Assembly Budget Subcommittee No. 1 on Health
- Akilah Weber
Legislator
It is now 2:30. We will call the Assembly Budget Sub One Committee to hearing. Hearing to order. Would you like to call roll?
- Committee Secretary
Person
[Roll Call].
- Akilah Weber
Legislator
All right. Well, first of all, thank everyone for coming either in person or watching us on the TV. This is part two, continuation of one of the hearings that we had back on March 11 which dealt with hospital financing. Today we will focus on the impact of healthcare pricing on consumers. We have an amazing panel. Our informational hearing on healthcare pricing will explore the challenges the healthcare system experiences from the perspective of consumers and workers in the industry.
- Akilah Weber
Legislator
I am going to invite up the first four members of our panel, starting with Laurel Lucia from UC Berkeley Labor Center, Beth Capell from Health Access, Ian Lewis from Unite Here, and Matt Lege from Service Employees International Union. And we will start with Laurel.
- Laurel Lucia
Person
Good afternoon. Thank you for the opportunity to be part of this hearing today. I'm Laurel Lucia, the Director of the Health Care program at the UC Berkeley Labor Center, which conducts research on the most pressing economic challenges affecting working families in California, including healthcare affordability. In January, my colleague Miranda Dietz and I published a report looking at the historical trends for affordability of job based coverage for Californians over the last 20 years, and I'm going to share some highlights from that report today.
- Laurel Lucia
Person
Some of the data I'll mention is in the slide deck that'll be shown up here, and it's also on the Committee website for the audience members. California worker premiums and deductibles have grown more than twice as fast as median wages have grown over the last two decades. The total annual premium for a job based family health plan grew from approximately $8,400 in 2002 to more than $22,200 in 2022. That's faster growth than we've seen in wages and household income.
- Laurel Lucia
Person
Deductibles have become increasingly common among private sector workers in California who have job based coverage. 20 years ago, approximately three out of 10 California workers had a deductible. By 2022, it was eight out of 10 workers. When you combine these trends, it becomes clear that healthcare is taking up an increasing share of household budgets, growing from around 4% of income for the typical California worker with job based coverage in 2002% to 12% of income in 2022 for a family that spends their full deductible.
- Laurel Lucia
Person
This erosion of healthcare affordability has negative consequences for access to care, financial security and equity. A recent survey from the California Health Care Foundation found that just over half of California adults say that they or a family member have skipped or delayed care in the past 12 months due to cost. Of those who delayed care, nearly half said that it made their condition worse.
- Laurel Lucia
Person
In terms of financial security, more than one in three Californians reported having some type of medical debt in 2023, and more than one in four reported having trouble paying for medical bills. Healthcare affordability is an equity issue. The survey data shows that delays in care and financial problems related to healthcare costs are more common among black and Latino Californians, and also among those with low income.
- Laurel Lucia
Person
When thinking about hospital prices, it's important to remember that Californians pay for nearly all of the health care costs in our state in direct and indirect ways. Approximately 43% of California health expenditures are paid for directly by households and employers, and most of the remainder is paid by the federal and state government, but that is ultimately funded by taxpayers.
- Laurel Lucia
Person
Typically, when we think about spending on healthcare, we might think about the portion of premium that comes out of a worker's paycheck or the co-payment at the doctor's office or a pharmacy. But the large portion of the healthcare premium that employers pay is also ultimately coming out of workers pockets. Under economic theory, employer contributions to health insurance premiums are one of multiple parts of workers total compensation, and employers offer the combination of wages and benefits that will best help them attract and retain employees.
- Laurel Lucia
Person
If employers weren't contributing to health insurance premiums, those dollars would go towards wages or other benefits. Because of this, high and rising health care costs can be an impediment to wage growth. One recent study in the Journal of the American Medical Association estimated that over a 32 year period, the average cumulative lost earnings due to growth in healthcare premiums was over $125,000 for the typical US family with job based coverage.
- Laurel Lucia
Person
And I think, you know, we can all think of our examples of how a typical California family could put that that lost earnings to good use. All US families saw the percentage of their compensation that goes towards job based coverage grow significantly over this time period. But black and Latino families dedicated a higher percentage of compensation to health coverage than white and Asian families, and that disparity worsened over time.
- Laurel Lucia
Person
So today's hearing follows a hearing on hospital financing while the trends I've described earlier for health care overall, hospital care, and particularly hospital prices, are an important contributor to those trends. Hospital care made up approximately 36% of private health insurance spending in the US in 2022, and that's roughly the same amount that we spend on physician and clinical care and retail drugs combined. These expenditures are the product of how much hospital care we use and hospital prices.
- Laurel Lucia
Person
Over the last decade, prices have been a bigger driver of hospital spending than utilization. With a couple of years of pandemic related exceptions. There's tremendous variation in commercial hospital prices that can't be fully explained by quality differences or variation in input costs like wages. And one factor that researchers have found is associated with high hospital prices is how consolidated the healthcare market is, meaning that hospitals in regions with limited competition tend to have higher prices.
- Laurel Lucia
Person
So the market is failing to rein in both rapid growth in prices and also variation in hospital prices. But California is taking steps to address affordability problems with the newly formed Office of Health Care Affordability, or OHCA. The office is charged with slowing spending growth while also promoting high value healthcare. By June 1 of this year, the board will be voting on how much it wants to bend the spending curve.
- Laurel Lucia
Person
The staff have recommended setting a target such that healthcare spending in the state grows no faster than median household income has grown historically, which would aim to ensure that the challenges I've described don't get worse. The trends in the data that I've talked about in my presentation really further reinforce the stories that many workers and consumers have shared at OHCA Board Meetings about how much they are struggling to afford healthcare. I appreciate the opportunity I've had to share this research and data with you today. Thank you.
- Akilah Weber
Legislator
Thank you. And before you begin, can you-- there was something I didn't catch, the last statistic that you said that was specific to black and Latino families. Can you state that again? It was the very last one.
- Laurel Lucia
Person
I think the last one was-- This was with regard to the national study in the Journal of the American Medical Association that estimated, you know, how much workers have spent on job based coverage over the last 30 years. And 30--, you know, for all workers over the last 30 years, the share of their total compensation that is spent on job based coverage, average premiums has grown significantly. But black and Latino families spend a higher percentage of their compensation on health insurance premiums.
- Laurel Lucia
Person
And the gap between the percentage of income spent by black and Latino families and white and Asian families has grown over time. So there's a greater disparity now.
- Akilah Weber
Legislator
Thank you.
