California Healthcare Affordability: What Nationwide Hospital Price-Transparency Data Can Tell Policymakers

Pouyan Golshani, MD · Interventional Radiologist; Founder, GigHz · October 2026 · Last updated October 7, 2026

Updated October 7, 2026: added Section 8 on patient incentives.

Written in a personal capacity. Disclosure: the author is a partner in a California medical group and the founder of CenterIQ and LaVascular, which analyze hospital price-transparency data.

Summary

California spends more on health care than any other state: $405 billion on personal health care in 2020, or $10,299 per resident, the most recent state-level figures available. It is tempting to look for one culprit. The two usual suspects, physician pay and hospital profit, explain less of that total than is often assumed. A larger and less discussed gap is that the person receiving a scheduled service usually has no visible price and no share of any savings, and so no reason to compare.

Since 2021, federal rules have required hospitals to post machine-readable files (MRFs) listing the rates they have negotiated with each payer. These files are imperfect, but they are public, national, and payer-specific. California's Office of Health Care Affordability (OHCA) has now published claims-based evidence of large price variation within California regions. This brief describes what posted-price data adds to that picture, where it falls short, and four practical steps for California.

1. Why posted prices matter

Spending growth is a product of price and utilization. OHCA's September 2026 issue brief notes that its earlier work examined utilization and patient mix, and that the role of prices had not yet been explored. Patients, employers, and physicians generally cannot see negotiated prices before care is delivered. That information gap limits the ability of any purchaser to reward lower-priced, equal-quality care.

2. Commercial rates vary widely by geography

In a 2026 preprint (not yet peer reviewed), Golshani and Joseph analyzed commercial facility rates from hospital MRFs for 14 common interventional radiology procedures. State-level median rates varied 3.7- to 8.3-fold between the highest- and lowest-priced states. The widest spreads were for femoral-popliteal angioplasty (8.3-fold), atherectomy (8.1-fold), and iliac stenting (7.1-fold). More rural states had consistently lower rates: the most-rural quartile of states had a median commercial rate 42% below the most-urban quartile.

OHCA's brief, using 2024 California claims for 70 CMS-designated shoppable services, found that the 90th-percentile price often exceeds the 10th-percentile price by a factor of ten or more within a single region. It reports, for example, a median allowed amount for brain MRI of $1,749 in the Sacramento region and $474 in Los Angeles East. Two different data sources, posted rates and paid claims, point in the same direction.

3. Commercial rates versus Medicare benchmarks

In the same preprint, national median commercial facility rates ranged from 1.34 to 3.60 times the corresponding 2026 Medicare outpatient (OPPS) facility payment, depending on the procedure. The ratio is not uniform across services, which means a single across-the-board multiple of Medicare would affect service lines very differently.

4. Variation within and across health systems

The preprint identified 660 groups in which a single negotiated rate was applied across two or more affiliated hospitals within a state. Rates are often set at the system level, not the facility level. This is relevant to how market structure is reflected in prices and to OHCA's cost and market impact reviews. The preprint describes this pattern; it does not establish its cause.

5. What patients and physicians can realistically use

Few patients shop from raw files, and OHCA's brief notes that consumer use of price tools has been modest. The more realistic users are referring physicians, employers, health plans, and regulators. For a scheduled procedure, a referring physician who can see that two nearby facilities differ severalfold in price, with no known quality difference, has actionable information. Posted data is most useful when it is translated into procedure-level comparisons.

6. Limitations of current machine-readable files

• Formats and completeness vary by hospital; some files omit payers, plans, or codes.
• Some rates are expressed as percentages of charges or as case rates and cannot be compared directly.
• Posted rates are contracted rates, not paid amounts, and can differ from claims.
• Files list facility rates; professional fees are usually separate.
• The preprint's findings are national and state-level, from posted rates. They are not California claims and should not be read as California estimates.

