healthcare costs?
Ultimately, it is up to the medical institution.
The committee expects health care providers to crack down on inefficient and wasteful health spending, including administrative inefficiencies and redundant or poorly coordinated tests. But they don't want to hinder spending on primary care or behavioral health. The affordability office monitors spending in these areas to ensure organizations do not reduce access to services or preventive care.
Will Californians have access to cheaper health care?
Yes, but it may not feel that way.
Growth caps do not obligate providers to reduce rates. Californians will not pay less for health insurance next year than they did this year. For people who already can't afford their health care costs (by some estimates, more than 50% of Californians are stuck at that number), the cap won't provide immediate relief.
The purpose of a cap is to prevent future prices from rising uncontrollably. This year, health insurance premiums on state Affordable Care Act exchanges increased 9.6% statewide, with double-digit increases in many areas. Personal health spending jumped 60% between 2010 and 2020, reaching $405 billion, according to federal data. That's $10,299 per person. According to the Kaiser Family Foundation, household health spending is also growing at twice the rate of wages.
In an effort to recognize how many Californians cannot afford their health care costs, the Office of Affordability has capped the average annual median household income growth rate, which has historically been about 3% over the past 20 years. Ta.
Will California succeed?
California is not the first state to try to reduce health care costs. Her eight other states have set similar cost benchmarks, but California is one of the more aggressive targets.
Massachusetts was the first state to set a benchmark for health care spending, and has nearly achieved its target growth rate of 3.6% over the past 10 years.
However, in recent years, states have found it difficult to contain costs due to the impact of the coronavirus disease (COVID-19) pandemic. The states of Connecticut, Delaware and Massachusetts significantly exceeded their spending targets in 2020-2021, largely due to increased health care utilization, according to a report in the policy journal Health Affairs.
Who opposed spending caps?
Former state Sen. Dr. Richard Pan was the lone vote against the new regulation, arguing that the state needs to recognize how changing population needs, such as an aging population, will affect future health care spending. Ta.
Pan and groups representing hospitals and doctors argue that the state should have set more “realistic” goals, rather than one that most organizations would not be able to meet.
In a letter to the board, the California Hospital Association proposed a 6.3% target for 2025, and state regulations to address how inflation, an aging population and a new law raising the state minimum wage for health care workers will drive up costs. We asked the authorities to consider it. Association President Carmela Coyle said in a statement after the vote that the new regulations will worsen access to health care while organizations are forced to make cuts.
“The agency is mandated by law to do more than limit spending,” Coyle said. “It is imperative that the Board develop a process to analyze the impact of its decisions on patients and reconsider its future goals to ensure that all Californians receive equitable, high-quality care.” .”
The California Health Plans Association, which represents most insurance companies, and the California Medical Association, which represents physicians, this week expressed support for a phased-in 3% goal, but so far they have not told the Office of Affordability. He asked them to consider other options.
“Adopting a 3% health care spending growth goal that most physicians and health care organizations are unable to meet will have a negative impact on Californians' access to health care,” Medical Association President Dr. Tanya Spirtos said ahead of the vote. wrote.
Who supported caps on health spending?
The new regulations are primarily supported by unions, employers, and consumer advocacy groups. Supporters turned out in droves to vote, helping housekeepers, bartenders, teachers, carpenters, nurses, and other workers who, even with insurance, cannot afford to pay for ever-increasing medical bills. He gave an example of how employees often forego salary increases in order to increase their wages.