- Beth Capell
Person
For Health Access California. First to say how much we appreciate the opportunity that this hearing represents to provide the consumer perspective on health care costs. I think, Madam Chair, you know from your work on Health Committee that Health Access is the statewide healthcare consumer advocacy coalition committed to quality, affordable health care for all Californians, and that we have worked for many decades in order to assure that Californians get the healthcare they need at a price they can afford.
- Beth Capell
Person
We want to put the question of healthcare costs and prices in a consumer context. As Ms. Lucia just said, consumers pay the costs of healthcare. We pay as taxpayers for Medicare and Medi-Cal and Covered California. We pay as employees in lost wages, $125,000. And I think you'll hear some examples of even higher lost wages. And as consumers, we pay for deductibles, co-pays and co-insurance. Ms. Lucia pointed to the cost of the share of premium and deductible.
- Beth Capell
Person
In California, it now exceeds $10,000, almost $10,500 in a state where the median income is 85 or 86 thousand dollars. You know your own constituents, spending one out of eight dollars on healthcare costs is hard. It's part of the reason Californians struggle to afford decent housing and food and the other needs of life. We are already seeing people denied access to care, denied quality care and equity worsen because of high health care costs. Today, consumers lack access to care because of affordability.
- Beth Capell
Person
They can't afford to see a doctor like yourself because they can't afford the deductible or the co-pay or the co-insurance. We know this. Half of consumers tell us they cannot afford to see the doctor. They skip doctor visits. They don't take their prescriptions. They don't get the labs and the tests. They know they should because they can't afford it because of costs. And half, as Ms. Lucia just said, half of those consumers get worse as a result, and they know it.
- Beth Capell
Person
Quality and most of the quality measures that we use depend on access to care. Whether it's managing asthma or diabetes or hypertension or prenatal care or childhood immunizations. Those all depend on going to the doctor, taking your medications and getting the tests you need. If you can't afford to do that, quality is worse. You're going to hear more. You just heard a little bit from Ms. Lucia about the impact on equity. You'll hear more from CPEHN.
- Beth Capell
Person
Part of what drives us at health access is the recognition that people who make in the bottom 60 or 70% of the income scale and communities of color are hit hardest by the lack of affordability today in our healthcare system. The Office of Health Care Affordability is premised on a California version of the triple lane that we will be able to achieve lower costs through and better outcomes and improved equity through delivering care in a better way. That's what the hope is.
- Beth Capell
Person
That's why the Office of Health Care Affordability includes not only a spending target, but alternative payment methods, emphasis on primary care, emphasis on behavioral health. We want people to be healthier and we want the money that we spend on healthcare to be spent in an effective and efficient way so that people get the care they need, but we're not just spending a lot of money for not much benefit.
- Beth Capell
Person
And I think I'll leave it there and leave it to my colleagues, of whom you have a number before you today.
- Ian Lewis
Person
Thank you. Madam Chair, I'm Ian Lewis. I'm a member and staff person with Unite Here. We're a union of 50,000 in California, 50,000 hotel, restaurants and gaming employees. And I've, over the 25 years I've been with our union, I've spent a huge amount of time on healthcare. The points that Laurel and Beth spoke to underline why it is that a hospitality workers union might have opinions and much to say about health costs.
- Ian Lewis
Person
For every union and for every private sector employer, for that matter, collective bargaining boils down to one number, and that's how much are labor costs going up next year? In our industry, that is very explicit. We commonly bargain with employers a fixed amount by which labor costs will go up. Let's call it a dollar an hour, for sake of discussion. To employers, it doesn't matter where that dollar goes, whether it goes to wages or retirement security, improved staffing levels, or health benefits. For them, it's a matter of certainty about labor costs.
- Ian Lewis
Person
For our union's members, healthcare year after year is the overwhelming priority. It is the most important thing and the biggest source of insecurity. Over the last 20 years, health premiums have gone up at two to three times the rate of inflation. And so $0.47 out of every dollar for our union has had to go into paying for the increased premiums. And every penny of that 47 cents per dollar is money that did not go into wages, is money that did not go into retirement security.
- Ian Lewis
Person
As a result, the typical union dishwasher, cook, housekeeper in this state over that 20 year period would have been over $150,000, would have had $150,000 more in their pockets or in their retirement accounts than they do today. In San Francisco, that number is well over $200,000. In San Francisco, the average room cleaner dishwasher, whom have you, would be paid $11.66 more per hour today than they would if health care costs hadn't gone up at two to three times the rate of inflation.
- Ian Lewis
Person
That would have more than paid for the increased cost of rent that has driven so many to move further and further away from home. Our union sponsors health funds that pay for care, either pay providers directly or more commonly, through health plans, just to give you a sense of where some of the cost drivers are, in Monterey County, our fund pays as much as 521% of what Medicare pays for hospital stay. That's not bill charges, that's the commercially contracted, allowable amount.
- Ian Lewis
Person
That's five times what the Federal Government thinks is a reasonable rate based on their analysis of hospital costs. Prescription drugs are another area, especially in hospitals, where costs are hidden. By way of example, an important chemotherapy for colorectal cancer, which went off patent about a dozen years ago. Over that time period, the price to hospitals went down 99%. Today, Medicare pays $185 for a course of treatment.
- Ian Lewis
Person
Yet as recently as last year, one hospital in Salinas was is charging nearly $90,000 for that same course of treatment in the commercial market. Contracting with health plans has not solved the problem either. Through a data warehouse that our union and others have built that has over $7 billion worth of experience, particularly with Kaiser, we found that within Kaiser, for instance, over the last four years, that integrated care system has managed to keep costs, the actual spending, down below 3%.
- Ian Lewis
Person
This is by their calculation of costs. And yet, for many of our funds, just this year, rates are going up as much as 25%. In just one year, the premiums are going 25%. We've done everything we know how to do on our end. We've built healthy living programs, sponsored promotora trainings among coworkers. We've disincentivized unnecessary ER care. We've incentivized the moving of care to appropriate sites of service. But at the end of the day, there's only so much you can do by managing utilization.
- Ian Lewis
Person
Healthcare costs are a multiplication problem. It's utilization times price. And price is the problem in California. It's a problem of crisis proportions. We cannot keep taking $0.47 out of every dollar that we get, often through big fights with employers and turn around and hand it off to other healthcare corporations. Something has to give. And that's why I was honored and agreed to be the speaker's appointee to the Office of Health Care Affordability.
- Ian Lewis
Person
I'm so glad you're focusing on this question today and in the months and years to come, I really do believe there's no more critical problem facing our state. Thank you.
- Matt Lege
Person
Thank you. Matt Lege here on behalf of SEIU California and our 700,000 members, many of them healthcare workers, many of them not healthcare workers, who share many of the same issues that my panelists just mentioned and appreciate his steadfast leadership on the Office of Health Care Affordability Board. It's a major concern in bargaining.
