A New State Agency Aims to Fix Rising Health Care Costs

By KRISTEN HWANG AND ANA B. IBARRA, CalMatters

In 2017, a rare viral infection hospitalized Bernadette Moordigian for three weeks and paralyzed her for nearly nine months. Although she had health insurance, the hospital sent her an $80,000 bill. She appealed and got financial aid but was still on the hook for $10,000.

In 2018, Shelly Tsai, a lawyer with Neighborhood Legal Services Los Angeles, took on a client who opted to give birth at home with a midwife. Insurance wouldn’t foot the $8,000 bill despite it costing three times less than a hospital birth.

Last year, Laila Dellapasqua reduced her family’s health insurance coverage yet again as premiums increased. Collectively their yearly deductibles are more than $31,000.

Stories like these three are increasingly common. California and the country are in the midst of a health care affordability crisis. The Golden State has taken a multi-pronged approach in its effort to get a grip on skyrocketing costs — its latest effort being a new Office of Health Care Affordability whose job will be to investigate the causes behind price increases and hold health industry players accountable. 

In California and nationally, the most cited reason for people being uninsured or underinsured is cost. Even those with robust insurance sometimes struggle to afford hospital bills and their medication. Some take extreme measures, such as rationing their dosages or traveling south of the border for more affordable care. Half of Californians skipped or postponed medical care in 2021 because of costs, according to a California Health Care Foundation report. 

“For all the talk of inflation in the last year, if gas prices went up the same rate as health care prices over the last couple of decades, we wouldn’t be seeing $5 to $6 a gallon, we’d be seeing $30 to $40 a gallon,” said Anthony Wright, executive director of Health Access California, a consumer rights group. “What is raising people’s concerns about inflation these days has been the case for health care for decades.”

The recently approved state budget includes $30 million to create the office, whose key responsibility will be to set and enforce limits on cost growth for the industry, including hospitals, health insurers and physician groups.

The office has been years in the making, with industry representatives, legislators and Gov. Gavin Newsom haggling over specifics. In its final form, it will be seated in the Department of Health Care Access and Information and led by department director Elizabeth Landsberg. 

“We absolutely will be shining a light specifically on how much of the health care dollar that’s coming out of people’s pocket — that’s putting a strain on their family budget — how much of that is going to administrative costs and profits,” Landsberg said.  

However, the office’s work won’t translate into instant savings for people nor immediately eliminate stories like Moordigian’s or Dellapasqua’s. Expectations should be tempered, Landsberg said. 

Read Health care costs keep rising. A new California agency aims to fix that on CalMatters.

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