As early as next week, the Office of Health Care Affordability board could set a spending growth target for health care — one of California’s largest economic sectors and a pillar of the state’s vitality and strength.
The office, established by the state Legislature in 2022, has until June to create its first health care spending growth target, but with a potential vote imminent, significant questions remain around what the target could mean for access to critical health care services. On Monday, CHA sent an alert asking hospital leaders to testify at the upcoming hearing so board members can hear some of these concerns directly from those closest to it.
There’s no question that the problem of health care affordability must be addressed, and hospitals stand ready to do their part to make sure that care is not financially out of reach for Californians. That cannot be done, however, without solving for the fact that if care is more affordable, but services and hospitals go away as a result, we are creating an even worse predicament — less expensive care, but far too many people in need and simply not enough services to treat them.
The current staff proposal is for a 3% target for each of the next five years. Earlier this month, CHA sent a comprehensive letter detailing concerns with — and the potential unintended consequences of — that proposal, including:
- Deficiencies with the proposal’s methodology
- The creation of a five-year target prior to the collection of data and analysis of even a single year’s effort
- Establishing California as an extreme outlier among other states with similar efforts
- No analysis of the impact on access, quality, equity, or workforce stability
To delve a bit deeper into these issues, a 3% growth target would not even keep pace with general inflation in California, projected at 3.4% for the coming years, meaning a cut of $36 billion in resources for patient care. There are other important factors that a 3% target fails to address, including: an aging population that will have greater health care needs; the rising cost of medicine and medical supplies; and policies enacted by the Legislature and governor that drive costs up such as minimum wage increases, Medi-Cal investments, and seismic mandate compliance.
And the proposal seems to ignore areas where more rather than less investment is needed — in things like behavioral health services, maternity care, and health equity.
All of this comes at a time when more than 50% of hospitals are losing money every day to care for patients, and one in five — nearly 100 hospitals statewide — is at significant risk of closure.
The office and its board must plan for the health care system Californians need and deserve, one that provides world-leading, life-saving care to millions every year. That planning entails two shifts from the current proposal. First, consideration of an alternative framework for setting a target that accounts for a diverse range of factors within health care, and second, setting a one-year rather than a five-year target, to allow time for data collection and analysis.
Hospitals stand committed to helping California develop policies that meaningfully address affordability challenges while protecting access to health care. We must do this in partnership to be successful.
