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California hospitals filed a lawsuit against a state health regulator Wednesday, seeking to block rules meant to keep consumer health care costs from growing too quickly.<\/p>\n
The state Office of Health Care Affordability sets limits on health care spending, capping the amount that a hospital\u2019s spending can grow each year. The California Hospital Association argues that the rules are illegal and will result in layoffs and cuts in services, ultimately reducing access to care.<\/p>\n
In a complaint filed in San Francisco County Superior Court<\/a>, the hospital association argues that setting spending limits creates \u201carbitrary and irresponsible cost targets that single out hospitals.\u201d The suit also contends that the rules \u201cwill severely disrupt \u2026 hospitals\u2019 ability to provide comprehensive, high-quality services by starving them of the resources they need to perform their critical roles.\u201d<\/p>\n A spokesman for the California Health and Human Services Agency, which oversees the affordability office, said the agency does not comment on pending litigation.<\/p>\n In 2022, state lawmakers created the affordability office <\/a>with the goal of containing skyrocketing health care costs. More than half of Californians have reported skipping medical care because it costs too much, and 38% report carrying medical debt<\/a>. In California, health care spending reached $405 billion in 2020<\/a> \u2014 or $10,299 per person \u2014 a 30% increase over five years.<\/p>\n The office\u2019s appointed board, noting that median household income in California grows an average of 3% annually, set spending targets for hospitals and other providers that aim to match the rise in consumer income. The rules limit spending growth to 3.5% beginning in 2025, and then lower the cap to 3% annually, starting in four years.<\/p>\n Eight other states<\/a> have targets similar to California\u2019s rules. In California, hospitals and providers are required to submit spending data to the state to show compliance. Beginning in 2028, the state can enforce spending targets with performance improvement plans and fines.<\/p>\n The affordability board\u2019s approval of the growth caps was contentious, with one board member <\/a>saying the target was unrealistic.<\/p>\n Office\u2019s regulators have since also reduced the limits further for seven hospitals<\/a>, calling them \u201chigh-cost\u201d for consumers. For these facilities, including Stanford Health Care in Palo Alto and Community Hospital of the Monterey Peninsula, regulators set spending growth targets of 1.8% in 2026 and 1.6% in four years.<\/p>\n \u201cThe spending caps set by politically appointed bureaucrats could force cuts that result in many Californians traveling farther for care, facing longer emergency room wait times, experiencing more overcrowding, and losing access to critical services like maternity care, cancer treatment, behavioral health services, and surgical care,\u201d California Hospital Association president and CEO Carmela Coyle said in a statement.<\/p>\n In its suit, the association estimates that the state\u2019s spending target will force 75% of its members to operate at a loss. The policy, the group argues, ignores the rising cost pressures on hospitals, including labor, pharmaceutical prices and a rapidly aging population. In addition, hospitals estimate that a federal spending law<\/a> will result in billions in losses<\/a> over the next 10 years, as federal funding and reimbursement for patient care is cut or reduced.<\/p>\n The statewide target also applies to large doctor groups and health insurers. The California Association of Health Plans, which represents insurers, responded to the hospital association\u2019s lawsuit by saying the state cannot reach its goal of making health care more affordable \u201cunless everyone is part of the solution.\u201d The lawsuit, according to the group, \u201cdemonstrates [hospitals\u2019] lack of commitment to the affordability that Californians urgently need.\u201d<\/p>\n Consumer advocates who back the industry spending targets slammed the hospital association’s lawsuit, calling it \u201coutrageous.\u201d<\/p>\n \u201cFor years, health care costs have vastly outpaced inflation and wage growth, with very little to show for it \u2014 our higher costs don\u2019t translate to better quality of care, outcomes, equity, or access,\u201d said Amanda McAllister, the executive director of the consumer group Health Access California. That\u2019s why, she said, the state \u201cvery thoughtfully\u201d created an affordability office and set rules to control the problem.<\/p>\n \u201cThis lawsuit is a blatant attempt to try to change the rules of the game after the fact because you don\u2019t like the outcome,\u201d she said.<\/p>\n Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.<\/p>\n This article was originally published on CalMatters<\/a> and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives<\/a> license.<\/p>\n","protected":false},"excerpt":{"rendered":"Keep up with LAist. If you’re enjoying this article, you’ll love our daily newsletter, The LA Report. 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