Bill to create health care price controls in California dies

A proposal to create government price controls in California for surgeries, hospital stays, doctor visits and other health care services died Friday when it failed to clear a key committee, but the author says he plans to bring it back next year.

The measure was a longshot from the beginning, but it drew national attention from health care policy observers. Hospitals, doctors and other influential health care providers lobbied intensely against the bill, which they said would lead to longer waits for medical care.

The bill has helped to change the national debate over health care costs and brought a wide variety of health care interests to the table, said Assemblyman Ash Kalra, a San Jose Democrat who wrote the bill.

"This is the type of attention and investment we need to find a solution to the skyrocketing costs of health care," Kalra said.

Kalra's proposal would have affected private health plans, including those offered by employers and purchased by individuals. A nine-member commission appointed by the governor and legislative leaders would have set prices for everything from physical exams to allergy tests to heart bypass surgery. No other state has such a requirement.

Prices would have been tied to Medicare's rate for a particular service or procedure, with that price as a floor. There would have been a process for doctors or hospitals to argue that their unique circumstances warrant payments higher than the state's standard rate.

It was backed by influential unions frustrated that health care costs are gobbling an increasing share of employee compensation.

Health care providers warned that price controls would encourage doctors to move out of state or retire, making it harder for people to see physicians when they're sick and force hospitals to lay off staff and in some cases shut down.

Theodore Mazer, a San Diego physician who is president of the California Medical Association, applauded the Assembly "for recognizing that this deeply flawed legislation would result in enormous costs to the state and restricted access to care for millions."

In recent decades, health care spending has risen faster than inflation and wages while employers and health plans have shifted more of the costs onto consumers through higher premiums, deductibles and copays. Americans spend more per capita on health care than citizens of other developed countries.

Meanwhile, a wave of consolidation by hospitals, physician groups and insurance companies has given industry players more power to demand higher rates.

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The bill is AB3087 .