Healthcare and Insurance

Healthcare and Health Insurance are directly linked, both the subject of contentious debate, as the costs for healthcare and insurance continue to spiral at rates that are unsustainable.

No doubt, given the unlikely chance that anything further will come from Washington on a National level, states will attempt to force changes to try and improve the system.

So, Here’s The Rundown

California Assembly Bill 3087, introduced by Assemblyman Ash Kalra, D-San Jose, would create a government-run rate-setting process that would unilaterally cap payments to doctors, dentists, hospitals and other clinicians for the health care services they provide to people with commercial health insurance.

While we aren’t sure exactly HOW the state proposes to regulate the free market, nonetheless, there is interest and momentum to do something and so it’s an interesting bill to look at.

Because AB 3087 does nothing to address the underlying causes for rising health care costs, this legislation would mean that hospitals and doctors will be paid less, regardless of what it actually costs to provide care.

That is like telling your local coffee shop that you are only going to pay them $2 for a $3 cup of coffee. Just because you have decided to “pay” less doesn’t mean that the actual cost of that cup of coffee has dropped. The coffee shop would lose money since the price it charges includes not only the cost of the coffee itself but also the costs for labor, materials and rent.

The same would be true for hospitals if AB 3087 is enacted. The bill would not regulate the prices a hospital would pay for a new imaging equipment, medical devices or life-saving drugs. Nor would it solve the chronic payment shortfalls that plague the Medicare and Medi-Cal programs.

For more than two decades, these government-sponsored programs have paid hospitals, doctors and other providers far less than the actual cost of care. (For example, Medi-Cal only pays hospitals about 68 cents for every dollar of care provided to a Medi-Cal patient.)

According to an analysis by the California Hospital Association, AB 3087 would cut $18 billion every year from hospitals throughout the state. Cuts this deep will result in devastating impacts on your ability to get the health care services you need, when you need them. Many hospitals could be forced to cut vital programs or even close altogether. Even getting a doctor’s appointment could be in jeopardy as many established doctors cut back or retire early, and newer physicians decide to flee the state.

Ultimately, whether AB3807 passes or fails, we will watch and see how each attempt to change the status – quo impacts the pricing, quality, and ultimately the delivery of healthcare and insurance. One thing for sure: no change to the system will come easily.