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Should California Regulate Cost Of Health-Care Services? Proposed New Law Would Put State In Charge Of Pricing.

Andrew Nixon / Capital Public Radio

Andrew Nixon / Capital Public Radio

The latest effort to control high healthcare costs was unveiled at the state Capitol on Monday, and it’s already drumming up opposition from insurance companies and physicians.

Democratic Assemblymember Ash Kalra of San Jose introduced Assembly Bill 3087 while flanked by supporters from consumer groups and labor unions. The measure would put the state in charge of regulating health care costs for all services covered by commercial providers.

Under the proposal, a nine-member commission appointed by the governor, the Senate pro tem and the Assembly speaker would be tasked with setting baseline rates for all health care services from stitches to major surgeries, whether they’re provided in clinics, hospitals or private practices. The rates would be built off of current Medicare service costs.

“By building upon existing models, we can establish a transparent process by which increases in health care costs can be kept reasonable while also expanding access to care,” Kalra said.

All commercial plans, including employer-sponsored ones, would have to comply, but Kalra’s staff said Medicare and Medicaid would not be affected. Insurance providers that feel patients should pay more than the baseline for a service could make their case to the commission for an exception.

Tam Ma, legal and policy director of consumer group Health Access, said the bill is intended to combat market consolidation and monopolies that have led to the state’s high prices.

“Californians cannot wait for a better federal political environment or a willing federal partner to address these issues,” she said. “California consumers are feeling the pinch right now.”

High healthcare costs have long been a point of contention in California, but lawmakers have yet to come together on a solution. Efforts to funnel all services through a single government payer stalled last year, but proponents remain committed to the idea. The California Nurse’s Association is still pushing for single payer and has called AB 3087 a “piecemeal” approach.

The California Medical Association, which represents physicians, also opposes. The group said in a written statement that the new proposal would intrude on the market, limit consumer choice and drive physicians out of the state.

“AB 3087 is a poorly conceived, monumental threat to patient access to health care that goes against the Assembly’s own expert recommendations,” California Medical Association President Theodore Mazer wrote. “This dangerously flawed legislation would result in government-sanctioned rationing of care and higher out-of-pocket costs for patients.”

Charles Bacchi, president of the California Association of Health Plans, said rate regulation isn’t the answer.

“California should spend its energy on enacting a state based requirement to obtain coverage to stabilize our individual health insurance marketplace instead of looking at price controls,” he wrote in an email. “We should avoid proposals that will cause further disruption to the health care so many Californians depend upon.”

In the meantime, California Attorney General Xavier Becerra is taking his own stand against market consolidation. Last month, he launched a lawsuit against Sutter Health, accusing the company of price gouging and not being transparent with patients about costs.

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