With no action taken at the March board meeting of the Office of Health Care Affordability, the eight-member body has just two meetings left before it is legally required to set the first health care spending growth target in California’s history.
The office, born as the Legislature’s alternative solution to a major statewide press for a single-payer health care system, holds the power to radically alter the way health care is delivered in California. Its legislated purpose: “Have a comprehensive view of health care spending […], with the goal of improving affordability, access, and equity of health care for Californians.”
As the board considers the staff proposal of a 3% growth target for the next five years, it is that second half of the Legislature’s intent — “improving … access, and equity…” — that is raising the most significant questions around the impact on patient care.
For all of the office’s power to help control health care cost growth — a critically important task given that care is out of reach financially for too many Californians — setting a target that ignores underlying drivers of spending, fails to account for an aging population, does not distinguish between “good” and “bad” health care spending, and fails to even keep pace with inflation will undoubtedly have the opposite of the intended effect on access to care.
For example, with general statewide inflation projected at 3.4% next year, a growth target of 3% would be a de facto cut in health care spending and remove some $36 billion in resources for patient care over the next five years. This is at a time when we need more investment in behavioral health care, more resources for Medi-Cal patients who have worse health outcomes, more geriatric care services, more investment in recruitment and retention of our health care workforce, and many more needs.
For hospitals, the vast majority of health care spending — rising labor costs that are set by market factors and state policy, the cost of supplies like blood and medical devices, the cost of pharmaceuticals, depreciation, and more — is out of their control. Setting a spending growth target does nothing to address any of these drivers of health care costs.
The notion of a target that is not only well below inflation and for multiple years — and in a state that had led the nation in managed care, where efficiency is paramount — suggests a “cart before the horse” strategy.
That’s why CHA continues to press for not only a one-year target, during which the office could collect data and analyze the impact on patient access to care, but also for a target that more completely accounts for factors such as inflation, state policies like a $160-plus billion seismic construction mandate, an aging population, and more.
These changes would not only build broad confidence and trust in the process, but also help create an achievable and sustainable path forward to ensure the office — as the law states — “promote[s] the goal of improved affordability for consumers and purchasers of health care, while maintaining quality and equitable care.”