Angela Hart and Samantha Young, California Healthline
Gavin Newsom drew attention to the California health care industry when he was a governor nominee, promising in 2018 to fight insurance companies, doctors and hospitals that have forced many Californians to grapple with huge medical bills and soaring insurance premiums.
He has pledged to spearhead the California single payer movement, a high-stakes liberal dream that will eliminate private health insurance and cut providers’ pay. The harsh rhetoric continued after his election, when Newsom told insurers to “do their damn job” to improve treatment for mental illness or faced fines, and promised to cut rapidly growing healthcare industry revenues.
“We have to get serious about cutting health care costs,” the first Democrat said in January 2020 when he presented his proposal to create a Health Accessibility Office that would do the unthinkable in a profit-driven system: set limits health care spending and requires so that doctors and hospitals work for less money. “We mean business.”
The industry leaders were shocked. But instead of mobilizing full protection to suppress Newsom’s efforts to regulate them, they used their political clout and close ties with the governor to develop a friendlier alternative that doctors, hospitals and insurance companies could live with.
When Newsom ultimately drafted the bill for the office, he took an idea suggested by healthcare executives and made it his own: instead of caps on prices or cuts in revenues, he would let industry spending grow, but with constraints.
Political strife killed the law this year, but she is expected to return in January and spark one of the health battles next year.
“They are afraid of what might happen to them and are trying to defend their interests because they are being threatened,” said David Panush, a seasoned Sacramento health policy consultant, of the players in the health care industry. They know that “there is blood in the water and sharks are approaching.”
If Newsom’s plan to curb health care costs succeeds, it could provide him with some political cover during next year’s re-election campaign, which will bring him a major health win, even if he dodges progressive demands such as a single payer system.
But it can also bolster the power of an industry that continues to wield tremendous influence – negotiating behind the scenes to protect its huge profits and secure incentives and side deals in exchange for its support.
“Every time we try to do something to reduce health care costs, there is tremendous resistance,” said Assemblyman Jim Wood (Democrat from Santa Rosa), head of the Assembly’s health committee, which works closely with the Newsom administration on this issue. offer.
Powerful industry players only fought back more strongly as lawmakers tried to tackle them, Wood said. “Any person or anything that violates the status quo is met with tremendous resistance and tremendous resources to deal with it,” he said.
When Newsom took office in 2019, he knew public opinion was turning against the healthcare industry. According to federal data, on average, health care costs averaged about $ 11,600 per person that year, up from $ 4,600 in 1999. In California, hospitals account for the largest share of spending, nearly a third, and 20% of health care dollars goes to doctors.
California Consumers Demand Action: 82% of state residents believe it is “extremely” or “very” important for the governor and legislature to make healthcare more accessible, according to a 2021 survey conducted by the California Health Care Foundation.
Most of Newsom’s harsh statements about industry spending came early in his presidency. “We’re going to set specific cost targets for all sectors that need to be met, and we’re going to assess penalties if they don’t meet those targets,” Newsom said in January 2020. “If it doesn’t wake up the group members. system, I don’t know what will happen. “
Newsom’s wake-up call came immediately after intense legislative debate over bills that would allow the state to set health care prices and create a single payer system. These measures received an unexpected boost but were ultimately deflected by opposition from the healthcare giants.
Then the covid-19 crisis hit, prompting him to be removed from office, and the wake-up call was answered with a press of the retry button. The governor and his healthcare industry allies have moved closer. Just as he needed them to be the nation’s front line of defense, they needed him to keep hospitals from overcrowding, provide protective gear, and promote vaccinations.
The Health Titans have become a permanent satellite in Newsom’s orbit. His calendars, obtained by the KHN, show that doctors, hospitals, and health insurance executives had regular access to the governor.
Carmela Coyle, head of the California Hospital Association, stood next to Newsom at the state’s emergency center during the early days of the coronavirus crisis, and Paul Markovich, CEO of Blue Shield of California, was awarded a lucrative state vaccination contract without bidding for implementation. Newsom’s vaccination efforts.
The industry’s cozy relationship with Newsom became public in late 2020, when Newsom was photographed dining at the posh French Laundry restaurant with Dustin Corcoran and Janus Norman, CEO and chief lobbyist, respectively, of the California Doctors’ Lobby. Medical Association.
“There is no way out of this covid crisis when the healthcare industry has been given so much power without the collateral influence,” said Carmen Balber, executive director of the Consumer Watchdog advocacy group.
Newsom did not respond to questions about industry impact, but spokesman Alex Stack said his proposal to regulate health care costs “is a priority for this administration, and we hope to continue working on this issue to address this issue.”
The doctors and Blue Shield have given Newsom millions of dollars to support his political career over the years, including a $ 20 million donation in September 2020 from Blue Shield to his initiatives to fight homelessness.
The recall efforts undertaken earlier this year have only strengthened Newsom’s relationship with health officials. Industry groups wrote checks to the California Democratic Party, which fought to keep Newsom in power. According to state campaign finance reports, he received $ 1 million each from the Blue Shield and the hospital lobby and $ 875,000 from the doctors’ lobby.
While Newsom has pledged to tackle the industry, he hasn’t taken aggressive action, and health leaders and lobbyists continue to exert their influence as they shape the debate over the Health Accessibility Office.
This could put Newsom in a quandary as he runs for re-election – first in the June 2022 primary and then in the November general election – because he will face intense political opposition pressure from Liberal Democrats who want him to kept his campaign promise and made a unified decision. payer.
Health experts and policymakers say Newsom can help relieve these pressures by enacting strict legislation following a sharp increase in health care costs.
“This problem is not going anywhere – it needs to be addressed,” admitted Corcoran. The pursuit of cost control “should be inconvenient for everyone, but not so terrible.”
But it won’t be easy. After powerful industry leaders joined forces with unions and consumer advocates to propose a plan to the governor, they stifled negotiations with their demands, splitting the coalition and wiping out efforts this year.
Coyle, along with the hospital association, left the coalition early on fears that hospitals were the primary target, and approached the Newsom administration independently. She also asks Newsom to relax stringent earthquake safety standards for hospitals.
Corcoran wants to exempt “small” medical practices, which he defines as practices with up to 100 doctors, from regulation, arguing that restrictive government control over spending could drive them out of business, leading to increased industry consolidation and higher prices.
“The goals were constantly changing,” said Yasmin Peled, a lobbyist for the Health Access California advocacy group that was involved in the negotiations. “Requests were constantly changing.”
Before the negotiations collapsed completely, Newsom embraced Coyle’s idea that the government should control growth, not impose revenue cuts. And this should apply not only to hospitals, but all health sectors, including doctors and insurance companies. (According to Wood’s statement, the pharmaceutical industry will not be subject to cost control provisions due to restrictions in federal law.)
With the front lines drawn, industry groups are poised for a major battle next year as Newsom and state Democratic legislators strengthen their laws. “Their primary purpose will be to protect their interests,” said Mark Peterson, professor of public policy, political science and law at the University of California, Los Angeles.
“There is no doubt that this industry has strength. The real question is what they do about it, ”Peterson said. “They’re getting important wins.”
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