On April 24, the Department of Health Care Access and Information
(HCAI)
announced that the Office of Health Care Affordability’s
Board approved a statewide health care spending target of 3
percent to be phased in over time (target initially starts at
3.5% for 2025 and 2026, to be lowered to 3.2% for 2027 and 2028,
before ultimately reaching 3% for 2029 and beyond). This target
was based on the average change in median household income for
the 20-year period from 2002-2022.
In recognition that health care affordability has reached a
crisis point as health care costs continue to grow, the Office of
Health Care Affordability’s statutory charge specifies that the
spending target is required to promote the goal of improved
affordability for consumers and purchasers of health care, while
maintaining quality and equitable care, including consideration
of the impact on persons with disabilities and chronic illness.
According to the HCAI announcement, the spending target will
apply to health care entities, including health plans, provider
organizations (with at least 25 physicians), and hospitals.
Beginning with the 2025 target, the Office of Health Care
Affordability can begin taking progressive enforcement action
against health care entities that exceed the spending growth
target. Progressive enforcement approaches include technical
assistance, requiring an explanation at public meetings, imposing
performance improvement plans, and ultimately, if warranted,
assessing financial penalties.
