California: Office of Health Care Affordability hopes to accomplish the near-impossible: Reducing the rate of healthcare cost growth

via Jefferson Public Radio:

For years, consumer advocates and some legislators have been battling to rein in escalating health care costs. Now the state has created a new agency to limit future growth in health care costs — and it will have the power to enforce that mandate.

...In California and nationally, the most cited reason for people being uninsured or underinsured is cost. Even those with robust insurance sometimes struggle to afford hospital bills and their medication. Some take extreme measures, such as rationing their dosages or traveling south of the border for more affordable care. Half of Californians skipped or postponed medical care in 2021 because of costs, according to a California Health Care Foundation report.

...The recently approved state budget includes $30 million to create the office, whose key responsibility will be to set and enforce limits on cost growth for the industry, including hospitals, health insurers and physician groups.

...The office isn’t necessarily aiming to reduce costs, but rather to slow the rate of growth of those costs. “Which may not feel that great to consumers who already feel like they’re paying too much, but we have got to get the costs under control, and we think this will absolutely have a meaningful impact,” Landsberg said.

The key to the new agency appears to be this:

An eight-member appointed advisory board will set limits on cost growth for different sectors and regions. Any entity that exceeds limits and shows no improvement may face financial penalties.

This isn't a new idea; eight other states have similar agencies with varying levels of success:

This issue brief documents efforts in eight states — Connecticut, Delaware, Massachusetts, Nevada, New Jersey, Oregon, Rhode Island, and Washington — that have established new independent commissions or increased the authority of an existing regulatory body to monitor and limit unnecessary growth in health spending.

Anyway, stay tuned...the problem, of course, is that a) it'll take years to tell whether the new agency is having any significant impact, and b) even if it proves effective, it's difficult to explain to the average person that healthcare costs increasing by, say, 5% per year is a good thing because it would have gone up 10% or whatever without such an agency in place.