California Hospitals Sue to Block State Health-Cost Caps

Overview

• The California Hospital Association filed a complaint in San Francisco County Superior Court seeking to halt the Office of Health Care Affordability’s spending rules.
• The OHCA board set annual growth caps at 3.5% starting in 2025, dropping to 3% in later years, with enforcement through performance plans and fines beginning in 2028.
• In court filings, hospitals warn the targets would force layoffs and service cuts, estimate losses at more than three-quarters of facilities, and project roughly 40,000 job reductions.
• Regulators designated seven facilities as high-cost and imposed tighter limits—down to 1.8% in 2026 and 1.6% four years later—affecting Stanford Health Care and Community Hospital of the Monterey Peninsula.
• Insurers and consumer advocates defend the caps as necessary for affordability, and the overseeing state agency declined to comment on the pending case.