Health Care Price-Fixing Commission

In In The News by Barbara Jacoby

From: California Medical Association

AB3087 (Kaira)

PURPOSE

AB 3087 would establish a government-run commission with nine political appointees to set the prices that health providers (doctors, hospitals, optometrists, etc.) can charge for services. Physicians are explicitly prohibited from participating on the commission, and the bill would base providers’ pricing off Medicare reimbursement rates.

SUMMARY

Assembly Bill 3087 (Kalra) is radical legislation that would increase patient out-of-pocket costs and result in dangerous government intrusion into the health care market by creating state- sanctioned rationing of health care for all Californians.

It would establish an undemocratic, government- run commission with nine political appointees who would unilaterally set the price for all medical services that are not already controlled by the government, essentially eliminating commercial health care markets in California. The political appointees are prohibited from being health care providers, so they would not have any tangible experience in the delivery of health care to patients.

This bill does not require plans and insurers to pass on the cost savings to patients, and it does not prohibit them from changing benefit designs to shift additional costs to patients.

The commission’s authority to set prices only applies to the commercial market and explicitly excludes setting prices for Medi-Cal and Medicare. What’s more, AB 3087 is self-serving because the commission would use health care funds to pay the legislation’s sponsors to lobby for the commission. Administration of the commission would be funded, in part, through physician licensing fees.

BACKGROUND

AB 3087 ignores the recommendations from the University of California, San Francisco’s report— commissioned by the California State Assembly— to achieve universal access to health care, which includes implementing a comprehensive strategy to overcome the physician workforce shortage in the state by removing barriers that prevent physicians and other clinicians from specializing in primary care and practicing in underserved areas.

Currently, six of nine California regions are already facing a primary care provider shortage, and 23 of California’s 58 counties fall below the minimum required primary care physician-to- population ratio. The state needs 8,243 additional primary care physicians by 2030 – a 32 percent increase.

In addition, the costs for a physician to operate a medical practice in California are among the highest in the United States. Compared to the rest of the nation, California physicians currently face some of the highest costs in the nation, including the largest Medicaid program in the nation with one-third of its population – and half of the state’s children – enrolled, one of the lowest Medi-Cal physician reimbursement rates, the highest wage index for labor workforce necessary to run a physician practice, the highest state taxes, second highest cost of living, and the highest overall physician practice expenses in the nation. This bill will drive physicians out of the state and further exacerbate California’s physician shortage problem.

CONTACT

Stuart Thompson, Associate Director, California Medical Association, 916-551-2062

Juan Thomas, Associate Director, California Medical Association, 916-551-2062

California Medical Association, 1201 J Street, Suite 200, Sacramento, CA 95814-2906 AB 3087 Fact Sheet – Page 1