States are increasingly trying to slow healthcare spending directly. California, which accounts for roughly one in eight U.S. healthcare dollars, spent $409 billion in 2023. Its Office of Health Care Affordability has set a per-capita spending growth target of 3.5% for 2025 and 2026, declining to 3% by 2029. Seven high-cost hospitals face tighter targets beginning in 2026, when enforcement can include public testimony, performance improvement plans, or financial penalties.
Evidence suggests broad growth targets can slow spending, but they are blunt instruments. A study of five states found that adopting cost-growth benchmark programs was associated with a 2% relative reduction in per-capita medical spending growth. However, a spending number alone cannot show whether a hospital exceeded its target because of higher prices, more patients, or sicker patients, and meeting the target could come from efficiency or from cutting staffing and services. Inflation also matters: a 2026 study found that meeting state benchmarks during the 2022-2023 inflation surge would have required real per-capita health spending to fall by an average of 1.6% per year.
More targeted price caps offer different tradeoffs. Rhode Island has limited hospital price growth since 2010, and one evaluation found hospital prices about 9% lower than comparison states, with premium savings of roughly $1,000 per member annually by 2022. But a later evaluation found lower registered-nurse staffing and wages relative to comparison hospitals. Oregon's state employee plan caps hospital facility payments at 200% of Medicare, producing about $50 million in annual savings with little detectable change in hospital finances or operations, though outpatient service use increased and out-of-pocket spending per procedure fell, potentially offsetting some savings. These state experiments show that curbing healthcare costs is possible, but each approach carries its own consequences.