California caps healthcare increases to three percent annually

A new state agency will enforce the cap.

Healthcare prices in California will be limited to three percent annual increases starting in 2029. 

State regulators approved a new rule on Wednesday that aims to address the increasing costs of medical care. 


Driving the news: The Health Care Affordability Board approved the three percent cap on Wednesday and plans to phase it in over five years. 

  • The new rule will be enforced by a new state agency, the Office of Health Care Affordability, with providers facing fines for non-compliance.
  • The board based the target on the average annual change in median household income in California between 2002 and 2022, which was 3%.
  • More than half of California’s 425 hospitals are losing money, and many rural facilities are in danger of closing, prompting the state Legislature to approve an emergency loan program.

What they’re saying: “Making quality health care affordable is a top priority for our administration,” Gov. Gavin Newsom said in a statement released. “This action is a crucial first step forward in our efforts to reign in outrageous heath care costs and make health care more affordable.”

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