After skyrocketing in the first year of the COVID-19 pandemic and then tempering almost as dramatically a year later, health care spending in the U.S rose just over 4% in 2022, hitting $4.5 trillion, the federal government announced Wednesday.
The annual growth in the nation’s health care spending appears to be returning to pre-pandemic trends, according to a new report from analysts at the Centers for Medicare & Medicaid Services (CMS). The report was published online Wednesday in the journal Health Affairs.
In the four years before 2020, the first year of the COVID-19 pandemic, health care spending rose 4.2% to 4.6% a year, according to CMS.
While last year’s increase was higher than the 3.2% growth in health spending in 2021, it was less than half the 10.6% growth of health spending in 2020.
Kaiser Permanente’s $200 millionsettlement with the State of California for its repeated failures to provide patients with adequate and timely mental health care was a long while coming. The deficiencies themselves? Kaiser’s own employees say they’ve been hiding in plain sight.
“Years and years of banging our heads against the wall have finally paid off,” said Ilana Marcucci-Morris, a therapist at Kaiser Permanente’s Oakland Medical Center. “This has the potential to make Kaiser a leader in mental health care, rather than a serial violator of mental health care laws.”
The settlement, announced late Thursday by the state’s Department of Managed Health Care, includes a $50 million fine — the largest the department has ever levied against a health plan, Director Mary Watanabe said in a statement. Kaiser also pledged to spend $150 million over five years to build out behavioral health services that critics say have been woefully underdeveloped for years, leading to appointment wait times that violated state standards.
The settlement resulted from the department’s enforcement investigation and a nonroutine surveyof Kaiser’s practices last year, which identified “several deficiencies and violations in the plan’s provision of behavioral health care services to enrollees,” the department said in a news release. Those included long delays for patients trying to schedule mental health appointments, a failure to contract enough high-level behavioral care facilities within its network, and Kaiser not making out-of-network referrals consistent with requirements under the law when in-network providers were not available, the department said.
Under the settlement, Kaiser must hire an outside consultant “to focus on corrective actions” related to access, referrals, appeals and grievances and to ensure that patients receive the mental health care they need, regardless of the type or severity of their conditions.
“Today’s actions represent a tectonic shift in terms of our accountability on the delivery of behavioral health services,” Gov. Gavin Newsom said in a statement. Newsom said the settlement aims to “provide Kaiser patients with the care they are entitled to in a timely manner.”
In a statement, Kaiser CEO Greg A. Adams said the agreement “takes full accountability for our performance during the survey period including our shortcomings, acknowledges our work to improve mental health care, and ensures that our ongoing investments not only help the members of Kaiser Permanente but also build a stronger mental health foundation in the communities we serve.”
Critics have argued that Kaiser patients haven’t received adequate care for years, despite previous enforcement actions. Kaiser paid a $4 million fine in 2013 for not providing its members proper access to mental health care. Four years later, it agreed to redress similar failures. Yet Kaiser has consistently left patients without follow-up mental health appointments for weeks, sometimes months, state officials and critics have said.
The situation reached a boiling point last fall, when more than 2,000 mental health professionals affiliated with the National Union of Healthcare Workerswalked offthe job, frustrated during contract negotiations by what they said was Kaiser’s refusal to address persistent staffing issues and long wait times for behavioral services. (Disclosure: NUHW is a financial supporter of Capital & Main.)
Capital & Main reported in 2021 and again last year that Kaiser workers said wait times for mental health appointments often stretched four to eight weeks or more. Jenny Butera, a marriage and family therapist in Sacramento who has since left Kaiser, said on Aug. 14 last year, “My earliest next appointment (is) mid-October — for anybody.” The American Psychological Association said in 2020 that it had never “seen such an egregious case of delayed access for follow-up appointments.”
The DMHC paid attention to such stories, and legislation that took effect last summer required providers such as Kaiser to schedule follow-up appointments for mental health care patients within 10 days of their last visit. In the wake of Thursday’s announced settlement, the department said its survey continues and could prompt a modified corrective plan.
