California Hospitals Sue to Block Healthcare cost Controls

By Ana B. Ibarra, CalMatters

California hospitals filed a lawsuit against a state health regulator Wednesday, seeking to block rules meant to keep consumer health care costs from growing too quickly.

The state Office of Health Care Affordability sets limits on health care spending, capping the amount that a hospital’s spending can grow each year. The California Hospital Association argues that the rules are illegal and will result in layoffs and cuts in services, ultimately reducing access to care.

In a complaint filed in San Francisco County Superior court, the hospital association argues that setting spending limits creates “arbitrary and irresponsible cost targets that single out hospitals.” The suit also contends that the rules “will severely disrupt … hospitals’ ability to provide comprehensive, high-quality services by starving them of the resources they need to perform their critical roles.”

A spokesman for the California Health and Human Services Agency, which oversees the affordability office, said the agency does not comment on pending litigation.

In 2022, state lawmakers created the affordability office with the goal of containing skyrocketing health care costs. More than half of Californians have reported skipping medical care because it costs too much, and 38% report carrying medical debt. In California, health care spending reached $405 billion in 2020 – or $10,299 per person – a 30% increase over five years.