Health Benefits

One Way We’re Working to Slow Rising Health Care Costs

CalPERS has a voice in the work to curb rising health care costs for Californians — including our members — with a seat on the Office of Health Care Affordability board.

With health care affordability at a crisis point, California recently launched a new initiative to tackle it the Office of Health Care Affordability (OHCA) and CalPERS has a seat at the table.

With a mission to help Californians receive health care that is accessible, affordable, equitable, high quality, and universal, OHCA is charged with three main responsibilities:

  • Slowing the growth of health care spending,
  • Promoting greater value in the health care system, and
  • Assessing market consolidation, which has a been a driver of cost increases.

CalPERS’ Role in the Office of Health Care Affordability

CalPERS Chief Health Director Don Moulds brings our voice, along with more than 20 years of strategic leadership in health care policy, to the Health Care Affordability Board as a non-voting member.

“While it’s critically important we look at spending, it isn’t the full picture when it comes to health care. It’s important we focus on value, which is a combination of spending and quality. We must balance how much to reasonably curb spending without creating issues that could affect access to care and health outcomes,” said Moulds.

Slowing Spending to Lower Health Care Costs

It’s no secret that health care affordability for Californians has eroded. In California, health care spending has grown roughly 5.4% a year over the last 20 years, significantly faster than growth in wages. Those with employer-covered health insurance including our nearly 1.5 million health plan members are paying more out-of-pocket expenses in higher deductibles, copays, and premiums.

Since 2015, health care spending has increased 30%, and households are spending nearly 13% of their median income on health care, crowding out other necessities.

Not only are consumers paying more, but according to a recent California Health Care Foundation survey (PDF), more than half of Californians say themselves or a family member has skipped or delayed care due to costs, and half of those said skipping or delaying care worsened their condition.

Using data such as total health expenditures and the 20-year average growth rate of median household income, the OHCA staff has recommended to the board setting a five-year statewide spending growth target of 3% annually.

This 3% target places California on a path toward a more sustainable, affordable, and equitable health care system, slowing the trajectory of growth, and improving affordability for all, according to OHCA’s staff recommendation (PDF) to the board.

“While it’s early days for OHCA, we anticipate that in the long-term, the spending growth targets will be effective in helping lower health care premiums for all Californians, including CalPERS members,” said Moulds.

To learn more about the Office of Health Care Affordability and CalPERS’ role in its work, view the video presentation about the program.