CEO Message

Staff Proposal for Affordability Target Misses the Mark 

In just a little more than a month, the public comment period for a staff-proposed 3% annual growth target for health care spending in California will close, and the board members of the Office of Health Care Affordability (OHCA) will consider approving that target. 

For background, OHCA was established by legislation in 2022 with a dual mandate: to improve the affordability of health care and to do so without sacrificing access to, or the quality of, health care.  

The 3% growth target is the office’s first venture into establishing a metric aimed at reducing the rate of growth in health care spending and is proposed at that level for each of the next five years. 

Importantly, the office is measuring and seeking to control growth in total spending for insurance and insurance-related costs to consumers — not the rate of growth in the cost of care. However, this insurance spending target will likely be used by the office to limit providers’ cost growth in a few years when targets become enforceable across health care sectors. 

At 10 a.m. (PT) Monday, CHA is hosting a complimentary, members-only webinar to discuss the proposal and, if approved, the detrimental impacts it would have on health care, as well as how hospitals can lend their voices to protect care. Next week, CHA will issue an alert with a template letter for your customization and key messages so your organization can lend your voice to a growing chorus calling for preservation of access to quality care. 

Hospitals are eager to work with the new office on strategies to reduce health care spending growth — the affordability of care is a problem that must be addressed. 

But that goal can’t be achieved if access to care is sacrificed. Here’s how a 3% target might play out for hospital care in California: While it’s difficult to project what the future would hold, if California hospitals had adhered to a 3% growth cap for the past five years, $60 billion would have been drained from the resources hospitals use to care for patients, an amount that translates to a whopping 58,000 health care jobs lost by the end of the five years. 

CHA’s most recent letter to the board noted significant concerns with the 3% target, notably that it:  

  • Fails to strike a balance between promoting affordability and maintaining access to high-quality, equitable care  
  • Ignores external factors that influence health care costs, such as inflation and California’s aging population   
  • Sets California apart as a radical outlier from other states with spending targets  

The proposal also avoids addressing several key factors, including a failure to account for new health care policies that drive up costs, such as the enactment of a $25 per hour minimum wage or an estimated $100 billion in seismic construction mandates by 2030.  

While OHCA continues to work through the early stages of its mission, hospitals continue to be a strong voice for both more affordable patient care and for protecting access to that care. 

These goals are not mutually exclusive, and California can achieve both if we choose a pragmatic, achievable, and sustainable strategy.