Affordability Initiative

In 2008, the IHA Board authorized the formation of a steering committee to identify and implement strategies to improve the affordability of California's health insurance products, resulting in the IHA Affordability Initiative.

The Affordability Initiative currently includes three projects: (1) a pilot of bundled episode-of-care pricing, beginning in Southern California and later expanding across the state; (2) efforts to reduce preventable readmissions in California hospitals; and (3) consideration of a uniform hospital payment model, e.g., Diagnostic Related Groups (DRG).  For more information on these projects, please refer to the Bundled Episode of Care Pilot, Leadership Summit on Reducing Readmissions, and DRG-Based Payment Assessment documents in Related Resources (to the right).

Affordability Initiative Objectives

The objective of the Affordability Initiative is to increase the efficiency of delivery systems in California through stakeholder collaboration for the purpose of delivering more affordable health insurance products. The scope of the Affordability Initiative is limited to commercial insurance programs, and will include efforts to develop consistent, standard methodologies and incentives across the healthcare industry in order to reduce redundancy and complexity. Efficiencies will be sought in both administrative and medical management components of insurance products.

Affordability Initiative Guiding Principles

The Affordability Initiative is informed by five guiding principles:

• Operate a shared governance model based upon clarity of purpose, shared goals, and open dialogue;

• Incorporate all stakeholder groups, including health plans, physician groups, hospitals, purchasers, and consumers; do not limit participation to IHA members;

• Pursue consistent methods across stakeholders to maximize results;

• Share savings resulting from the initiative with consumers and purchasers to create more affordable health insurance products; and 

• Focus on efforts to improve cost efficiency that enhance, rather than restrict, access to medical care.