California health spending is rising even as commercially insured patients use less care. New evidence points to prices, treatment intensity, prescription drugs and high-cost cases—but researchers still cannot say exactly how much each factor contributes.
A new national study offers a simple explanation for why private health insurance keeps getting more expensive: The cost of health care itself is rising.
But California’s newest data raise a more complicated question.
If Californians with commercial insurance are using less health care, why is the amount being spent on their care still rising?
That question is critical because the cost of care eventually becomes part of the cost of coverage.
A September study in JAMA Health Forum found that average private insurance premiums increased 78.4% between 2011 and 2024, while health spending increased 84.2%. The researchers found that health-spending growth accounted for 91% of the growth in premiums during that period. They cautioned, however, that the 91% figure is an accounting relationship, not proof that health spending causally produced exactly 91% of premium growth.
For California, the more important question is what is happening underneath that spending.
California’s spending puzzle
California’s Office of Health Care Affordability (OHCA) recently examined commercial health-care claims from 2022 through 2024.
The results are striking.
Total medical expense per commercial enrollee increased 15.8% over those two years.
But the commercial utilization rate fell 4.2%, while the average number of health-care encounters per member fell 3%.
In other words, the increase in spending cannot simply be explained by Californians going to the doctor more often.
OHCA’s earlier analysis reached a similar conclusion. From 2022 to 2023, utilization declined across the commercial payers it studied even as spending per member increased. The agency said prices and the intensity of care were among the factors that needed further investigation.
That shifts the question.
The issue may not be how much care Californians use, but how much the care they receive costs.
Price is one important piece
California’s commercial health-care market contains large differences in what insurers pay for the same or similar services.
OHCA has been examining those differences as part of its broader effort to identify the drivers of health-care spending. Its 2026 research program includes analyses of commercial spending, utilization, hospital spending and regional price variation.
That does not mean every high price is unnecessary, or that hospitals and doctors alone are responsible for rising insurance premiums.
It does mean that the price of care is an important part of the affordability equation.
And commercial insurance matters here because the prices negotiated between providers and private insurers can differ substantially from the prices paid by public programs such as Medicare.
Prescription drugs are another clear pressure
Prescription drugs provide one of California’s clearest examples of spending growth.
According to the California Department of Managed Health Care’s 2024 prescription-drug spending report, health plans spent about $14.9 billion on prescription drugs in 2024, an increase of 9.5% from the previous year.
Prescription drugs represented 15.4% of total health-plan premiums in 2024.
Specialty drugs were only 1.8% of prescriptions dispensed, but accounted for 63% of prescription-drug spending.
That does not mean prescription drugs explain all of the increase in insurance costs. But unlike some broader explanations, California has direct data showing how much prescription spending represents within health-plan premiums.
Patients are also becoming more expensive to treat
OHCA found that the share of commercial enrollees with a chronic condition increased 9.6% between 2022 and 2024.
The share of extremely high-cost members, those with at least $1 million in annual spending, increased 25.4%.
But those high-cost patients represented only about 0.01% of the commercial enrollment population.
Those numbers provide another piece of the puzzle, but they do not establish how much these factors contributed to the overall increase in spending.
That distinction matters.
What California knows and what it doesn’t
The evidence increasingly points to several forces behind rising health-care spending:
- prices paid for medical services
- the intensity and mix of care
- prescription drugs
- chronic conditions
- extremely high-cost cases
What the evidence does not yet provide is a clean California percentage showing exactly how much each factor contributed to the growth of private insurance premiums.
That is an important limitation.
It means it would be wrong to say, for example, that hospitals, drug companies or patients are individually responsible for a specific share of California’s premium increases based on the evidence currently available.
The new JAMA Health Forum study also carries the same warning. Its 91% finding describes an accounting relationship between spending and premium growth; the researchers explicitly say it is not a causal estimate.
Why this matters to California families
Parriva has also looked into what Californians may face as health insurance costs rise in 2027. This story asks a different question: What is happening to the underlying cost of health care that eventually feeds into those insurance costs?
That distinction matters because controlling premiums without addressing the cost of care underneath them may not solve the larger affordability problem.
California created OHCA specifically to study and address that problem. The agency is now building a growing body of evidence on spending, prices, utilization and other drivers of health-care costs.
For consumers, the takeaway is not that there is one culprit.
It is that California’s health-care affordability problem is increasingly looking less like a question of how much care people use and more like a question of what that care costs.
And the state is still working to determine exactly where those costs are coming from.
For Californians already struggling to afford coverage, Parriva’s guide on what to do if you can’t afford health insurance provides a separate practical resource. That is a different question from what is driving the system’s underlying costs—but for families feeling those costs now, the distinction matters.
