American Healthcare is Broken but California Might be Able to Fix It

BY LAUREN LOW

Assemblyman Ash Kalra, D-San Jose, discusses his proposal to create price controls for hospital stays, doctor visits, and other health care services at the state Capitol. (AP Photo/Jonathan J. Cooper)

Healthcare in America is frustrating, complicated, and broken. The U.S. spends more on healthcare than any other nation on earth, investing a staggering 18 percent of its GDP into healthcare. Despite this astronomical spending, the average American still pays outrageously high healthcare costs. High costs have severe consequences. A quarter of American households are struggling with medical debt and a large number of Americans are putting off expensive medical procedures because they cannot pay, which can have fatal consequences. The Center for Disease Control found 20 to 40 percent of premature deaths from the five leading causes of death could be preventable, but deaths from these causes are far more likely without access to medical help. While the Affordable Care Act was a significant step in the attempt to correct the problems plaguing the American healthcare system, Americans still find themselves confronted with high premiums and expensive care. California has suffered greatly from these issues, with premiums increasing 240 percent between 2002 and 2016. Currently, an innovative new bill in the California state legislature could change the way the United States deals with healthcare, saving money and lives in the process.

Assembly Bill 3087 was introduced in February by Assembly Member Ash Kalra of San Jose. If passed, AB 3087 will allow the state of California to set the price of medical services. Under this bill, a commission would set rates for all services provided by commercial healthcare plans based on what the state already pays under Medicare. The commission would be comprised of appointees chosen by the governor, senate pro-temp, and assembly speaker. Under AB 3087, all insurers would have to comply with the new price regulations, while Medicare and Medicaid would remain unaffected. An appeals process will be instituted that allows healthcare providers to contest costs they believe would harm their practices. The bill is partially based on Maryland’s all-payer system, which saved the state a reported $429 million. AB 3087 aims to cut California’s high healthcare costs, helping consumers access services more affordably and making pricing more uniform.

Under the current system, prices for medical services are set in a dishonest and inaccessible method that limits consumer choice and systematically overcharges patients. Individual hospitals set their own prices for medical services, leading to a lack of consistency in pricing. Each hospital has a “charge master” that lists the price for each object, from complex services and procedures all the way down to the use of plastic gloves. Oftentimes, these items are sold to the patient at a tremendous markup. Furthermore, prices are surprisingly random and vary drastically from hospital to hospital. These charge sheets are not available to the consumer, so patients have no way of knowing if other providers offer these services for cheaper or even estimate the cost of service before receiving treatment. The secretive method of pricing hurts patients, who end up overpaying for healthcare. Additional factors, including the astronomical administrative costs associated with our complex healthcare system, also contribute to high healthcare costs. Some form of government regulation is necessary to ensure patients are not overcharged for essential services. AB 3087 attempts to correct the fractured pricing system that is the source of anxiety and debt for thousands of patients.

While the bill enjoys support from labor unions and consumer rights groups, it also faces heavy opposition. Physicians and hospitals argue that the bill would drive healthcare providers to cut back on services and cause doctors to leave the state. Skeptics of Maryland’s all-payer system expressed similar concerns when the program was adopted; however, there has been no evidence of cutbacks or physician flight. Predictably, advocates of small government object to the concept of the state interfering with the free market, despite the lack of transparency and consumer choice in the current healthcare market, which has transformed it into a oligopoly. While opposition from conservative thinkers is to be expected, the bill has received a surprising amount of criticism from the left due to its failure to promote a single payer system. This argument seems misguided, as the bill does nothing to prevent the establishment of single payer healthcare in the future and may even make the process of establishing such a system easier due to the lower cost of healthcare.

AB 3087 is not California’s first attempt at healthcare reform. In 2016, residents voted against Proposition 61, which aimed to prohibit state agencies from paying more for pharmaceuticals than the Department of Veterans Affairs. The failure of this proposition demonstrates that, despite the state’s progressive reputation, many citizens still feel wary about government intervention in healthcare. Resistance to widespread healthcare reform is also evident in the state assembly. Last June, a proposal to create a single payer healthcare system in California was blocked in the state assembly. California may not be ready to test a universal healthcare system yet, but AB 3087 is a start on the road to health care reform.

American healthcare is ineffective and overpriced. We as citizens pay for more than any other people on Earth, yet the care we receive is no better than the care provided in other developed countries.  While AB 3087 will not solve all the problems plaguing our national healthcare institutions or create a single payer system, it would directly help thousands of families across California by reducing the cost of healthcare. California has always been a testing ground for innovative policies. Now, California has an opportunity to lead the nation with this new approach to reducing wildly inflated healthcare costs.

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