The California Office of Health Care Affordability (OHCA) continues to press forward with analyses, investigations, and policies that do not take into full account the impact of their proposals on patient care. Given that, it’s vital that hospitals make certain that the effect on patients and communities is not lost from the conversation.
The cost of health care services remains out of reach for far too many Californians. That problem must be solved, but solutions cannot come at the expense of patients — and yellow warning lights are flashing.
CHA’s latest letter to OHCA, sent last week, called attention to several drivers of cost-growth that the OHCA board has largely ignored, as well as some of the potential problems that could arise.
Already, OHCA seems poised to set sector-specific spending growth targets for hospitals in certain geographic regions — something that the law set for 2029 — with a current focus on Monterey County. And while it’s the board’s prerogative to move more quickly, doing so suggests that a proper analysis of the impact of such targets will fall by the wayside.
As outlined in CHA’s Oct. 9 letter, many factors remain unexamined or underexamined. To share a few:
- The regional cost-of-living discrepancies in California are stark, and the state as a whole is far more expensive than most of the country.
- Medicare pays just 75 cents on the dollar for hospital care, leaving hospitals no choice but to turn to commercial payers to keep their doors open (with an aging population, this shortfall will only grow in the next decade).
- Hospitals unable to obtain additional reimbursement from commercial insurance companies — those with exceedingly high rates of government payers — must close or merge with larger systems.
- Reducing commercial reimbursement to 150% of Medicare would devastate patient care, leaving 80% of California hospitals losing money every day to care for patients and jeopardizing tens of thousands of local jobs.
- Reducing all of California hospitals’ operating margins to zero — leaving not a penny to expand services for emergencies like a pandemic or for workforce investment, for example — would reduce total health care spending in the state by a mere $4 per person per year.
- There is no link between statewide market share and higher reimbursement.
- And there’s more.
In any given year, this board of eight unelected officials will make financial decisions about California health care that shift more money than the state Legislature or the U.S. Congress. Together, we must ensure those decisions are made carefully and judiciously.
