California regulators have approved a new rule that will limit annual price increases for doctors, hospitals, and health insurance companies to 3% starting in 2029. The move comes as a response to the ever-increasing costs of medical care in the United States, with Californians seeing their health care spending rise by about 5.4% each year for the past two decades.
The 3% cap, approved by the Health Care Affordability Board, will be phased in over five years, starting with 3.5% in 2025. The new rule will be enforced by a new state agency, the Office of Health Care Affordability, which will gather data and potentially impose fines on providers who do not comply.
While the health care industry acknowledges the challenge posed by the cap, supporters argue that it is a necessary step to rein in costs. However, some critics, including the California Medical Association, have raised concerns that the 3% cap is too low and may be difficult to meet, especially given the rising costs of practicing medicine in the United States.
Despite the challenges, Democratic Gov. Gavin Newsom has expressed support for the new rule, calling it a crucial first step in efforts to make health care more affordable for Californians. With health care spending in the United States reaching $4.5 trillion in 2022, the move to limit price increases in California is seen as a significant step towards addressing the issue of rising medical costs.