California & Health Care Cost Controls

California Governor Gavin Newsom wants to control how much hospitals and doctors can charge for health care. Insurance company price controls are also part of his plan. If those involved do not comply with the cost controls he plans to install, then they’d face a huge fine.

To get this done, Newsom is proposing the establishment of an Office of Health Care Affordability. Four other states — including the PIA Western Alliance state of Oregon — have offices that do the same thing. Sort of.

The other states are Massachusetts, Maryland and Rhode Island.

The difference between Oregon and those states is how California plans to implement the plan. Newsom — says Democrat Jim Wood — plans to be more draconian with the companies that don’t comply.

“If we could get everybody to voluntarily really look at the way they are managing health care, they would have done it by now,” Wood said. “We’re seeing health care costs rise at twice the rate of inflation for the last seven years, and that is simply unsustainable.”

Newsom and those supporting the plan say when it comes to prices, patients and employers have very little ability to negotiate. Worse, continual hospital mergers and acquisitions have diluted competition.

Supporter say that makes it much easier for providers to raise their rates.

Statistics from the California Health Care Foundation says something needs to be done and soon. As noted earlier, the foundation says between 2002 and 2017 the monthly premium costs for people getting insurance through their employer rose 249%.

That’s six times the rate of inflation.

The foundation also notes that about half of the people in California delayed — or even skipped — some kind of health care last year because they could not afford the treatment.

As expected, the California Hospital Association opposes the idea. It wonders if the new department will be able to tell the difference between spending that is good for a patient — something like mental health care — from what it calls bad spending. That would be overly complex paperwork and medical records that are unnecessarily duplicated.

Association spokeswoman, Jan Emerson-Shea also points out that 45% of the hospitals in the state are operating in the red and another 15% are barely breaking even. “Caution is needed in attempting to create affordability by simply capping spending,” she said. “That does nothing to address the actual cost of care.”

Disagreeing with the hospitals is the California Medical Association. Spokesman and president, Dr. Robert Wailes said health care costs are way too high. He said there is a definite need to bring them down. However, his worry is by forcing prices down it could lead to more mergers and fewer choices for consumers.

That — he said — could drive prices back up.

Newsom’s proposal is light years from becoming law. It faces a long uphill battle. Wood said the healthcare industry is lobbying hard to get exemptions that fit their particular business interests.

“Nobody wants to take responsibility or own their role in the problem,” Wood said. “The biggest hurdle is people trying to find a way to get out of it. And what we’re trying to do is keep everybody in it.”

Source link: Insurance Business America — https://bit.ly/3wnt3o6