California healthcare industry holds power in battle to cut healthcare costs
He is committed to lead
“We need to take seriously reducing health care costs,” the first-term Democrat said in
to establish a
Industry leaders have been shaken. But rather than mobilizing full-blown defense to frustrate Newsom’s efforts to regulate them, they used their political influence and close ties to the governor to craft a friendlier alternative with which doctors, hospitals, and corporations. insurance could live.
When Newsom finally drafted legislation for the office, he took an idea that health executives had come up with and made it his own: instead of capping prices or cutting income, he would allow spending for the office. industry to increase – but with limits.
Internal political struggles have killed the legislation this year, but it is expected to return in January and spark one of next year’s successful healthcare battles.
“They are afraid of what could happen to them, and they try to protect their interests because they are threatened”,
If Newsom’s plan to curb healthcare spending is successful, it could provide him with political cover as he campaigns for re-election next year, giving him a major healthcare victory even if he sidesteps the demands. progressives such as the creation of a single-payer system.
But it could also cement the power of an industry that continues to wield immense influence – negotiating behind the scenes to protect its massive revenues and secure exemptions and side deals in return for its support.
“Every time we try to do something to reduce the costs of health care, it is met with huge opposition,” said a member of the National Assembly.
Powerful industry players have only backed down harder as lawmakers tried to confront them, Wood said. âAnyone or anything that disrupts the status quo is facing enormous resistance and enormous resources to combat it,â he said.
When Newsom took office in 2019, he knew public sentiment was turning against the healthcare industry. On average, health care costs were around
Much of Newsom’s harsh talk about industry spending took place early in his tenure. “We will create specific cost targets for all sectors to be achieved, and we will assess penalties if they do not meet those targets,” Newsom said in
Newsom’s wake-up call follows tense legislative debates over bills that would have empowered the state to set prices for health care and create a single-payer system. The measures gained surprising momentum, but eventually gave way to opposition from the healthcare giants.
Then the covid-19 crisis struck and propelled the recall effort to oust him from office – and the wake-up call was greeted with a slap on the snooze button. The governor and his allies in the health care industry huddled closer. Just as he needed them to be the state’s first line of defense, they needed him to keep hospitals from overflowing, to secure protective gear, and to push vaccinations.
The Health Titans have become a regular part of Newsom’s orbit. His calendars, obtained by KHN, show that doctors, hospitals and health insurance executives have regularly had access to the governor.
The comfort of the industry’s relationship with Newsom erupted to the public in late 2020 when he was pictured dining at the chic French Laundry restaurant with
“There is no possible way for us to get out of this covid crisis where the healthcare industry has been given so much power with no ensuing influence,” said
Newsom did not answer questions about the industry’s influence, but the spokesperson
The recall effort earlier this year only solidified Newsom’s relationship with healthcare executives. Industrial groups have written checks to
Although Newsom has vowed to take on the industry, it has not taken it in an aggressive manner, and healthcare executives and lobbyists continue to wield their influence as they shape the debate on
This could put Newsom in a political stalemate as he runs for reelection – first in the
Political and health experts say Newsom can help ease this pressure by passing tough law to tackle the spiraling health spending.
“This problem is not going to go away – it must be resolved,” Corcoran admitted. The pressure to control costs “should be uncomfortable for everyone, but not horribly.”
But it won’t be easy. After powerful industry leaders joined forces with union and consumer advocates to come up with a plan to the governor, they blocked negotiations with their demands, shattering the coalition and killing the effort this year.
Coyle, along with the Hospital Association, had left the coalition early for fear that hospitals would be the primary target and approached the Newsom administration independently. She is also asking Newsom to relax strict earthquake safety standards for hospitals.
Corcoran wants to exempt “small” medical practices – which it defines as practices with up to 100 physicians – from the regulations, arguing that restrictive government cost controls could bankrupt them, leading to further industry consolidation and higher prices.
“The goal posts were constantly moving,” said
Before negotiations broke down completely, Newsom embraced Coyle’s idea that the state should control growth, not impose income cuts. And it shouldn’t just focus on hospitals, but apply to all sectors of health, including doctors and insurers. (The pharmaceutical industry would not be subject to the measure’s cost control provisions due to restrictions in federal law, according to Wood’s office.)
With the battle lines drawn, industry groups are poised for a major fight next year as Newsom and the state’s Democratic lawmakers bolster each other through legislation. Their main goal will be to protect their interests, said
âThere’s no question this industry has power. The real question is what it does with it,â Peterson said. “They get big wins and big wins.”
This story was produced by KHN, which publishes California Healthline, an independent editorial service of the