Office of Health Care Affordability staff reviewed economic indicators used in setting the statewide spending target and presented an updated list of hospitals meeting high‑cost criteria.

Staff walked through 2024 changes: California median household income rose 11.9% in 2024, bringing the 20‑year annual average to 3.7% (up 0.7 percentage points from the value used to set the 3% target). OCA said health‑care spending growth still outpaces income and argued for maintaining a predictable, multi‑year target to give regulated entities stable expectations.

The board considered alternative lookback windows. Several members, including Professor Richard Kronick, favored a shorter 10‑year average to better reflect recent wage and inflation dynamics; others supported the 20‑year basis for stability and to smooth temporary volatility. Member Ian Lewis emphasized affordability concerns, noting median income increases may not reflect the experience of many Californians.

OCA also reported on its high‑cost hospital methodology (percentile thresholds on inpatient net patient revenue per case‑mix adjusted discharge and commercial‑to‑Medicare payment‑to‑cost ratios) and said there was no change in the list of high‑cost hospitals using the latest HCAI hospital financial data for 2019–2023. Staff will continue to update the list annually and provide facility‑level datasets for hospitals to review.

During public comment, consumer advocates urged retaining the current targets to preserve pressure on price growth and asked OCA to consider the impacts of potential changes on premiums and deductibles. Hospital association representatives urged careful reconsideration of the methodology and deeper analyses on payer and market drivers.

No formal board vote to change targets was taken; staff characterized their recommendation as not to reset spending target values at this time and committed to providing further data when updated THCE and hospital financial data are available.