Affordable health care threatened by hospitals’ mark-up costs

California small businesses face a long list of challenges. From labor shortages and lost revenue due to the pandemic, to rising rents, fuel costs, inflation and the supply chain crisis, the roadblocks that small business owners must contend with in the Golden State are numerous.

Even in the face of these challenges, providing health care that is both affordable and high quality to our employees and their families is still a top priority for those of us who run small businesses, but the California Legislature’s consideration of Senate Bill 958 has led many of us to believe they are working against us.

If there is one thing this pandemic has taught us, it is that having quality health care coverage is important, and as an employer, I am committed to providing this health care coverage to my employees.

Studies have shown that hospitals commonly mark up drug costs when billing patients and health plans.

The cost of this coverage, however, seems to get more expensive every year. A recent California Health Care Foundation study found the average monthly health insurance premium in California, including the employer contribution, was $653 for single coverage and $1,717 for family coverage.

If it passes, SB 958 will only add to these costs and could jeopardize the affordability of employer-provided health care coverage for employees and their families in California.

SB 958 would do away with a safe and long-practiced process health insurers have implemented using specialty pharmacies to deliver clinically administered drugs directly to a health clinic or patient when it is safe to do so.

If passed, SB 958 would severely limit specialty pharmacies’ ability to deliver lower cost medications to patients, while also making it even easier for hospitals to markup the cost they charge patients for critical medications, and in the end, we would see higher health care premiums for California’s employers and individuals.

It is no surprise that this bill is sponsored by California hospitals – the very industry that would benefit from such a law.

Studies have shown that hospitals commonly mark up drug costs when billing patients and health plans. The Journal of the American Medical Association (JAMA) recently published a study finding that the nation’s top cancer hospitals are hiking drug prices by double to seven times their costs of acquiring cancer drugs. A prominent California columnist has also highlighted this common but seemingly unethical practice, which leads one to wonder, why are California lawmakers even considering this legislation?

As the leading small business advocate in the state, the California Small Business Association is thankful to the California lawmakers who have taken important steps to help employers recover from this terrible pandemic and once again grow jobs, the local and state economy, and our communities.

Unfortunately, SB 958 is a prescription for higher health care premiums that will hurt California employers and workers by giving hospitals license to overcharge for life saving medications.

If health care affordability is the goal of the California Legislature, they must reject bills like SB 958 that will increase premium costs for California employers and employees.
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Editor’s Note: Betty Jo Toccoli is president of the California Small Business Association.