New Office of Health Care Affordability Proposal Would Limit Health Cost Growth, Offering Real Relief to Californians

Health and consumer advocates praise new staff recommendations of the Office of Health Care Affordability to set a statewide health growth target at 3%

OHCA’s Health Care Affordability Board to make final decision in coming months

SACRAMENTO, CA – California’s ambitious effort to rein in the skyrocketing cost of care enters a new phase this week as the board for the Office of Health Care Affordability (OHCA) meets to discuss setting a statewide spending target. To provide relief from double-digit health cost increases to consumers, the staff recommends the adoption of a 3% annual cost growth target between 2025-2029, stating that this target “places California on the path of a more sustainable, affordable, and equitable health care system, slowing the trajectory of growth and improving affordability for all.”

This recommendation was praised by consumer advocates, especially basing the spending target on median income from 2002-2022, putting the real-life cost impacts to consumers at the forefront. The recommendations also make sure the health care system and consumers benefit as soon as possible and without further delay, beyond the several years of development already built into the law.

The OHCA staff recommendations point out that health care spending between 2000-2020 has risen 5.4% while median household income has increased only 3%. A recent study found that Americans lost as much as $125,000 in wages because premiums for employer coverage grew faster than wages.

“This cost target is a long-sought solution for the many Californians that have complained, correctly, about the ever-escalating health costs and the struggle to afford health care. This recommendation offers real relief for California consumers and employers across the state, regardless of how they get care or coverage. It’s time to hold the health care industry accountable for the rising cost of care and to live within the means that most California families do every year,” said Anthony Wright, executive director of Health Access California, the statewide health care consumer advocacy coalition. “California has taken action to help lower or contain specific health costs, like on prescription drugs and much-needed financial help for those in Covered California, but this recommendation has the potential to help patients and purchasers throughout the entire health system and state.”

Created in the 2022 California State Budget, the OHCA is set with the task of slowing health care spending growth by setting targets, and importantly was given the power to enforce those targets with fines commensurate with the amount overcharged. The potential penalties are one of many features that sets the California Office apart from similar health cost target-setting commissions in nine other states, where their authority and focus are more limited. Health consumer advocates expect push back from health industry corporations.

“Health care costs right now are not just inflated, but irrational, with prices unrelated to quality, outcomes, or the cost to provide such health services. Our highly consolidated health industry gets to charge what they can, often without competitive forces trying to bring prices down. We will never meet a goal we never set, and a 3% spending target, aligned with median income growth, will provide some security and sanity into a system that otherwise would be unsustainable,” said Wright. “This goal does not ask to reduce or even freeze spending growth but to ensure that health costs do not outpace what Californians can afford.”

The OHCA board will meet to review these recommendations on Wednesday, January 24th, which will be followed by a 45-day comment period before a final vote.


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