Healthcare Costs Expected to Rise in California

The Affordable Care Act will expand coverage to millions of Californians next year. But health care costs are expected to grow 7.4% next year, which will drive up insurance premiums, according to the California Association of Health Plans (CAHP).

Obesity, chronic disease, and rising prescription drug prices are major contributors to the growing health care expenditures in California and across the United States. Patrick Johnston, CAHP president and CEO said, “Next year, many Californians will be eligible for new government subsidies to help pay for health coverage. While subsidies will help make coverage more affordable, the underlying cost of health care continues to grow, and that will drive up insurance costs because 88 cents out of every $1 spent on health plan premiums goes to medical care.”

Two in five California adults have a chronic disease. Chronic diseases account for $3 out of every $4 spent on health care, or an extra $6,100 per person per year. One out of every three children in California is obese or overweight, and 61% of California adults are overweight or obese. Health care costs associated with obesity amount to $12.8 billion per year in California.

Prescription drug spending in California nearly doubled from 1991 to 2009, reaching $24.4 billion, accounting for more than 10% of all health care expenditures in the state. Johnston noted that one-third of U.S. health expenditures are for unnecessary tests, treatments, hospitalizations, and drugs. CAHP’s Choosing Wisely campaign has identified more than 130 tests and procedures that may not only be unnecessary, but could also cause harm in some instances. According to CAHP, some expensive new technologies, such as robotic-assisted hysterectomies, don’t improve medical outcomes and drive up costs. For more information, visit www.calhealthplans.org

Last Updated 09/16/2020

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