A new policy brief about the impact of California AB 72 finds that the law – designed to alleviate surprise medical billing – while well-intentioned also has unintended consequences that have increased medical costs and affected quality of care.
The Pacific Research Institute (PRI) brief, “The Menace of Medical Rate Setting: The Case of California’s AB 72,” is authored by Dr. Wayne Winegarden, director of PRI’s Center for Medical Economics and Innovation.
The three-year-old law has caused price controls that have driven more health care providers to consolidate and led to fewer doctors on call in emergencies, Winegarden told the Northern California Record.
“We see networks narrowing at a time when you have a pandemic,” Winegarden said. “Then as you narrow those networks, you reduce patient choice and that raises costs, which is the exact opposite of what we need.”
The brief cites surveys of both patients and physicians.
Data from the California Medical Association found that 62% of medical professionals surveyed said AB 72 caused access issues for patients, and 79% said it decreased availability of emergency physicians.
Additionally, statistics from California Department of Managed Health Care showed patient complaints about health care access escalated in 2018 – shortly after the law was in effect – and grievances continued to rise in 2019.
The net effect is similar to rent control measures.
“San Francisco has a rent control policy that has made housing less affordable by restricting the supply. That’s the type of path we’re going down with AB 72,” Winegarden said. “Rent control is a perfect analogy, we don’t want that in our health care.”
Winegarden noted AB 72 could become a cautionary tale for Congress and other states, and that free market reforms are needed to bring about billing transparency for patients and improvements in medical care without price controls.
“When you look at what providers have been saying, listening to people directly involved, they’re saying there has been constant pressure to consolidate,” Winegarden said. “For a lot of independent physicians, who wanted to be in private practice to practice medicine, this was the final straw that pushed them to consolidate.”
The question isn’t whether AB 72 is necessary, but what reforms are needed to fulfill its intent.
“AB 72 was passed as a response to real problem,” Winegarden said. “But it creates additional problems that are either unnecessary or very damaging by overwhelming the original issue it’s meant to address.”