Newsom signs bill establishing Office of Health Care Affordability after negotiations

Following Gov. Gavin Newsom’s signing of the $308 billion state budget on June 30th, which includes $30 million to establish and administer the Office of Health Care Affordability (OHCA), Newsom officially codified the OHCA’s creation into law with the signing of Senate Bill 184.

 

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SB 184, a budget trailer bill sponsored by the Senate Committee on Budget and Fiscal Review, is based on Assembly Bill 1130, originally introduced by Asm. Jim Wood (D–Healdsburg) in Feb. 2021. AB 1130 contained language to create an office that would collect and analyze the health care market for cost drivers and trends to develop data-informed policies and enforceable cost targets, with the ultimate goal of containing health care costs and providing affordable health care to Californians. 

When AB 1130 was referred to the Senate Health Committee in February of this year, Wood negotiated with the Senate on the language of the bill that both legislative chambers ultimately agreed upon, and then created SB 184.

Wood told State of Reform that one of the biggest points of contention during the bill’s negotiations were specifying the health care entities that would be required to report data to the OHCA. The final decision was that all health care entities that are dominant in an area that also have a significant impact on pricing will be required to report data, including health care service plans, health insurers, hospitals, and physician organizations.

Another major point of contention amid negotiations, Wood said, was the governance of the OHCA. The final agreement was that the Health Care Affordability Board would be composed of 8 members, including 4 appointed by the Governor and confirmed by the Senate, 1 appointed by the Senate Committee on Rules, 1 appointed by the Speaker of the Assembly, the Secretary of Health and Human Services, and the California Public Employees’ Retirement System (CalPERS) Chief Health Director as a nonvoting member.

With the official establishment of the OHCA, Wood’s “top priority health care legislation,” Wood says the office will play a significant role in combatting rising health care costs in California. According to a California Health Care Foundation survey, 49% of Californians have skipped or postponed some type of health care in the last 12 months due to inability to pay and 47% reported their conditions worsened as a result. 

“As a health care provider of 30 years and chair of the Assembly Health Committee for the past 7 years, I have had the opportunity to delve deeply into health care policy, and I’ve watched the costs rise year after year without the state’s ability to undertake a comprehensive review of why or what to do about it,” said Wood in a press release.

“Bottom line, health care is too expensive, its growth rate is unsustainable and we have to do something. This is my most important work to date. The creation of OHCA has been a true partnership with Governor Newsom and his administration, my colleagues in the Assembly and Senate as well as a collaboration of many stakeholders including the health care entities that will be required to provide data as well as the people who are paying for and receiving care.”