Assemblymember Ash Kalra (D-San Jose) introduced a bill that would allow a state-appointed commission to set prices for medical services — AB 3087, the Health Care Price Relief Act. The commission would control how much health plans, hospitals, physicians, physician groups, and providers could charge. Pricing would be determined as a percentage of Medicare rates. Providers would need permission from the commission to charge more. Also under the bill, an individual would not owe a health care provider anything more than the applicable cost sharing amount. Assemblymember Kalra said, “We must act now before prices become unsustainable.” The California Labor Federation notes that, “Across California, prices for medical procedures are…completely unrelated to quality; prices for the same procedures can vary widely in hospitals even next door to each other.”
Proponents note that Medicare has been setting health care rates for decades with a transparent, public formula. California is not the first state to address provider payments. Maryland has had an “All Payer Model” since 2014 in which all hospitals must charge the same rate for services to patients, regardless of what insurance they carry.
Providers are launching fierce opposition to the bill. California Medical Association (CMA) president Theodore Mazer said, “It threatens to reverse the historic gains for health coverage and access made in California since the passage of the Affordable Care Act. AB 3087 would cause an exodus of practicing physicians, which would exacerbate our physician shortage.” The California Hospital Association (CHA) says the bill would lead to massive cuts in hospital services, and force the closure of many hospitals. The state’s hospitals may lose at least $18 billion annually in revenues. Approximately 60 percent of hospitals would likely lose money under this legislation, and an estimated 175,000 health care workers could lose their jobs. The bill does not address the decades-long underfunding of the Medicare and Medi-Cal programs, according CHA.