Can California's three major state health care purchasers combine their buying power to lower costs or improve value? Implementation of the ACA may provide an opportunity.
Implementation of the Affordable Care Act (ACA) puts three of California's largest public purchasers of health care services — Covered California (California's ACA-compliant health benefit marketplace), the California Department of Health Care Services (DHCS), and the California Public Employees Retirement System (CalPERS) — in a stronger position to coordinate their buying power.
States have long been interested in this type of alignment, hoping that enhanced market leverage would lead to lower costs and better medical care. But few such efforts have been sustained. State government bodies are often reluctant to coordinate with one another without a mandate to do so, and the regular turnover in governmental leadership can stymie progress. State purchasers also differ significantly in their missions, covered populations and services, and contractors (including health plans and providers), further complicating alignment.
Despite these challenges, some states have effectively coordinated purchasing efforts, and in the case of Minnesota, sustained that activity over time. The creation of Covered California opens new opportunities for coordinated purchasing in the state, as does California's State Innovation Model grant planning process. California's three public health care purchasers could increase coordination in two ways:
- Creating a standing multiagency entity to ensure ongoing, facilitated dialogue among the state's health care purchasing entities
- Aligning performance measures, financial incentives, and contractual requirements to elicit desired outcomes from health care contractors
The full report is available under Document Downloads.
In the video below, author/researcher Michael Bailit presented the findings from this report and answered audience questions at a September 24, 2013, CHCF webinar.