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California Could Curb Health-Care Cost Under Governor’s Proposal

March 10, 2020, 2:36 AM

California could become the first state to set targets to keep the cost of health care from skyrocketing under a proposal offered by the administration of Gov. Gain Newsom (D).

The blueprint released Monday would create an Office of Health Care Affordability. The office would set cost targets and collect data from health-care providers, with the possibility of penalties if physicians, hospitals, or other providers don’t meet the targets.

“Affordability in health care is a critical issue for Californians; it is one of the governor’s top priorities to address,” Alice Chen, deputy director for policy and planning for the California Health and Human Services Agency, said at a budget hearing Monday.

The office would be led by a governor-appointed director and an 11-member advisory board, Chen said. It would identify data gaps in health-care information to better understand how to reign in costs.

More than half of California residents and families get health insurance coverage through their employers. While wages have remained stagnant, premiums have risen dramatically—49% percent on average since 2008, according to the Labor Center at the University of California Berkeley.

The office would develop regulations to address enforcement if providers miss targets, Chen said, but the goal in creating the office is of “administrative simplification, not adding new requirements or mandates.”

Health-care nonprofits and labor groups broadly favor creating the office and have launched a coalition in support of the governor’s proposal. But hospitals and many large private insurers have yet to weigh in on the specifics. Mary Ellen Grant, spokeswoman for the California Association of Health Plans, said the organization is reviewing the plan.

Anthony Wright, executive director of Health Access California, said he’s confident the industry will get on board.

“We’re happy that we have strong support within the industry, and we think that there’s a lot more of the industry that’s willing to be part of this solution,” Wright said at a news conference Monday. Health Access California describes itself on its website as a consumer advocacy coalition.

To contact the reporter on this story: Tiffany Stecker in Sacramento, Calif. at tstecker@bgov.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Tina May at tmay@bloomberglaw.com

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