CA Legislature Creating an ‘Office of Healthcare Affordability:’ What Could Go Wrong?

The California Legislature has a proposal to create an Office of Healthcare Affordability. Sounding Orwellian, while a new agency focused on making healthcare more affordable may be just what the doctor ordered, this proposal creates a massive new bureaucracy and policing agency to penalize healthcare providers for not hitting “cost targets.”

Wasn’t Covered California, the state’s Obamacare program, supposed to make healthcare more affordable?

“This new Office will be charged with increasing price and quality transparency, developing specific strategies and cost targets for the different sectors of the health care industry, and financial consequences for entities that fail to meet these targets,” California’s HealthAccess.com reports.

We might have more success with a Ministry of Truth.

The creation of this new agency is not being proposed in a piece of legislation, which would have committee hearings and receive public input; this proposed new agency is buried in a budget trailer bill.

Trailer bills usually have everything and the kitchen sink thrown in that lawmakers know they can’t get passed during a legislative session.

1. the creation of this office has nothing to do with COVID response (more distraction from the administration);
2. the timing of this after a once in a lifetime pandemic that just radically altered the health care system seems alarming; and
3. will likely lead to a rationing of care as hospital/health care system bottom lines are ignored to impose social dictates.

The budget proposal is HERE. Draft trailer bill language is expected to be available from the Department Of Finance next week.

Just the expanding budget for the agency should make all lawmakers call “time out.”

In the Budget Request Summary, The Office of Statewide Health Planning and Development (OSHPD) requests:

• 58 positions and $11.2 million in 2021-22,
• 106 positions and $24.5 million in 2022-23, 123 positions and
• $27.3 million in 2023-24, and annually thereafter from the California Health Data and Planning Fund to establish the Health Care Affordability Program.
• OSHPD also requests corresponding statutory changes and provisional language.

So, within the third year of this new agency, the budget will jump from $11.2 million to $27.3 million. If you believe that is the real budget estimate, I have a bridge I’d like to sell you.

A few items of note:

1. The trailer bill language is NOT available for the Legislature or the public despite a Department Of Finance tradition of providing all draft language by February 1^st;
2. This item was heard by the Senate last Friday. California State Senator Dr. Richard Pan actually had good critical questions. Providers, especially hospitals, have very strong concerns. All of the supporters were unions and social health groups.
3. The Assembly has yet to hear this proposed bill;
4. Assemblyman Dr. Jim Wood is planning on introducing a policy bill version of this. However, the policy process is preferred, as this issue is too complex for hidden budget trailer bill process.

Here is the detail we do have available from the Senate Committee on Budget and Fiscal Review:

The Office of Statewide Health Planning and Development requests 58 new positions and expenditure authority from the California Health Data and Planning Fund of $11.2 million in 2021-22, 106 positions and $24.5 million in 2022-23, 123 positions and $27.3 million in 2023-24, and 123 positions and $27.3 million annually thereafter. If approved, these positions and resources would allow OSHPD to establish an Office of Health Care Affordability to increase health care price and quality transparency, develop strategies and cost targets for different sectors of the health care industry, impose financial consequences for entities that fail to meet these targets, and promote health care workforce stability and training needs. OSHPD is also proposing trailer bill language to establish the Office.

And a little recent history of the proposal:

The Governor, in his 2020 January budget, proposed the establishment of an Office of Health Care Affordability to increase price and quality transparency, develop specific strategies and cost targets for different sectors of the health care industry, and financial consequences for entities that fail to meet these targets. The proposal included expansion and recasting of existing health care cost data efforts as the Health Care Payments Data Program at OSHPD, and expected this program to become an integrated part of the data collection efforts to support the efforts of the new Office of Health Care Affordability. Due to the pandemic, the Administration withdrew its proposal to implement the Office of Health Care Affordability, but continued with its proposal to move forward to the next stage of development of the Health Care Payments Data Program.

“As Californians face an affordability crisis on many fronts, a new, bold effort has been proposed to address the rising cost of care that is taking a bigger and bigger bit out of workers’ wages and family finances,” California’s HealthAccess.com reports. “In January California Governor Gavin Newsom released a proposed 2020-2021 state budget which included a far-reaching proposal to create a new Office of Health Care Affordability.”

Probably most concerning with the proposal is the “Investigations and Enforcement Branch.” Hiring a bunch of lawyers and investigators is anathema to the proposal that this agency will lower the cost of health care. This Investigations and Enforcement Branch sounds more like a policing agency within a healthcare system:

“This branch would manage legal staff to advise the Office on legal matters, and carry out the Office’s investigation and enforcement responsibilities including interpreting laws, rules and regulations, representing the Office in administrative proceedings and litigation, and managing outside counsel. This branch would also establish the regulatory program for enforcement of cost targets and cost and market impact reviews including development of regulations, guidance, and bulletins, as well as the assignment of cost target violations, notices of proposed material changes, and corrective action plans. These responsibilities would also include financial and market impact reviews. The Investigations and Enforcement Branch would be led by a Deputy Chief Counsel that would report directly to OSHPD’s Chief Counsel in its Legal Office.”

Equally concerning is the Information Technology Services Division, since we can see in real time just how horribly the state manages any Information Technology – the DMV and EDD come to mind.  And even worse is that this division would provide support for the IT infrastructure used to collect data from health care entities  – your private health care data being managed by the state.

Office of Health Care Affordability Coalition FACT SHEET: It’s Time for California to Stop Unchecked Growth in Health Care Costs

This is the alliance on the Office of Health Care Affordability Coalition FACT SHEET: