Bill to Reign in Health Care Prices Advances in the Legislature

The Health Care Price Relief Act would set up an independent commission to determine what health care providers can charge for services under commercial health plans. Photo Credit: Thinkstock

A California Assembly committee has advanced a bill that aims to reign in soaring health care costs by giving the state authority to regulate prices charged by hospitals, doctors and other providers.

During a hearing Tuesday, the Assembly Committee on Health voted 11 to 4 to pass the bill on to the appropriations committee, the final step before legislation can go before the full Assembly for a vote. The appropriations committee is expected to decide in late May whether or not to move the bill forward.

Known as the Health Care Price Relief Act, the bill would set up an independent commission to determine what health care providers can charge for services under commercial health plans. Reimbursement rates for Medicare, the federal health program for seniors, would serve as the baseline for determining prices. Doctors, hospitals and health plans who want to charge higher prices would have to justify increasing rates.

Supporters of the bill, which include labor unions and patient advocacy groups, said the legislation would counter what has become a crisis in health care affordability. Assemblyman Ash Kalra, D-San Jose, who introduced the bill, told the committee that people are increasingly forgoing health care services because they can’t afford to pay for them, even if they have health insurance. Businesses are also struggling to provide health insurance for their employees, he said.

“The status quo is unacceptable,” Kalra said. “The way the system is currently set up, we’re going to see more Californians, more small businesses, not be able to afford health care. And frankly, the providers, the hospitals, the doctors going into the future, they need and deserve a sustainable system too.”

But opponents, including representatives from major hospital, health plan and medical associations, said the bill would have the opposite of its intended effect. Instead of improving patient access to health care, it would lead to provider shortages through massive job losses and physicians leaving the state, they said. Setting price controls would shortchange health care providers while failing to address underlying reasons for rising health care costs, said Carmela Coyle, president and CEO of the California Hospital Association. She said many providers have to charge higher rates to patients insured by commercial plans because government health programs such as Medi-Cal and Medicare don’t pay enough.

“The bill amounts to huge cuts for doctors, hospitals, dentists and others, and lost access to care for everyone,” she said, calling the bill a “recipe for disaster.”

Lawmakers peppered both proponents and the opposition with questions about the legislation’s potential impacts. Many assembly members expressed reservations about the bill, but agreed on the need for action to tackle rising health care costs.

“I see this bill as a conversation that needs to happen,” said Monique Limon, D-Santa Barbara, who voted in favor of the bill. “I have great concerns about the bill …but I understand that there’s reason to have this conversation.”

Following Tuesday’s vote, advocates vowed to keep pushing for the bill to move forward.

“We’re pleased that California is taking steps toward dealing with inflated health care prices in our monopolized health care market,” said Anthony Wright, executive director of Health Access California, one of dozens of organizations supporting the bill. “There’s obviously more work to do to refine the policy proposal, but what we know is the problem is urgent.”

Meanwhile opponents, including the California Medical Association, California Hospital Association and California Dental Association, called the bill’s advance a dangerous step toward harmful government intrusion into the health care market. The bill would lead to disruption in care for millions of Californians and provider shortages, the organizations said.

“Today is a dangerous step backward for patient access to health care in California,” California Medical Association President Theodore Mazer said in a statement. “This poorly-conceived legislation would do nothing to reduce health care costs; instead it would destabilize California’s health care system, resulting in less access to care and services and more costs shifted to patients.”

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