The California Office of Health Care Affordability (OHCA) was established in 2022 to set health care spending growth targets and address the most significant cost drivers and outliers in the health care system. At the January OHCA board meeting, OHCA announced its proposal for statewide health care spending growth targets for 2025 and beyond. The OHCA proposal is to set the statewide spending growth target (on a per capita basis) at 3% for 2025, with a 3% annual growth target in place for 5 years, through 2029. This 3% spending growth target is lower than the level at which other states have set their initial growth targets.

In testimony before the board, the California Medical Association (CMA) urged OHCA to ensure that the cost of practicing medicine, as well as access and equity, are considered as it sets health care spending growth targets.

“Last month, the Center for Medicare and Medicaid (CMS) projected that the increase in the Medicare Economic Index – the cost to practice medicine – will be 4.6% in 2024,” CMA Chief of Staff Janice Rocco explained to the OHCA board. “We need to consider, rather than ignore, the cost of providing health care when setting this target.”

“The OHCA statute requires that this board not consider affordability in a vacuum, but instead specifically names access, quality and equity in providing care among its goals,” Rocco said. “A 3% target put in place for five years seems likely to result in wait times increasing, and for those long wait times to apply to most of us.”

OHCA’s enabling statutes allow the office to monitor compliance with the spending growth targets, issue performance improvement plans, and assess administrative penalties through enforcement actions, including escalating administrative penalties for noncompliance with the spending growth targets.

Rocco concluded her remarks by stating that setting a growth target without consideration of the costs of providing care will make it difficult to obtain buy-in from health care entities and will ultimately make it harder to achieve OHCA’s targets.

CMA physician and OHCA Board Member Richard Pan, M.D., also expressed concern about OHCA’s target-setting methodology and standard for enforcement. Dr. Pan also stressed the need to factor in other drivers of health care spending, such as technology, geography, demography and consumer choice.

CMA will continue to participate in stakeholder discussions and work to ensure the voice and real-world experience of physicians are considered as OHCA develops and implements its spending growth target methodology.