Testimony: California’s Office of Health Care Affordability (AB 1130)

April 6, 2021
Testimony by Bill Kramer, Executive Director for Health Policy, PBGH 

Good afternoon to the Chair, Vice Chair and Members of the Committee, and

thank you for the opportunity to offer comments on AB 1130. I am Bill Kramer, Executive Director for Health Policy at the Purchaser Business Group on Health (formerly known as the Pacific Business Group on Health). We are a nonprofit coalition based in California, representing nearly 40 large private employers and public entities.

We strongly support the proposed Office of Health Care Affordability.

All of you know what the problem is: health care costs are too high, creating financial barriers for patients to get necessary care. It also puts a severe financial burden on employers that provide health benefits to their employees and families, thereby crowding out business investment and workers’ wages.

We know that health care costs could be lower – much lower – while maintaining the quality of care. Numerous studies have shown that the amount of unnecessary spending is 20-30% of total spending. We also know that some hospitals and physician groups are able to provide high quality services at much lower costs than other providers.

AB 1130 presents a great opportunity to hold down the costs of care and benefit all Californians. In particular, we believe that the proposed Office of Health Care Affordability will be effective because:

1. Its scope is broad – taking into account quality, access and equity in addition to costs
2. It will set appropriate cost targets, with meaningful incentives for meeting the targets
3. It will provide technical assistance to providers for help in meeting the targets

There is one element of the bill, however, that needs to be strengthened. The role of the Advisory Board is very important to the success of the Office of Health Care Affordability, and it is important that its members are acting in the interests of the general public. Specifically, the Board should ensure that the interests of patients, consumers, and purchasers – those who receive health services and pay for them – are primary. I have participated in many advisory groups and Boards that are composed of people who have “expertise” in the health care industry, but unfortunately the interests of consumers and purchasers are often overwhelmed by other interests in these groups. As a result, we are often stymied in our efforts to make progress toward our goals, i.e., lower costs and better quality, access and equity. I strongly recommend that the Committee consider changes to ensure that the Advisory Board is acting on behalf of the general public, and in the public interest broadly.\

Thank you for your consideration of these comments, and we would be happy to provide additional information if it would be helpful.