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Consumer, Business Groups Push CA to Drive Down Health-Care Costs

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The California Health Care Foundation finds over the past 15 years, the cost of health-insurance premiums has jumped almost 250%, while inflation has grown 44%. (Volgariver/Adobe Stock)
The California Health Care Foundation finds over the past 15 years, the cost of health-insurance premiums has jumped almost 250%, while inflation has grown 44%. (Volgariver/Adobe Stock)
 By Suzanne Potter - Producer, Contact
May 7, 2021

SACRAMENTO, Calif. - Consumer and business groups are speaking out in favor of California legislation to create an agency dedicated to cutting health-care costs.

Assembly Bill 1130 from Assemblymember Jim Wood - D-Santa Rosa - would establish a State Office of Health Care Affordability. The agency would have the power to set cost targets for health plans, hospitals and more - and to enforce them.

Bill Barcellona, executive vice president of government affairs for America's Physician Groups, said experts are needed to ferret out where, how and why the marketplace is failing patients.

"You have to have someone at the top of the system looking at the data, finding the gaps and driving innovation," said Barcellona. "And on the negative side, driving compliance."

Opponents object to what they see as more government intervention in the health-care marketplace.

According to the California Health Care Foundation, costs for California families who get health care through their jobs have jumped 142% in recent years - far outpacing the growth of median household income.

Rhonda Smith, executive director of the California Black Health Network, said the U.S. health-care system is broken.

"We spend the most on health-care costs and we have the worst outcomes," said Smith. "We spend more on hospitalizations than any other developed nation, and we have the worst life expectancy at birth than any other developed nation."

The new agency would look at moving to a new system of payments that rewards providers when they improve patient outcomes - instead of the current fee-for-service model that encourages volume.

Anthony Wright, executive director of the nonprofit advocacy group Health Access, said the current system sets costs primarily based on the potential for profit, rather than effectiveness or equity.

"The price is not necessarily based on the best quality or outcomes," said Wright, "but is based on what the market can bear."

The bill is in the Appropriations Committee. Its backers are asking for $11.2 million to fund the agency for the first year. They say they're optimistic that Gov. Gavin Newsom will include the funding in his budget update, due a week from tomorrow.

Disclosure: Health Access contributes to our fund for reporting on Health Issues. If you would like to help support news in the public interest, click here.
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