- Matt Lege
Person
It's often leading to longer worker actions, longer strikes, and even at times because it matters so much for workers, it has allowed employers to utilize as a tool to threaten to cancel health insurance, which really speaks to the need to invest in the Striking Worker Fund and Covered California that I know this can be looked at this year and really just want to underscore why that's important, because that is a critical tool that we're bargaining over that could be sort of taken away and utilized.
- Matt Lege
Person
One of the major drivers that we see that's driving healthcare costs, candidly, is greed. And for example, you know, we see the expansion of for profit companies and private equity companies in various parts of the healthcare industry, driving consolidation, eliminating competition and choice, suppressing wages for the workforce and resulting in significant profits over time. This has been studied both in California and at national levels and is something that is definitely a flag as we're looking at how to control costs.
- Matt Lege
Person
One example is the dialysis industry, where two large for profit entities are driving up healthcare costs that's pretty well documented and really force workers to choose between the high cost of care or higher premiums or forgoing care. And many of them, unfortunately, are forgoing care, leading to higher costs in the long term.
- Matt Lege
Person
We've also seen, and this is recently documented, executive compensation in the healthcare space being a problem with one recent article on the CEO Valley Children's Hospital in Fresno receiving total compensation of close to $5.5 million in 2022. This is for a hospital where 90% of their revenue comes or more comes from the Medi-Cal program. So something where our public dollars are going to really support, you know, extensive compensation for executives, while at the same time we see the healthcare workforce and we see a crisis.
- Matt Lege
Person
We see before the pandemic, a shortage of more than 500,000 workers to meet our growing care needs, particularly as our population gets older and more and more go on to Medicare, which means more and more are going to have higher utilization, which means California Federal Government as a whole is going to have to deal with this. We know that without a sufficient workforce, we're going to see longer delays, harder to get in and see someone.
- Matt Lege
Person
We'll see higher rates of infections and bed sores when you are in the hospital, and unfortunately, poorly coordinated care if we continue to have turnover. We must have sustained investment in our healthcare workforce to meet this need, both in the short and the long term, and also must make sure that this workforce meets our cultural and linguistically needs of our population as we continue to diversify as a state, investing in the workforce goes hand in hand with meeting our state's cost containment goals because better staffing, retention and training healthcare workforce will improve patient care and outcomes.
- Matt Lege
Person
Unfortunately, you know, for the State of the measurement and monitoring of the healthcare workforce and workforce stability, which is one of the issues currently under discussion with the Office of Health Care Affordability is really dependent on our ability to get data. And often the data sources we're using currently have a lag of a year or more, which means it's hard to react in real time with what we need.
- Matt Lege
Person
And unfortunately, there's not a magic wand to magically create more healthcare workers that are experienced and be able to do deliver the care, as both of you know. So, you know, for that, we really want to push and see the need for site level data so that we can see what each region, each individual site needs as a state and continue to work on that investment.
- Matt Lege
Person
We also think that that needs to be put together as a whole so we can look at a macro level, make sure everyone taking the appropriate clinical placements sites, investing in those training programs, because it is going to need an entire industry effort to meet our workforce goals. So just in summary, I'll close quickly. Healthcare costs are really hurting workers at the bargaining table.
- Matt Lege
Person
We see the greed within the industry, and sometimes it's not even healthcare providers, but it's people from outside that see that this is an industry where you can make quite a bit of money driving up costs. And additionally, just that having a strong healthcare workforce does require this investment and continued commitment by the industry to make sure that we're meeting our overall long term care goals for both quality of care and cost. Thank you for your time and attention on this issue.
- Akilah Weber
Legislator
Thank you so much to our first panel. I am going to switch it over to the second, but I am going to ask Laurel to stay. So we'll now have Sara Flocks from the California Labor Federation, Carmen Comsti from California Nurses Association, Kiran Savage-Sangwan from California Pan-Ethnic Health Network.
- Sara Flocks
Person
Thank you, Madam Chair, Assemblymember. Thank you so much for the invitation. I almost don't have much to say. This is an excellent, excellent panel and people that I have worked with and learned from for many years now. But I do want to drill down on some of the points that were made on affordability.
- Sara Flocks
Person
We have said for a long time at the Labor Federation that every dollar that goes into the healthcare industry is a dollar that comes out of a worker's pocket, a consumer's pocket, or a taxpayer's pocket. What I think we know now, and what Ian illustrated is that that's not just a dollar, that's $11.66 in their industry. Now take that and multiply it by the 2.2 million union workers that the Labor Federation represents.
- Sara Flocks
Person
And in certain areas of the state and in certain workforces, that number is much higher. Unions are going to the table and being asked to give up 15, 16, 17 dollars an hour so that they can have health care that their members can afford. Because that's the big question. That's the big issue, that you can reduce the amount that's paid in a premium, but then you're going to have a $10,000 deductible that a lot of our members cannot afford.
- Sara Flocks
Person
And we want them to get the care that they need. And so this huge amount of money that is basically being siphoned away from working people and the state budget into the healthcare industry is exacerbating the affordability crisis in the state. This is not just a healthcare issue. It's not just a public health issue. It's an economic crisis. It is contributing to the inequities and income inequality in the state.
- Sara Flocks
Person
And for that reason, it's an issue that the Labor Federation has tried to tackle for many, many decades now and will continue in the future. And we've done that in several ways. One is through policy, but also internally, which Ian also talked about. Our trust funds are very sophisticated purchasers.
- Sara Flocks
Person
And they, many of them that are self insured, are able to look at what they are being charged, and they are able to try their best through any resource or tool they have, to try to reduce the cost, to try to figure out high value networks, to try to make sure people get high quality care that's not as expensive as perhaps the hospital next to them. And they've looked into everything. We've tried to follow the dollar.
- Sara Flocks
Person
And let me tell you, following the healthcare dollar is very complicated because there's health insurer, health plans, insurers, there's hospitals, PBMs, there's pharma, dialysis clinics, there's money floating in and out, and it is very hard to track. But fundamentally, what we've realized, the problem is the price. And I'm just going to say that again, I'm going to quote Ian, it is the price we are being charged too much in. And we have reached the limit of what we can do.
- Sara Flocks
Person
Internally benefit design is not getting us the results that we need. And so we are very excited about the Office of Health Care Affordability because it's the first time that we have an eye in the sky, we are able to look at the whole industry and try to set reasonable targets. And we really hope that we also, and the OHCA board, will be able to drill down.
