An Ambitious Goal for Health Spending
California is stepping up its game in the health sector. The state’s Office of Health Care Affordability aims to redirect a significant portion of insurer spending to primary care. By 2034, the goal is to allocate 15% of such spending to this critical sector, a marked increase from the current 7% spending rate. The objective behind this ambitious undertaking is to broaden Californians’ access to preventive care services and boost the population’s overall health.
The board that laid out this target believes that the effort, though challenging, is attainable. The move is expected to overhaul the present health care system by changing the way insurers provide care, requiring a significant shift in methodology and operations.
Balancing with Existing Policies
However, the new target presents some complexity, given that it comes on the heels of a recent spending cap. Earlier this year, the board set a 3.5% annual limit on the overall growth in health care expenditure, creating what might be regarded as a squeeze on insurers. The interactions between these two policies remain uncertain, stirring concern among stakeholders.
The board, however, argues that health insurers are ideally positioned to usher in this shift. Since they are the ones negotiating terms with providers, they can create incentive schemes encouraging more preventive care spending. One such approach could be offering higher reimbursement rates for primary care providers or opting to pay for comprehensive care versus individual visits.
The Potential Benefits of the Target
Through this initiative, the board hopes to broaden the primary care workforce, leading to a healthier state population. California faces a significant deficiency of primary care providers, which hinders access to preventive care. Millions of Californians reside in areas with insufficient doctors, and the board aims to counter this issue proactively.
Furthermore, a shift in health spending could support more extensive disease prevention efforts, early diagnoses, and effective treatment. Given the current spending pattern, where a significant portion of health care visits are to primary care physicians, yet a small fraction of spending directed towards primary care, there is scope for improvement.
From 2022, the board will start collecting data on annual health plan spending on primary care. This data will include the extent of spending in community-based clinics, schools, and homeless shelters. However, the exclusion of obstetricians means the focus will primarily be on providers offering holistic, coordinated, and comprehensive care.
For the next 12 years, health plans are expected to gradually increase primary care spending until the 15% target is achieved in 2034.
Looking at Other States’ Success
Successful similar initiatives have been launched in states like Colorado, Connecticut, Delaware, Oregon, Rhode Island, and Washington. These states have seen promising results, with Rhode Island more than doubling its primary care spending from 2008 to 2018.
Encouraging Compliance with Financial Incentives
Interestingly, the board does not have enforcement authority in primary care spending. To lead health plans towards achieving the target, it’s dangling tempting financial incentives. For instance, if the insurance companies can prove their spending has been used to elevate primary care, they could potentially exceed the 3.5% overall growth cap.
A higher level of compliance could essentially transform the health care landscape, providing a boost to disadvantaged communities lacking adequate access to medical care. Improved access to and quality of primary care can translate into significantly better health outcomes, creating a healthier California in the long run. This simultaneous increase in spending on behavioral health is also being considered as the state aims to further its investment in the health care sector.