This bill would establish, within HCAI, the Office of Health Care Affordability to analyze the health care market for cost trends and drivers of spending, develop data-informed policies for lowering health care costs for consumers and purchasers, set and enforce cost targets, and create a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchasers. The bill would also establish the Health Care Affordability Board , composed of 8 members, appointed as prescribed, and the Health Care Affordability Advisory Committee.
The bill would require the board to establish statewide health care cost targets for per capita total health care expenditures by the 2025 calendar year and specific targets for each health care sector it defines, including fully integrated delivery system systems, geographic regions, and individual health care entities, as appropriate. The bill, commencing in 2026, would require the office to take progressive actions against health care entities for failing to meet the cost targets, including performance improvement plans and escalating administrative penalties. The bill would establish the Health Care Affordability Fund for the purpose of receiving and, upon appropriation by the Legislature, expending revenues collected pursuant to the provisions of the bill.
The bill would require the office to set standards for various health care metrics, including health care quality and equity , alternative payment models , primary care and behavioral health investments , and health care workforce stability. The bill would require the office to gather data and present a report on baseline health care spending trends and underlying factors on or before June 1, 2025. On or before June 1, 2027, the bill would require the office to prepare and publish annual reports concerning health care spending trends and underlying factors, along with policy recommendations to control costs and the other stated metrics. The bill would require the office to present the report’s findings to the board and the broader public at a public meeting of the board and would provide for public comment and feedback on the report, as specified.
The bill would require the office to monitor cost trends in the health care market and to examine health care mergers, acquisitions, corporate affiliations, or other transactions that entail material changes to ownership, operations, or governance of health care service plans, insurers, hospitals or hospital systems, physician organizations, providers, pharmacy benefit managers, and other health care entities. The bill would require the health care entities to provide the office with written notice, as specified, of agreements and transactions that would sell, transfer, lease, exchange, option, encumber, convey, or otherwise dispose of a material amount of assets, or that would transfer control, responsibility, or governance of a material amount of the assets or operations to one or more entities. The bill would require the office to conduct a cost and market impact review, as specified, if it finds that the change is likely to have a risk of a significant impact on market competition, the state’s ability to meet cost targets, or costs for purchasers and consumers. The bill would prohibit an agreement or transaction for which a cost and market impact review proceeds to be implemented without a written waiver from the office or until 60 days after the office issues its final report. The bill would require the health care entity to pay specified costs associated with that review and completing the report.
The bill would require health care service plans and health insurers, in submitting rates for review, to demonstrate the impact of any changes in the rate of growth of health care costs resulting from the health care cost targets. Because a willful violation of the bill’s requirements relative to health care service plans would be a crime, the bill would impose a state-mandated local program.