- Sara Flocks
Person
So we'll start to look at some of those hospitals that are charging 500, 400, 600 percent of Medicare and try to figure out why they're charging so much more than what the federal Medicare program thinks they should be getting in commercial payments. And hopefully, when we identify that that money can be put back into the workforce and into making sure that we have a fully trained, well paid, stable healthcare workforce that is in medically underserved areas, that reflects the diversity of our state and is able to stay in the profession.
- Sara Flocks
Person
And so we really think of, with OHCA, that hopefully this will be a redistribution of some of the money in the healthcare industry back to workers in wages and back into the industry, so that the healthcare workforce has the stability and the wages they need to serve the public. So we thank you for this hearing and look forward to working with you in the future.
- Carmen Comsti
Person
Hi, good afternoon, Chair Weber, Assemblymember Bonta. I'm Carmen Comsti, lead regulatory policy specialist with the California Nurses Association, as you know, the largest union of registered nurses in California, representing over 100,000 nurses across the state. You know, I kind of want to step back a little here, which is to say today, you know, we have a market based system of healthcare, and I think we need to realize that.
- Carmen Comsti
Person
And what is driving healthcare right now is a profit driven insurance system and profit driven healthcare corporations, healthcare employers that thrive at the expense of patients and healthcare workers. With healthcare employers fixated on short term profits and reducing costs, what we get is that healthcare employers union bust. They depress wages, they understaff to cut costs. Employers squeeze healthcare workers to provide more care with less, which harms our nurses' ability to provide safe and high quality patient care.
- Carmen Comsti
Person
So there's a connection between the mechanism of cutting costs and raising prices and healthcare quality. When revenue is tight, what we see on the chopping block are safety net hospitals and rural hospitals, because they're not money makers. High cost, low return services like maternity care, behavioral health care, primary care, those are also pegged for closure. We've seen today there's a healthcare system, a for profit healthcare system, who's closing trauma centers in major metropolitan areas in the state.
- Carmen Comsti
Person
You know, and to even further focus on short term cost cutting, hospitals implement, you know, they avoid implementing things like seismic upgrades to their hospitals at the expense of healthcare workers and patients in the long run, employers focus on just in time staffing and just in time supplies. Again, short term cost cutting at the expense of long term investment and prevention.
- Carmen Comsti
Person
Now, employer indifference and disregard for healthcare worker health and safety has, and we know, has resulted in high levels of moral distress for nurses and other healthcare workers and high rates of workplace injury and illness. As a result, this leads many nurses and other healthcare workers to leave bedside care or the profession altogether. This harms our healthcare workforce. These lean staffing models and supply models, they ultimately contribute to the rising costs of healthcare.
- Carmen Comsti
Person
In 2023, it costs hospitals on average nationwide over $56,000 for each staph RN turnover. And the average hospital nationwide in one year alone lost over $4.8 million in nurse turnover alone. So this is just nurses. Just imagine all the other healthcare workers that we're talking about here, too. But to be clear, there's no shortage of registered nurses in California and the United States. There's a shortage of good nursing jobs.
- Carmen Comsti
Person
There are over half a million registered nurses who are actively licensed in California, but only about two thirds working actively as nurses. Healthcare employers must instead invest in the recruitment and retention of healthcare workers and nurses and provide good union jobs with fair wages, safe staffing and safe working conditions. And instead of shifting the cost onto workers and patients, we must fundamentally restructure our healthcare system. This is why healthcare nurses, union nurses of CNA, have been fighting for decades for universal, guaranteed healthcare for all through a single payer system.
- Carmen Comsti
Person
Healthcare corporations waste tens of billions of dollars each year on profit margins and insurance middlemen, the nickel and dime patients and workers. Meanwhile, patients forego the basic healthcare needs because they can't afford it. For nurses, this is unconscionable. To address the rising prices of healthcare, we want to move to a system that treats patients with dignity and provides the care that they need.
- Carmen Comsti
Person
Our healthcare system is fundamentally broken, and under a single payer system, we know that we can use our collective buying power to reduce prices across the board for everyone. And by guaranteeing healthcare for all, we're taking healthcare off the bargaining table for healthcare workers so that we can bargain for higher wages, better working conditions and better compensation overall so we can retain them in our healthcare system.
- Carmen Comsti
Person
Now confirming studies over the decades, the Healthy California for All Commission found that it costs California hospitals, doctors and other providers about 85 billion with a B each year in insurance-related administrative costs. And the Commission found that a direct payments or single payer model with no cost sharing and long term care for all would save between $32 billion with a B, up to $213 billion over 10 years if we implemented a single payer system compared to our current system.
- Carmen Comsti
Person
By eliminating this fragmentation in our current healthcare system, California would save billions that could be instead invested into our healthcare infrastructure, to our hospitals, to good jobs, to safe staffing, to optimal resourcing, so that we can actually have a healthcare system that can provide care to everyone. And so, you know, we look forward to working with you all on these really important issues. Thanks.
- Kiran Savage-Sangwan
Person
Great. Thank you so much. Good afternoon and thank you so much for holding this hearing. I'm here on behalf of the California Pan-Ethnic Health Network, or CPEHN. We are a statewide multicultural health advocacy organization and we work with a large network of community based organizations and community leaders, all of whom are deeply embedded in communities of color across the state.
- Kiran Savage-Sangwan
Person
Our goal is to eliminate racial health disparities in California, and the current and ever rising cost of health care is a significant barrier to reaching this goal. Approximately 40% of black, Latino and multiracial Californians or their family members have had difficulty paying medical bills in the last 12 months. As a result, half of all black and Latino Californians currently have medical debt, the most common source of which is hospital care.
- Kiran Savage-Sangwan
Person
Others have spoken about the number of consumers who skipped needed medical care because of concerns with cost or affordability. I want to note that the impacts of healthcare costs, particularly the accumulation of medical debt, go beyond that. A 2016 study cited by the Consumer Financial Protection Bureau found that larger debt loads are correlated with a higher risk of dying earlier. People with debt have triple the incidence of mental health conditions such as anxiety, stress, or depression.
- Kiran Savage-Sangwan
Person
And a 2021 study published in the Journal of Clinical Psychiatry found that debt burden is strongly associated with an increased likelihood of suicide attempts. Quite literally, unaffordable healthcare costs make us sicker, and this is particularly true for people of color. High health care costs also have impacts on the ability of consumers to afford other essentials, particularly housing, in the State of California.
- Kiran Savage-Sangwan
Person
Multiple studies have found high health care costs and debt impact the ability of consumers to pay for food and housing, two critical components of health. Health care costs contribute to California's homelessness crisis, both causing and prolonging homelessness, which again, is disproportionately experienced by black and Latino Californians. Health care costs push people out of housing and onto the street. And in fact, on my way here today, I passed a woman. She was on the street. She was asking for change.