“This settlement is a monumental victory for Kaiser Permanente patients and its mental health therapists who have waged multiple strikes over the past decade to make Kaiser fix its broken behavioral healthcare system,” said union President Sal Rosselli. “The DMHC’s report affirms everything that Kaiser therapists have said about their patients’ inability to receive timely, adequate mental health care.”
In his statement, Adams said demand for Kaiser’s mental health care services rose 33% during the COVID-19 pandemic and that 20% more people have sought care in 2023 than at the same time last year. He added that “an ongoing shortage of qualified mental health professionals,” along with clinician burnout and turnover and the 10-week strike last year, made it “very difficult to meet this growing need for care.”
The union has disputed Kaiser’s characterization, arguing that qualified therapists fled Kaiser over the years because of unreasonable workloads and short-staffing practices that predated the pandemic.
Kaiser Permanente is the largest health care provider in California, with 9.4 millionresidentsusing the system. The company was founded as a nonprofit, though its Permanente Medical Groups operate as for-profit entities. Kaiser reported a record $8.1 billion in net revenue in 2021 before showing a loss in 2022 — the only year since 2007 that the company has posted negative income.
Kaiser therapists have complained for years that Kaiser paid scant attention to the mental health care needs of its patients — a fairly common practice among health providers, industry economists say. Thursday’s settlement will change the math a bit.
“It makes me feel hopeful, knowing they have to put money into this,” Marcucci-Morris said. “We’ve been pushing for well over a decade.”
The Conversation asked Michael McQuarrie, an Arizona State University sociologist who directs its Center for Work and Democracy, to explain why this strike is happening now and how labor actions like this can affect patient care.
Kaiser health care workers on the picket line outside of a Kaiser Permanente facility in Sacramento, Calif. It is the largest medical care worker strike in U.S. history.
1. Why is this historic strike happening now?
The two main reasons are concerns over staffing levels and practices and dissatisfaction with pay that hasn’t kept up with inflation and was too low to begin with.
Kaiser says its options are limited due to a national shortfall in all sorts of health care workers, including home health aides and nurse practitioners. Workers counter that higher pay and better working conditions would attract more applicants.
At the same time, inflation has outstripped negotiated wage increases for Kaiser workers. Kaiser is currently offering some workers in Northern California and Washington state 4% annual raises for the four years covered by the new contract and lower raises for everyone else. The unions have rejected this offer, which they say would not make up for past inflation and would unnecessarily create different wage scales based on the region where workers are located.
“Why are we here? Patient care! How do we get it? Higher staffing. Why are we here? Patient care! How do we get it? Living wages.” Video by Amanda Mascarelli.
2. Has Kaiser’s financial management played a role too?
Kaiser, which provides health care for 12.7 million Americans, took in US$95.4 billion in revenue in 2022 but ran a $1.2 billion operating loss that it attributed to “strong economic headwinds in the financial markets” – suggesting that its investments were to blame rather than its health care operations.
3. But isn’t Kaiser a nonprofit – and does that mean it has any special obligations?
Like many health care systems, Kaiser is a nonprofit. This means it pays very little in taxes. In exchange for their special tax status, nonprofits are supposed to provide public benefits.
Health care strikes are not unusual, with more than 40 occurring in the past two years. However, the industry and the workforce are heavily fragmented, which means that these strikes tend to be relatively small.
In September 2022, the Minnesota Nurses Association took 15,000 members on strike over many of the same issues, such as staffing and inflation. That strike, which lasted three days, was the largest health care strike in U.S. history by that point in terms the number of workers involved.
Prior to that, the largest was probably another Minnesota strike in 2010, in which about 12,000 nurses walked off the job for 24 hours.
Kaiser has experienced much smaller strikes in the past, such as a walkout in 2015 of about 75 mental health clinicians.
5. How much are patients harmed during health care strikes?
It depends on the strike, but usually not much.
Critical care Kaiser facilities will remain open, though the strike will likely cause some delays in care due to short staffing and long lines.
Some appointments and elective procedures at the affected hospitals are being postponed, and nonessential functions like labs and radiology departments are temporarily closed or their hours are being reduced.
Nurses, who are very important bedside caregivers, are part of a different coalition of Kaiser unions. While they won’t be on strike, they may have to help cover work not being done by aides and other support staff who are on the picket lines.
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