Can we learn from Oregon?
Health Reform Interrupted: The Unraveling Of The Oregon Health Plan
by Jonathan Oberlander
Health Affairs
December 19, 2006
Abstract:
The Oregon Health Plan (OHP) has received national and international attention for rationing medical care based on explicit priorities. However, in recent years OHP has lost substantial enrollment and struggled to live up to its core principles. This paper explores what went wrong in OHP and the implications of Oregon’s experience for state-led health reform.
Lessons for state health reform (excerpt):
The strongest challenge to sustainability, though, may come from rising medical costs. As medical inflation increases, and with it the number of uninsured people who lose employer-sponsored coverage and qualify for public insurance, the price tag for maintaining—let alone broadening—coverage expansions also increases, and retrenchment may supplant activism on the agenda. And as Medicaid spending consumes a higher percentage of state budgets, outpacing revenue growth and threatening to crowd out spending for education and other politically popular priorities, ambitious plans to cover the uninsured become more difficult to fulfill. Economic downturns exacerbate these pressures, especially since states must live with balanced budget requirements. Cost control, which triggers intense opposition from medical-industry interests that profit from the status quo, requires much more political will to impose than insurance expansions do. Avoiding cost control and gaining the support of system stakeholders is perhaps the key to short-term political success. However, its absence may be, in the long run, the Achilles’ heel of state-led health reforms that seek to move toward universal coverage without serious mechanisms to control spending in their own programs and without limits on medical care inflation in the broader health system.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.1.w96
Comment:
By Don McCanne, MD
There are many factors involved in the unraveling of the Oregon Health Plan that will not be discussed here, but most are of importance to other states. Nonsubscribers can download this article free of charge for the next two weeks and should do so to learn these other important lessons from Oregon. Only one factor will be discussed here.
The most difficult problem that Oregon and all other states have faced is the continuing escalation of medical costs. Now that there seems to be a growing political consensus that comprehensive reform must occur at the state level, we need to ask whether the states would be capable of stabilizing the system by controlling costs.
We can’t discuss controlling costs without understanding some of the more important reasons for our high costs. Amongst them are deterioration of our primary care infrastructure, high prices, profound administrative inefficiencies, and an excess of non-beneficial high-tech services.
Innumerable studies have demonstrated that a strong primary care infrastructure ensures the delivery of higher quality care at a lower cost. Could any state build that infrastructure independently? It would require a transformation of both our medical education and health care delivery systems to achieve that mission. It is unlikely that any one state would be capable of that intrinsically, not to mention the fact some states might expropriate the products of the efforts made by other states. We will not have an effective primary care infrastructure until we have made it a national policy that all concerned individuals and institutions cooperate in efforts to build the primary care system we need.
Our health care pricing is the highest of all nations. Could any one state independently control prices, whether through markets or by government control? Both government and private insurance programs already set rates, yet health care costs continue to escalate. Prices need to be set based on legitimate costs and fair profits. The most efficient and equitable method would be through negotiation. If one or two states acted independently without other states involved in a similar process, cost shifting and unfair pricing would be inevitable with the possible consequence of instability in the health care delivery infrastructure. We need national policies to establish a system of pricing that is fair for all.
Much of the administrative waste that characterizes the health care system in the United States is due to the fragmented financing system of public programs and a multitude of private plans. Could a state independently establish an efficient, coordinated system of health care financing, such as a single payer system? It would be impossible without federal involvement. The state would require funds that are currently financing Medicare, Medicaid, SCHIP, and innumerable other programs that have designated revenues flowing to the states. Even though administration would be more efficient on a state or regional basis, only the federal tax system has the size and stability to ensure that state programs remain adequately funded. We need federal policies to be sure that adequate public funds would always be available for an administratively efficient financing system.
Can states control the high-tech excesses? Once again, that would require a coordinated effort between our medical education and health care delivery systems. Only a national resource such as the National Institutes of Health would be capable of providing the parameters to guide this process. We need federal policies to support national programs that would identify value in all health care services, not just high-tech, so that we receive greater relative benefit from our health care expenditures.
The Democrats have indicated that they intend to merely tweak our system. Many are advancing programs to shift responsibility to the states to allow them to adopt “politically feasible” programs that have been designed by the conservatives. (One important factor in Oregon’s unraveling was the introduction of “personal responsibility” through decreased benefits and greater cost sharing.)
Oregon, and every other state for that matter, have provided us with an important lesson. The states cannot act alone. It must be national policy that everyone has access to comprehensive, high quality, affordable health care.
All state programs have fallen short. Why do we continue these experiments with state laboratories when a simpler, single national health insurance program will do it?