- Kiran Savage-Sangwan
Person
And she wasn't asking for money for food or for housing. She was asking for money for a life-saving medical procedure for a family member. Finally, and perhaps most importantly, all this healthcare spending does not lead to good health outcomes outcomes.
- Kiran Savage-Sangwan
Person
While sufficient funding is, of course a prerequisite, including for our Medi-Cal program, the United States spends far more on health care than other high income countries, but according to the Commonwealth Foundation, ranks last, absolutely last, in critical domains, including access to care, administrative efficiency, equity, and health outcomes. More spending doesn't lead to better care.
- Kiran Savage-Sangwan
Person
CPEHN supports the Office of Healthcare Affordability not only because we believe controlling costs itself is critical to advancing health and racial equity, but more importantly because we want a more effective and more equitable healthcare system. The Office of Health Care Affordability's mandate ensures that we do not sacrifice access, quality, or equity in the process of reining in costs. It requires us to invest adequately in primary and behavioral health, which has been shown to improve health outcomes, and it ensures that the health workforce remains intact.
- Kiran Savage-Sangwan
Person
We can and must build a better healthcare delivery system in California, one which is not only for those who can pay, but for all of us. Thank you.
- Akilah Weber
Legislator
Thank you so much. I want to thank all of the panelists for your presentations today. I'm going to turn over to my colleague, Assemblymember Bonta, to see if she has any questions. And before she does, I apologize if all of the panelists who aren't sitting, if you're sitting there, stay. But if you're not, if you can come up to the first row, just in case you need to quickly swap out. I apologize I didn't mention that earlier. And I will now turn it over to Assemblymember Bonta.
- Mia Bonta
Legislator
Thank you to all of the panelists for your presentation and Dr. Weber for making sure that we have a very robust conversation about this. I am primarily interested in wanting to dive a little bit more deeper into the conversation around vertical consolidation and the impacts of vertical consolidation, and to your point, kind of the introduction of, or the removal of competition in the market and what that means for people who are struggling to meet their basic needs in healthcare.
- Mia Bonta
Legislator
So, just wanted to just have a little bit more of a discussion around the impacts of vertical consolidation and what we as a Legislature are already doing around that legislatively and whether there are any opportunities for us to be able to address that.
- Beth Capell
Person
Beth Capell, on behalf of Health Access, thank you so much for that question. There's already been a substantial amount of consolidation within healthcare in California just in the last few days, I was looking at the degree of consolidation in the commercial market. We have 33 major insurers that represent something like 75 or 80% of the healthcare market. When we look region by region, we find a handful of health systems that are in the commercial market.
- Beth Capell
Person
I think about San Diego with Scripps and sharp and UC Davis and UC, sorry, too many UCs is not enough time. UC San Diego and Kaiser, similarly, in the East Bay, functionally, in the commercial market, it's Sutter and Kaiser. And so that's a degree of consolidation. That means if you want to go to a non Kaiser hospital or doctor, you're going to Sutter, and that's a high degree of consolidation. In Monterey, which you heard about, there are three hospital systems.
- Beth Capell
Person
One of them, a standalone hospital, is part of a health system that is using its reserves to buy up physician practices. They have $1.0 billion in reserves. That's the one that's charging between 550% and 600% of what Medicare charges. They're not. And Miss Lucia has done some of the homework here. They're not paying their healthcare workers better. They're comparable to other Bay Area wages, which are good wages relatively, but they're not paying better.
- Beth Capell
Person
The other two hospitals in the area are now pricing in a similar way, what an economist might call shadow pricing off of the first one. This is a challenge that the Office of Healthcare Affordability is also equipped to identify, but not to act on. So I want to distinguish here. The Office of Healthcare Affordability has the authority to do what are called cost and market impact reviews of both transactions and also markets.
- Beth Capell
Person
And I know my friends in Monterey have already asked them to look at Monterey County for obvious reasons given what you've heard today What they can't do, what the Attorney General does and has done for 30 years with nonprofit hospitals, is to say yes, no, or yes with conditions. And let me be clear, 80 or 90% of the time, attorneys General of both parties, going back all the way to Dan Lundgren, who, yes, I knew, have said yes with conditions.
- Beth Capell
Person
And they're conditions that I think we all support, keeping the emergency room open, keeping labor and delivery, keeping cardiac care, the kinds of things consumers actually need. So that's been a very important protection. You have legislation pending before you. Sorry, I can't remember where this bill is now. On private equity. You already got. Yeah, on private equity, which you will see again on the floor, which is going to Judiciary Committee and their role in taking over parts of healthcare in California. So.
- Beth Capell
Person
And there have been other efforts to try and expand the authority of the Attorney General to have oversight and to be able to protect the public interest, which is what they do. Sorry, that was a very long question. Answered a very short question, but it touched a lot of areas of interest. I know to both of you.
- Mia Bonta
Legislator
I appreciate it. And my second question kind of hit on where you were going already with the response, which is the promise of OCA and also the limitations of OCA moving forward. You know, in our wildest dreams, if all we're able to get from OCA is an understanding with data to support that we are offering lower quality care at a higher price. It's wonderful to have that data. What in the world then do we do about that?
- Mia Bonta
Legislator
So, wanted to kind of first talk about the limitations of OCA and also the potential, even outside of the mechanism of the office of Attorney General to be able to truly address the impacts of what ultimately might be referred to as price fixing within our medical industry.
- Beth Capell
Person
Price fixing is a strong term in the world of antitrust. So you noticed I didn't quite say that layman's person. So the Office of Healthcare Affordability, as I think you both know, is going to be setting a target on spending. They will also be setting standards for primary care, behavioral health, alternative payment model, use of alternative payment models.
- Beth Capell
Person
One of the conversations that I think will come to you at some point is, do we know enough about what we should be doing in terms of primary care and behavioral health and alternative payment models, that those standards or guidelines should perhaps be a little bit more be enforceable? That we should be saying, yes, we are serious as a state in prioritizing primary care, and we want to get to a certain threshold.
- Beth Capell
Person
Yes, we are serious about access to behavioral health, and this legislature has already done a lot, but I don't think any of us think it's enough. And the same with alternative payment models. We are, and I'm going to defer to Ian, who's actually on the OCA board. The effort behind OCA is serious about the triple aim of lower costs, improved outcomes, and reduced disparities. And that's part of what you've heard from all the panelists. Yeah.
- Ian Lewis
Person
And if I may, and before I say anything, I should make clear I'm speaking on behalf of myself and not the office or any other board members, but I will borrow from a fellow board member, Dr. Kronick. Who described part of the goal of the target setting in very concise way, which is to shift the incentives in the healthcare market away from revenue maximization. It's a very ambitious goal and it's very much an experiment.
