It’s Yves. This article about spending limits has a cheeky label above the headline on the original site.
Ouch! This is certainly a weekly column headline, but it also has the effect of suggesting fundamental doubts about the prospects for success.
Sure, the Ford administration’s price caps and WIN button (Whip Inflation Now) gave this sort of thing a bad rap, but some research suggests that the WIN price caps were actually beginning to break the cost-price spiral just as the administration was waving the white flag.
But healthcare is a particularly tricky area: most people would pay everything they have for essential services; private equity is particularly good at creating low-level monopolies (at the local and regional level); there is a shortage of doctors because decisions were made some time ago to reduce the number of doctors (e.g., by cutting slots in higher education programs); foreign-educated doctors rebelled overwhelmingly in the face of US administrative burdens; both pharmaceutical companies and pharmacy benefit managers have been successful in inflating drug costs; and so on. In other words, it’s a complex problem that can only be addressed with persistence and flexibility… when the regulatory regime is not so flexible. Businesspeople want at least some certainty, which prevents them from adapting on the fly to curb abuse and avoidance behavior.
Bernard J. Wolfson, KFF Health Foundation senior correspondent and columnist for California Healthline, was previously business editor and health care reporter for the Orange County Register and, prior to that, served as Europe editor for Market News International in Paris, where he oversaw coverage of the eurozone debt crisis. KFF Health News
California Office of Affordable Care Plans to curb spiraling health care costs face enormous challenges.
The goal of the agency, established in 2022, is to make health care more affordable and accessible while improving health outcomes for the state’s most disadvantaged residents. That will require a sustained fight against a sprawling and often dysfunctional health care system and powerful industry players with plenty of experience battling each other and the state.
Can the new agency get insurers, hospitals and medical groups to cooperate on cost containment as they compete for position in state health care policy? $405 Billion Health Economy• Can we transform the system so that financial rewards are tied to providing quality care rather than charging exorbitant fees for a seemingly limitless number of services and procedures?
The decision has yet to be made, but it could continue for years.
California is 9th Province The state will join Connecticut, Delaware, Massachusetts, Nevada, New Jersey, Oregon, Rhode Island and Washington in setting annual health care spending targets.
Massachusetts was the first state to implement annual spending targets in 2013. It was the only state with a history of doing so before the pandemic, but the results have been mixed: annual health care spending increases fell short of targets and below the national average in three of the first five years, but health care costs have increased significantly more recently.
Medical expenses growth in 2022 Massachusetts’ goal exceeded By a wide margin. The Health Policy Commission, a state agency created to oversee spending-containment efforts, warned that “there are a number of worrying trends that, if not addressed, could lead to the health care system becoming unaffordable.”
In neighboring Rhode Island, despite existing policies limiting hospital price hikes; This outpaced the overall growth in medical spending. The 2019 budget enacted slightly exceeded the target. In 2020 and 2021, spending was heavily impacted by the pandemic. In 2022, spending growth is expected to be at only half the state’s target rate. Connecticut and DelawareIn contrast, both countries exceeded their 2022 targets.
All of this is a work in progress, and California officials will have to adapt to some degree in the face of state policy and demographic realities that require more health care spending.
And they will inevitably face a backlash from an industry that is confronted with unreasonably high prices, unnecessary treatments, overutilization of expensive care, administrative waste, and the inflationary effects of putting more and more hospitals in the hands of a few.
“Telling the industry to slow spending growth is the same as telling them to slow revenue growth,” said Michael Baylitt, president of Baylitt Health, a Massachusetts-based consulting group that does consulting work in a variety of states, including California. “And that could be interpreted as, ‘We’ve got to slow our profit margins.’ It’s a very difficult conversation to have.”
Some of California’s most important health care sectors have voiced their opposition to the new Affordable Care Agency’s aims, while avoiding openly opposing them.
In April, when the Affordable Care Administration was considering a 3% annual per capita spending increase target, the California Hospital Association I sent a letter Hospitals said they were “willing to work with officials,” but the association argued the proposed figure was too low because it didn’t take into account California’s aging population, new investments in Medicare and other cost pressures.
The hospital group proposed a spending growth target of 5.3% on average over the five-year period from 2025 to 2029. This is Average annual increase of 5.2% Trends in per capita medical expenses over the five years from 2015 to 2020.
Five days after the hospital association sent its letter, the Affordability Commission Slightly less aggressive targetIt will start at 3.5% in 2025 and fall to 3% in 2029. Carmella Coyle, the association’s chief executive officer, said: In a statement The committee’s decision was based on the aging society, Mental Health and Addiction Treatment,and Labor shortage.
The California Medical Association, which represents the state’s physicians, Similar concernsThe group said the new targets, which will be phased in gradually, are “less unreasonable” than the original plan, but that it will “continue to oppose artificially low spending targets that would have a real negative impact on patient access and quality of care.”
But let’s give the state some credit here: The mission the state is embarking on is ambitious enough that it’s hard to argue with the motivation behind it: to provide some financial relief to millions of Californians who are either unable to get the care they need or who are cutting back on other essential household expenses to pay for health care.
Sushmita Morris, 38, of Pasadena, was shocked when she received her bill for outpatient surgery at the University of Southern California’s Keck Hospital last July after a miscarriage. Morris said the procedure took just 30 minutes, and when the doctor handed her a bill for just over $700, she paid it. But then the hospital sent her a bill for nearly $9,000, leaving her with more than $4,600 to pay.
Morris called Keck’s billing office multiple times, asking for an itemized bill, but got nowhere. “The robotic response was, ‘You’re on a high-deductible plan,'” she says. “But I should have received a reasonable bill for what was done.” She has refused to pay the bill, and expects to hear from a collection agency soon.
The road to more affordable health care is long and fraught with major challenges and unexpected events that may shift the landscape and require considerable flexibility.
There is some flexibility built in. First, state caps on spending increases may not apply to health care organizations, industry segments, or geographic areas that can show circumstances justify increased spending—for example, older and sicker patients or a sharp increase in labor costs.
For those who exceed their limits without justification, the first step would be a performance improvement plan. If that doesn’t work, at some point, though it’s yet to be determined, the Office of Budget and Management could impose a fine equal to the full amount by which the organization exceeded the target. But because of the lag time between collecting data, then talking to the target overshooters, and developing a potential improvement plan, that’s unlikely to happen until at least 2030.
In California, officials, consumer advocates and health experts say engagement with all stakeholders, based on robust, agency-specific data on cost trends, will increase transparency and ultimately strengthen accountability.
Publicly available data on cost trends at specific health care organizations is scarce, said Richard Klonick, a professor of public health at the University of California, San Diego, and a member of the Affordable Care Commission. But “we’re going to know that in the future,” he said. “And I think that knowing that and having that information publicly available will put some pressure on those organizations.”