CenterIQ data are derived from the machine-readable price files that hospitals are required to post under the federal Hospital Price Transparency rule (45 CFR Part 180). The files were obtained from the consolidated dataset published by Trilliant Health's Oria data portal (snapshot of November 7, 2025, covering 5,419 hospitals with successfully processed files). CenterIQ extracts commercial negotiated facility rates, summarizes them by hospital and procedure code, flags implausible values, and removes duplicate postings across affiliated facilities. The underlying figures are hospital-reported contracted rates, not paid claims.

California coverage in the underlying data is too thin to support California estimates. In the CenterIQ database, 44 California hospitals posted a commercial rate for at least one of the 14 study procedures, and only 2 to 17 hospitals posted a rate for any single procedure. Several of those hospitals belong to the same health system and post identical rates. Some post the same dollar amount for unrelated procedures, which points to case rates rather than procedure-specific prices. For these reasons this brief reports no California price figures. More complete and consistently formatted California files would make the cross-check proposed in Section 7 possible.

7. Practical steps for California

• Use posted rates as a cross-check on claims. OHCA's brief covers only the fully insured market and excludes capitated services. MRFs include payer-specific rates, including for self-insured plans. Comparing the two would show where they agree and where either source is unreliable.
• Report price variation by site of service and claim type. Ranges as wide as $20 to $7,000 for one procedure code likely combine professional and facility claims and different care settings. Stratified reporting would make any reference price more defensible.
• Extend price-variation analysis beyond the CMS shoppable list. Schedulable image-guided procedures show variation of similar magnitude in posted data and are not on the list of 70.
• Weigh access effects before acting on price alone. OHCA's brief notes that lower-priced providers may raise prices toward a reference point. Rural and low-volume service lines warrant specific attention, since rates there are already lower in posted data.

These steps concern measurement and reporting. The evidence summarized here supports better measurement; it does not by itself establish which pricing policy California should adopt.

8. Who has a reason to compare prices?

Physician pay is a small share of spending. Physician compensation has been estimated at roughly 8 to 10 percent of national health expenditures. The average US physician earned about $386,000 in 2025, according to Medscape’s 2026 compensation report, about 4.3 times US GDP per capita.

Hospital operating margins are thin. Kaufman Hall’s national median hospital operating margin for 2025 was 1.3 percent including allocations from parent health systems (4.9 percent before those allocations), and small hospitals ran negative. Tax-exempt hospitals reported community benefits equal to about 15 percent of total expenses. Hospitals depend on volume; a small change in price or mix can move them from surplus to loss.

The patient usually has no stake in the price. For a scheduled procedure, a commercially insured patient often pays the same copay wherever the procedure is done, cannot see the negotiated price in advance, and keeps none of the difference if they choose a lower-priced facility. Under those terms, not shopping is the rational choice. Posted files do not change that on their own.

When price reaches the patient, they do compare. Under CalPERS reference pricing for hip and knee replacement, where members paid any amount above a set reference price, the share choosing lower-priced hospitals rose from 48 percent to 63 percent, and prices at hospitals that had been above the reference price fell by about a third (Robinson and Brown, UC Berkeley). Design matters, though. Maine requires carriers to pay small-group enrollees at least 40 percent of the savings when they choose a lower-cost provider, yet in 2023 only 46 of about 119,000 eligible enrollees used it, for $2,360 in total payments, according to the state Bureau of Insurance. A savings share that patients have to discover on their own does little. The price has to be in front of the patient and the referring physician at the moment of choice.

A practical step for California. Pair transparency with a reason to use it:

1. Show the patient’s expected cost, and the plan’s negotiated price, at the point of referral for scheduled services.
2. When a patient chooses a facility priced below the plan’s reference or average price, return a share of the savings to the patient.
3. Deposit that share in an account the patient owns and keeps if unused at year end, available for future copays and other qualified medical costs. Health savings accounts already work this way, but only alongside a high-deductible plan (2026 limits: $4,400 self-only, $8,750 family). California could study a state account of this kind, open to members of any commercial plan, funded by shared savings and exempt from state income tax. Federal tax treatment would require federal action.

These are design questions, not settled answers. They are offered because the evidence in this brief shows large price differences that patients currently have no reason to act on.