- Ian Lewis
Person
Previous legislatures have grappled with the question of whether interceding directly on pricing, in their wisdom at the time, they decided not ready to do that yet. The targets are not price targets, they're spending targets. And so the charge of the office of healthcare affordability is to set and enforce spending targets with the goal of reducing spending in such a way that the benefit of reduced spending accrues to consumers and purchasers. Very much an experiment and a very complicated challenge.
- Ian Lewis
Person
I will say the discussion at the board has been very robust. We are very mindful of our, of the challenge of accomplishing that goal without compromising in any way the workforce and so forth. And just briefly, on primary and behavioral care, there are sectors where we understand the vast gap between primary and specialist physician payments, financially or plan reimbursed behavioral healthcare and privately reimbursed health care. Those are big gaps in areas where we might need to make more investment.
- Beth Capell
Person
And I would just add that the presentation that you heard today, the research from the UC Berkeley Labor Center, has also been made to the OCA board, because part of the charge that they're taking very seriously is to track the impact on consumer affordability that has really, for the last year, dominated their conversation.
- Beth Capell
Person
So a lot of what you've heard today is what the conversation has been there and they're trying to figure out, and no other state has ever done this, what the metrics are that we track. And part of the challenge is, as you heard, it's not just one thing if you just track copays, those might come down, but deductibles would go up. What good would that do if you lowered deductibles and copays? But the share of premium went up. Real consumers call it paying twice.
- Beth Capell
Person
I paid once for my share of premium, then I paid a deductible. Now I still have to pay a copay. And what's, you know, like I pay every time I turn around. No wonder I can't afford to go to the doctor. So trying to look at all those things, but part of it goes hand in hand with lowering the rate of spending growth. And I want to be clear. The law does not allow the board to cut spending.
- Beth Capell
Person
It allows them to slow the rate of growth. Those are two very different things. Some people might have liked to see cuts but that's not what the law says. The wisdom of the legislature was that slowing the rate of growth would be quite an accomplishment if we could. So that's what the law provides.
- Carmen Comsti
Person
If I could, if I may. So I kind of wanted to add to what Ian and Beth were saying here, which is one of the questions that, and I'm on the Advisory Committee to the OCA board as well as Kiran.
- Carmen Comsti
Person
So, you know, speaking for myself and CNA, only here, you know, one of the things that has come up a lot is that there's a lot of difficulty tracking, you know, as the spending targets presumably will be providers and plans will try to meet the spending targets that, you know, that'll be placed and shifted. The costs will be shifted onto either patients through higher deductibles and copayments or premiums, or onto workers by either cuts in workers benefits, wages.
- Carmen Comsti
Person
And those things are really hard to grasp because particularly on the consumer side, it's very difficult. A lot of us have tried to say, let's collect data on what the out of pocket spend is, and it's a little bit mushy what that dollar figure is. So how are we supposed to, in the long run, track all those things? And it's going to be very difficult, is kind of where we're at right now with OCA.
- Carmen Comsti
Person
So, like, it's ambitious in terms of tracking, but how it actually gets implemented is there's an open ended question. And then on the integration and consolidation side, I think there also was a large discussion when the cost and market impact review regulations were being developed as to what next it went wet. After OCA gets the information about large transactions, what happens?
- Carmen Comsti
Person
There was some indication that OCA would provide, if there was some concern on the impact of a transaction, that that information would be given to the Attorney General. But then the Attorney General doesn't necessarily have any authority to do anything with that information. So I think there's questions about we have, if we're building this database and the analysis of markets and prices and integration on OCA, what happens to that?
- Carmen Comsti
Person
And I think we all want more to happen when the information is there and we want better information. And obviously, these would lead us to potentially having further code changes to give either the Attorney General more authority or OCA or some combination of that. So that's the larger scope of what's happening. And, yes, we should look more in vertical integration. I think one of the things we didn't talk about was how vertical integration can lead to closures, and it's private equity light.
- Carmen Comsti
Person
Just because you're not technically a private equity firm doesn't mean that they don't do the same behaviors of buying up a large swath of, of healthcare providers and then closing the lowest cost or the lowest profitable centers of the corporation.
- Mia Bonta
Legislator
Yeah, just my last question, chair. I also wanted to thank Miss Comsti for framing it around the opportunity costs, essentially, or the real life cost of what it means. $85 billion in insurance related to healthcare costs.
- Mia Bonta
Legislator
I think you said 32 billion to $213 billion of lost savings, essentially, to manage the fragmentation. I think about the individual in the frame of what we're talking about, the worker, consumer, patient who's seeking care, and the fact that essentially, we risk the quality of care and create a lot of churn for the individual by not necessarily providing the lowest cost preventative opportunity, because we are looking for things that cost more to be able to address their concerns.
- Mia Bonta
Legislator
And I think it's hard in budget, especially because we always frame things around how much we are spending, and it's very challenging for us to be able to quantify how much we could be saving and the opportunity costs associated for consumers when we take particular action on the budget side. And if I had to wave a magic wand on behalf of the State of California, that would be my hope for my wish realized for the State of California in our budgeting process.
- Mia Bonta
Legislator
And so thank the author, thank the chair for bringing forward this critical issue and trying to help me wave that one.
- Akilah Weber
Legislator
Well, I want to also thank all of the panelists once again, this is a very complicated issue here. And unfortunately, it is, you know, impacting some more than others, usually along the same racial and socioeconomic lines that we see in all spaces within our social network.
- Akilah Weber
Legislator
And when I was looking through your slides, and I wish we could have been advancing them during your presentation, but, you know, when you were talking about what happened over the last 20 years, it really kind of took me back to what has happened within the healthcare industry over the last 20 years, how many advances we have made over the last 20 years that are very expensive. 20 years ago, I was. Yeah, I was two. Exactly. I was two years old.
- Akilah Weber
Legislator
I was a brilliant genius, you know, just starting out. My residency program at OB GYN and IVF was not something that is common, common as it is today. We, especially at my county hospital, rarely did laparoscopy. We pretty much opened everybody up for surgery and definitely did not have the DA Vinci robot. That was not a thing, which is out and extremely expensive. We weren't talking about gene therapy.
- Akilah Weber
Legislator
We weren't talking about all of these things that we are talking about now, thankfully, but it's also extremely expensive. And a lot of times when people have these conversations about healthcare, they like to compare us to other countries, which I oftentimes think is a little unrealistic because the United States is a very unique country with a very different kind of foundation than what you find in other countries.
