Today, California’s Office of Health Care Affordability (OHCA) took another step toward diminishing access to health care for millions of Californians. In a unanimous vote, the board approved levying astronomical financial penalties on hospitals it deems noncompliant with spending caps imposed by the state. These penalties were set without first clarifying how spending will be determined to meet or exceed those targets.
OHCA previously set five-year limits on how much California spends on hospital care — limits below the cost of actually providing care.
Several states (Oregon, Massachusetts, and Rhode Island, for example) have programs to address health care affordability. California’s approach, however, is far more aggressive, with financial penalties nearly 20 times higher than those of the next closest state. In some cases, a hospital could be fined more than their entire annual operating earnings. Aggressively limiting what California can spend on hospital care will reduce Californians’ ability to access the services and care they need. Other states are already seeing negative consequences from hospital-focused efforts, with hundreds of hospital workers laid off by just one hospital system in Massachusetts and reductions to both staffing and salaries in Rhode Island.
“The stakes for California are too high,” said California Hospital Association President & CEO Carmela Coyle. “Californians have seen what happens when their local hospital closes: Care needs don’t change. Instead, patients travel farther for care, they wait longer for appointments, and they get sicker all the while. Jeopardizing access to care for millions, as well as the livelihoods of the more than half a million people employed at hospitals, is reckless and harmful.”
“Health care can be made more affordable for consumers while also maintaining access to care. More than 80% of Californians say that having access to care when they need it is more important than affordability. OHCA can’t ignore the whole picture, including the cost of insurance, drugs, and wasteful regulation in California.”
OHCA’s singular focus on limiting hospital spending ignores the decades of work hospitals have undertaken to make care affordable. Consider:
- California has the 10th lowest per capita hospital expenditures in the nation — efficient, cost-effective are already provided to millions of patients.
- Hundreds of hospitals participate in value-based programs that emphasize patients’ overall well-being and result in better health outcomes.
- California hospitals provide nearly $2 billion in care at low or no cost, subsidized services, or community-based services that improve health and well-being.
All of this good work is happening while 44% of hospitals operate at a loss, while California leads the nation in net hospital closures (more than 40 over the past 20 years), and while Medicaid is grappling with historic cuts.
“Hospitals are relentless in pursuing their mission to care for their communities, no matter the challenges they face,” Coyle said. “It’s time OHCA is just as relentless in assessing all of health care’s problems, rather than creating new ones.”