California regulators approve 3 percent cap on annual health care price increases
Date
4/25/2024 9:45:48 AM
(MENAFN) California regulators have approved a new rule aimed at curbing the rising costs of medical care in the state, limiting annual price increases for doctors, hospitals, and health insurance companies to 3 percent starting in 2029. This move comes as health care expenses in California have been increasing by about 5.4 percent annually over the past two decades, outpacing income growth for most residents.
The 3 percent cap, endorsed by the Health Care Affordability Board, will be phased in over five years, beginning with a 3.5 percent limit in 2025. While the enforcement of the cap is not expected until the end of the decade, a newly established state agency, the Office of Health Care Affordability, will be responsible for gathering data to ensure compliance. Providers failing to adhere to the cap could face fines.
Dr. Mark Ghaly, chair of the Health Care Affordability Board, described the cap as an aggressive measure but acknowledged the significant challenge it poses for the health care industry. The process of applying the cost target across different health care sectors in the state will be determined by regulators, with enforcement designed to be progressive, allowing providers multiple opportunities to avoid fines.
However, California's health care industry has expressed concerns about the feasibility of the 3 percent cap, arguing that it is too low and may be difficult to achieve. According to the Center for Medicare and Medicaid Services, the cost of practicing medicine in the U.S. is projected to increase by 4.6 percent this year alone. Additionally, critics point out that the 3 percent target is based on the average annual change in median household income in California over the past two decades, which includes the recession years, leading some to advocate for a higher threshold based on more recent income data.
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