- Akilah Weber
Legislator
And when you look at those other countries, our healthcare system, you have longer waits and not necessarily the same kind of access that we have here. But one of the things that you said in your presentation that really kind of stuck out to me is that here in California, as taxpayers, we're ultimately paying like, the entire price for healthcare. What do you see in other states? Here in the United States.
- Laurel Lucia
Person
I don't have the numbers for other states, but I suspect that they're similar in terms of the share of health expenditures that are spent on by employers and households, you know, through job based coverage, through the individual market, through Medigap coverage, through deductibles and copayments, as compared to the percentage paid by taxpayers. There may be some differences because of how common job based coverage is in California versus other states.
- Laurel Lucia
Person
And also we have now a better coverage rate than a lot of other states because we've done the Medicaid expansion under the Affordable Care Act, and we've taken steps to make Medicaid more inclusive of immigrants. So the numbers might differ slightly, but I think other states would see a similar story, that the vast majority of costs are paid by workers, consumers and taxpayers.
- Ian Lewis
Person
And if I may, in pure dollar terms, California is, depending on the year, somewhere between the most expensive and the fourth most expensive state in the country. There's a real difference by market as well. Monterey, I've spoken about various Northern California markets are the most expensive in the country, which means that for multi employer plans, like some of those associated with my union, other states are having to subsidize the care of Californians because all the money goes into one pool.
- Ian Lewis
Person
And yet at the same time, it's California, often California based companies that are buying up other companies elsewhere in the country. So it's a real challenge. Our employers are looking at California and wondering what on earth is going wrong here? And because you raised other countries, I will say I've bargained contracts in British Columbia and in Toronto as well, operating under very different health systems.
- Ian Lewis
Person
And I cannot begin to describe how different bargaining is in those states where you need to negotiate two or three cents per hour per year additional into healthcare instead of 75-80 cents per year.
- Akilah Weber
Legislator
So what do you think it is about California that the cost, in your opinion, is so much higher here that other states are having to supplement?
- Ian Lewis
Person
Certainly there are baseline costs that are more expensive that we all will experience that affect the companies. But I do put my finger on the consolidation, the degree of consolidation, particularly in the hospital industry, but increasingly other parts of the health sector.
- Laurel Lucia
Person
Yeah. And there's a lot of research that backs that up. Our UC Berkeley colleagues at the Petra center have done a lot of good research on the impact of healthcare consolidation in prices and have especially focused on the difference between northern and Southern California. And even after taking into account wage differences between the two parts of the state, have found an impact of consolidation on prices.
- Akilah Weber
Legislator
Thank you. And I want to go back to what I had asked for you to clarify with me. So with the impact on Black and Latino families that their job base share, that they spend a higher percent.
- Laurel Lucia
Person
Yeah. And I can send you the specific data which I have here in front of me, but in a graph that's not labeled with numbers. So I'm going to have to kind of eyeball it.
- Laurel Lucia
Person
But if, for example, you take Black Americans in 1988 were paying around roughly 8% of their income on premiums, and that's the total premium both paid by the employer and the worker, because as many of us have talked about it, the whole thing is essentially coming out of the worker's pocket. By 2019, black Americans, on average, were paying around 18 or 19% of their total compensation towards health insurance premiums.
- Laurel Lucia
Person
Over that same time period, the percentage of compensation grew for white Americans from about 6% to 13 or 14% in 2019. You can't see it from here, but the gap widens over time, and the percentage of compensation spent on premiums is growing for everyone.
- Akilah Weber
Legislator
And what is the reason for this? Do we know? Is it just the types of jobs that you see more primarily for African Americans?
- Laurel Lucia
Person
Yes. I mean, part of the explanation is, is income inequality.
- Akilah Weber
Legislator
But I guess my question is, is it the percent of their income? So it wouldn't matter, like, how much you make. It's either like 5%, 10%. Right. Regardless of how much you make. So is it, again, like the jobs that they have or?
- Beth Capell
Person
As I recall the JAMA study, it is that those, the African American workforce is disproportionately lower in the lower half of the income scale. So this. The same health benefits that cost $24,000 a year for family coverage is a bigger share of income for people in the bottom half of the income scale than for people in the top 10 or 20%. Laurel will correct me, which she often does, but the 80th percentile of income in California is something like $190,000 a year.
- Beth Capell
Person
So family that makes less than than that in California is in the bottom 80%. The median income is $86,000. So when you put $24,000 or $25,000 in coverage on top of those wages, it's just a lot of money, to use a technical, non numeric term.
- Akilah Weber
Legislator
Okay, so it's not that their percentage that they're paying is higher, it's the percentage of their overall income. That's what you're saying.
- Laurel Lucia
Person
Yes. Sorry. I see the question now. Yeah. The percentage that the worker pays versus the employer pays. The workers percentage has grown over time for workers in general. I haven't seen that data by race ethnicity, but this is all about the percentage of compensation. And I can send you the specific study.
- Akilah Weber
Legislator
So it's not an issue of certain people getting charged higher.
- Mia Bonta
Legislator
Just to build on that, though, it is the case, though, that there is a disparity in the overall amount that Black Americans and Latino Americans pay for the cost of care in terms of services. So Black Americans have more coming out of their pocket for particular procedures and the type of healthcare that they are receiving. So it's kind of a double whammy.
- Mia Bonta
Legislator
So not only do they not have the proportionate growth in income to support their relative amount of pain towards their health insurance coverage, but what they have to pay for is also more as well.
- Laurel Lucia
Person
This is actually an area where there's not great data. We have a. A gap in the research that I've been increasingly noticing in terms of how much Californians or even Americans are spending out of pocket.
- Laurel Lucia
Person
We don't have a lot of great data in general, and we specifically don't have good data by race and ethnicity. And I am hopeful that's one of the gaps that OCA can help to address in addition to the health. Well, no, I'll stop there.
- Ian Lewis
Person
I think two key dimensions I tease out of this. Certainly as a percent of their income, black and Latino workers are paying hugely more than those of other races or ethnicities. The barriers to access lead to worse health outcomes, which raises the cost to those communities as well, in absolute terms.
- Ian Lewis
Person
The other nuance here is that while we've done extraordinary work expanding Medicaid and Medical, and to a degree, with the Covered California coverage, there is a huge swath of workers in that, you know, just above the ranges that those programs cover. And as pandemic era supports are wound down, are more exposed to the health markets here. That category of workers, hospitality industry workers, are key. Among them, 90% of our members are people of color. Big majority are women. Same in food and commercial sectors.
- Ian Lewis
Person
That's the category of workers who are on the brink of losing coverage through the employment based system altogether if things don't shift in the coming years. And that's something Oka is certainly mindful of, and I hope the legislature will keep forefront in your minds.
