Addressing the Impact of Rising Health Care Costs on Californian Families

TL/DR –

The cost of employer-sponsored family health coverage in California has risen 24% in three years, far outpacing inflation and wage growth and contributing to financial strain for many households. In response to rising health care costs, California established the Office of Health Care Affordability to monitor and limit health spending growth, but hospital industry groups have opposed its targets. The author argues that the affordability agency’s policy doesn’t impose budget cuts, but is designed to slow health spending growth, and that reducing hospital spending could free up budgets for worker wages without sacrificing patient care.

Rising Health Care Costs Affect Californian Households

High health care expenses are causing financial strain on Californian households. According to a recent survey by the California Health Care Foundation, 70% of people reported that these costs are a burden on their budgets, with almost two-thirds worried about unexpected medical bills. This leads to many Californians skipping or delaying necessary health care.

Employer-Sponsored Health Insurance Costs Rise

Millions of working Californians receive health insurance through their employers, but these aren’t free. In fact, the cost of employer-sponsored family health coverage in California has risen significantly – from $22,818 in 2022 to $28,397 in 2025. That’s a 24% increase in just three years, far outpacing general inflation (12%) and wage growth (14%). This growth also exceeded the national average of 6%.

Impacts of Rising Health Insurance on Workers’ Wages

Increased spending on health insurance by employers means less money for wages. Rising premiums thus effectively act as a hidden pay cut for working families. This trend of stagnant or reduced wages due to rising health care costs has been verified by economists at the UC Berkeley Labor Center and the Federal Reserve.

Pushback Against Office of Health Care Affordability

The state of California established the Office of Health Care Affordability to monitor and limit health spending growth. However, hospital industry groups have fought against its targets, resulting in a lawsuit filed by the California Hospital Association.

Efficiency Gains and Cost Savings Possible

Despite operational pressures, hospital spending offers significant opportunities for efficiency gains and cost savings. Data indicates that 40% of the total operating costs for all California general, acute care hospitals in 2024 were spent on overhead, including administrative and non-patient care functions. The use of artificial intelligence can streamline these administrative tasks, enabling hospitals to meet modest growth targets without compromising patient care or staff levels.

Call for Immediate Action on Health Care Affordability

Californian workers have waited long enough for relief from rising health care costs. The spending targets set by the Office of Health Care Affordability are reasonable and long overdue. Any further delay means more workers going without a wage increase, as rising premiums continue to absorb any potential salary increases.

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