- Akilah Weber
Legislator
Well, thank you for that. And I definitely look forward to seeing the data that comes out of OCA, and hopefully we can get some better data to see if there are any specific disparities and race that we're talking about here because we do know that it has existed in other areas. You know, a black family may get quoted a certain insurance price, and a non black family would get quoted something different. So I was wondering if that's what you were getting at with your percentage.
- Akilah Weber
Legislator
And so we'll see what the data elucidates with that. Do you have any other questions? I really want to thank you all for engaging in this very important conversation with us as we tackle not only budgetary issues and affordability issues, but also starting to also think from a policy standpoint, what kind of things we in the legislature should be putting forward in terms of bills and supporting to improve healthcare affordability and healthcare access for all Californians.
- Akilah Weber
Legislator
At this point, I'm going to open it up for public comment. You will have 1 minute, and please come to the mic if you have anything you'd like to say. Thank you.
- Linda Nguy
Person
Good afternoon. Linda Nguy with Western Center on Law and Poverty. We align our commons with health access and CPenn, particularly noting low wage workers, particularly workers of color, are expected to contribute more of their wages to health coverage, highlighting the need to rein in costs.
- Linda Nguy
Person
There's also very real access concerns, as seen from delays in care, noting that hospital debt makes over 70% of medical debt and that 12 counties lack a single hospital with a maternity ward. Thank you.
- Mark Farouk
Person
Hi chair and members. Mark Farouk with the California Hospital Association. We appreciate the conversation this afternoon related to affordability. Just wanted to point out a few things that you know. This follows a hearing that was held on March 11 about the financial instability of many of our hospitals that, you know, over 50% of California's hospitals still operate in the red in caring for patients. California's hospitals nonetheless stand ready to respond to the next healthcare crisis, whether that be the COVID-19 pandemic or something else.
- Mark Farouk
Person
And so last year, the legislature acknowledged many of these challenges with the authorization of the distress hospital loan program and the reauthorization of the managed care organization tax, two critical, important investments to stabilize not only hospitals but other healthcare providers.
- Mark Farouk
Person
But I'd be remiss if I also didn't point out the challenges faced by our rural hospitals and rural communities, where two thirds operate in the red and where the closure of service, the closure of a hospital, can force someone to drive an extra hour up to 2 hours to find that same service. Just a few points related to the Office of Healthcare Affordability, which was mentioned earlier. We support the overall goal of the office to make health care more affordable, more affordable.
- Mark Farouk
Person
But we do remain concerned about some of the proposals, specifically the existing 3% spending target proposal. I think we have to be mindful of managing the challenge of balancing cost growth reductions and the need to invest in improvements in access to care. Making healthcare more affordable and meeting the needs of 40 million people has never been attempted on this scale.
- Mark Farouk
Person
So it's quite a serious undertaking, I think, as everyone would agree, and we think it is essential that this be done with an understanding of the difference between good spending and what would be termed wasteful spending. The proposed 3% spending target would cause an abrupt 40% reduction in growth of healthcare spending, representing a $13 billion cut in resources for patient care and advancements in in health equity.
- Mark Farouk
Person
Also point out there hasn't been an analysis yet at the office related to spending target and what that would mean for access, quality, equity or workforce stability. Thank you.
- Sarah Bridge
Person
Thank you. Madam Chair and Member Sarah Bridge, on behalf of the Association of California Healthcare Districts, we represent the 77 healthcare districts throughout the State of California. These are local government entities. Just want to make a couple of brief comments based on the panelists that presented here today. The first being that healthcare districts share in all of the concerns that were mentioned today. We want to make sure that healthcare is affordable for our workers, consumers, patients that we serve and lead with that.
- Sarah Bridge
Person
First, however, want to be really considerate that we don't apply a blunt instrument to these problems as we look at things like consolidation and seismic and other and the office of Healthcare affordability and cost and spending targets. Public entities are much different. We're not operating with large margins. In fact, most district hospitals are in the red. In fact, over half of them were those to receive the distressed hospital loans.
- Sarah Bridge
Person
In this most recent go around, what happens when a district hospital fails is we often have to affiliate or merge with larger entities, which speaks to the consolidation issue. That's not something that healthcare districts want to do. It's not their first choice. It's often not their second choice. But they're forced to do it. And that does, in fact, consolidate the markets.
- Sarah Bridge
Person
When we look at affordability and we have these really important conversations and the conversations around things like seismic and other mandates passed by the state, we just have to understand that it's a finite pool of resources. And when we're forced to meet other mandates or comply with new regulations, often that takes away the ability for us to Fund new projects and programs for our workers and patients. So thank you.
- Katie Layton
Person
Good afternoon. Thank you Chair Weber, Assemblymember Bonta for holding this hearing today. My name is Katie Layton and I'm here on behalf of the Children's Specialty Care Coalition. We represent over 3000 pediatric specialty physicians that treat children with complex Healthcare needs like cancer, heart disease, disease, cystic fibrosis and many others.
- Katie Layton
Person
We appreciate the conversations here today and the deliberations that are taking place within the Office of Healthcare Affordability cost must not be a barrier to care, but we also must proceed cautiously when it comes to a spending target to avoid unintended consequences that could further worsen access challenges that are already acute in certain regions of the state and within certain provider networks.
- Katie Layton
Person
For the pediatric specialty care network specifically, there's a growing shortage of providers and a number of pediatric subspecialty fellowships are going unfilled, in some cases up to 50%. Most pediatric specialty medical groups already see somewhere between 50 and 70% Medi-Cal patients, and the chronic underfunding of the Medi-Cal and CCS program is leading to crisis level concerns when it comes to access. Additionally, patients that these physicians care for are often costly to treat and rely on extremely high cost drugs to manage their conditions.
- Katie Layton
Person
So while we agree that escalating costs of care for consumers need to be addressed, we would just urge a balanced and measured approach when it comes to cost containment strategies that recognizes the current workforce challenge, challenges and high cost needs of certain populations. Thank you.
- David Gonzalez
Person
Thank you Madam Chair and members. David Gonzalez, today, on behalf of the Americas Physician Groups appreciate the opportunity to provide some comments. So APG is one of the early supporters of Senate Bill 184, which is actually establishing a framework for the Office of Healthcare Affordability. And we're working with OCA staff right now in developing some alternative payment standards for providers, hopefully creating a more coordinated system that's more accountable to patients and one that they can afford.
- David Gonzalez
Person
But we look forward to working with the Administration, the Yoka board and the legislature in this very important policy that's often unknown. There's a lot of people in state politics that don't know that OCA exists. But we're hoping to make this program a vibrant one on one. That can work. Thank you.
- Akilah Weber
Legislator
All right. Well, thank you again, and this hearing is adjourned.
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