
Former Oregon Gov. John Kitzhaber is pushing Republicans and Democrats in Congress to adopt Oregon-style health care reforms to limit the damaging effects of potentially huge Medicaid spending cuts.
The only Republican member of Oregon’s delegation, U.S. Rep. Cliff Bentz, contacted Kitzhaber earlier this year to talk about how to address Republicans’ budget goals while limiting harms to the federal health care program serving low-income people. Kitzhaber has since encouraged Bentz and others in Congress to follow the lead of Oregon’s version of the program, known as the Oregon Health Plan.
The idea, the former governor says, is to channel budgetary pressures and concerns over escalating Medicaid costs to cut waste and drive savings, as opposed to cutting services and coverage. But he knows it’s a tricky argument to make in the context of the current polarized debate.
“I recognize that there are a lot of folks who are skeptical of what I'm proposing,” he told The Lund Report. “Right now we are caught in a false choice between deep cuts to Medicaid and defending the status quo. I think we can do better. If the skeptics have a better approach, they should get it on the table. Soon.”
Indeed, while Democratic members of the Oregon delegation have praised the state’s reforms, they stopped short of endorsing Kitzhaber’s idea to expand them when asked for comment by The Lund Report.
Former governor's ideas spark praise, skepticism
U.S. Sen. Jeff Merkley said Oregon’s reforms “paid off with lower costs and greater services for Oregonians,” and faulted Republicans for instead focusing on cuts. “The success of our Medicaid expansion through the Oregon Health Plan should be celebrated, but instead Republicans have put Medicaid on the chopping block to pay for tax cuts that will hurt families and help billionaires.”
U.S. Sen. Ron Wyden, who has praised Oregon’s reforms in the past, said in a statement that Kitzhaber’s ideas are unlikely to be productive. “There’s no reason to believe Republicans will entertain any reasonable reforms when they are writing their bill entirely behind closed doors and their so-called solution is to give away tax write-offs to billionaires and wealthy corporations,” Wyden said. “Given their dismal track record as Donald Trump’s chorus of zombies backing his every whim, this strikes me as just one more distraction that is not on the level.”
However, Kitzhaber has continued sharing his ideas, in an OPB interview in March and in more detail on his personal blog on Monday. Last week, his vision received an endorsement from the leader of the influential Milbank Memorial Fund, which is focused on improving health and addressing health inequities.
In an opinion piece, President Christopher Koller asked whether there was alternative to higher taxes or federal cuts to address Medicaid. He added, “The answer is yes, and it comes from Oregon,” referring the reforms cited Kitzhaber that the Oregon Legislature approved in 2011. Generally, he said, the reforms offer “a potentially promising solution to the problem of Medicaid’s future [financial] sustainability — the monster in the basement people choose to ignore.”
But Koller said the key to the Oregon system are its “guardrails” around things like benefit design and enrollment and eligibility guarantees.
“In the long run,” Koller wrote, “any law that Congress considers regarding per person allocations to states that eliminates or weakens the guardrails developed in Oregon’s agreement will result in smaller, weaker state Medicaid programs serving fewer people.”
Kitzhaber’s idea: leverage savings rather than cuts
Kitzhaber has prominence on the national stage thanks in part to Oregon’s reforms. About a decade ago he was considered one of the most influential health care leaders in the country. That’s when Bentz, then a state lawmaker got to know him.
Put simply, the former governor’s proposal is that:
- Congress should set funding for states’ Medicaid programs based on the number of people they cover. The cap would be adjusted over time based on enrollment changes and a yearly growth rate that’s set lower than the current health care cost inflation rate.
- States would have to agree to not cut eligibility or benefits.
- Increased payments would go to state programs that meet goals or metrics that measure access and quality of care.
“What we're offering is a strategy to, instead of just cut the funding for Medicaid, change the delivery model,” Kitzhaber told The Lund Report.
Bentz is relatively well-placed to influence the Medicaid discussion. He’s a member of the health subcommittee of the House Committee on Energy and Commerce, where the potential cuts are being discussed.
Bentz initially agreed to be interviewed but then declined, saying through a spokesperson that he didn’t want to speak for his subcommittee before it decides on a course of action.
“We’re still working through it,” Alexia Spentzas said, adding that the congressman is working “alongside” Kitzhaber and “trying to find the best outcome.”
Oregon effort faced setbacks
With its cap on per-member spending growth, the goal would be to pressure programs to take steps to discourage wasteful spending over time. Kitzhaber cites a consultant’s report finding that the Oregon program saved billions.
But the program was not as successful as it was supposed to be.
It was centered around assigning regional managed care organizations a so-called “global budget” that would give them flexibility in how funds are spent to improve health.
The idea was to promote efficiency and and improved health by bypassing federal rules that said if a managed care entity saved money and cut spending, it would receive less funds the following year.
But while federal policy officials approved the Oregon reforms, their counterparts overseeing Medicaid rate-setting did not. They issued a directive to Oregon in 2014 that restored the disincentives to savings that the reforms had tried to avoid..
Kitzhaber, today, says Congressional action could fix the Medicaid rate-setting quandary, opening the door to more savings in the future.
More focus on cost is needed, Kitzhaber argues
Not everyone is wild about the Oregon Health Plan’s performance these days. Its payments to hospitals and other providers have been stagnant, causing providers such as dentists to stop serving low-income people.
Some health systems say they have little choice but to look for a buyer or partner, such as a national chain or private equity backed firm.
Kitzhaber said part of the solution is returning to a system of “shared responsibility” where providers are required to handle a certain proportion of Medicaid members, so the impacts are spread out.
But he said the overall argument also falsely assumes that cuts and improvements in spending can’t be made, such as by replacing costly services or drugs with ones that are less expensive but still effective.
That’s where leadership and reforms could come in, he added. “There's no conversation that I'm aware of going on in Oregon right now about, okay, how do we reduce the total cost of care? And the answer is, ‘Well, we just need more money.’ To me, that’s just inviting the collapse of portions of our healthcare system or selling them to for-profit entities that will milk them for all they have and then leave.”
While the former governor may not be making friends among Congressional Democrats, he is echoing some of their concerns.
In his personal blog, Kitzhaber said he considers President Donald Trump a “threat to our democracy,” adding that he thinks Democrats in Congress could embrace ideas like his to seize the high ground in the Medicaid debate.
Comments
I agree with Dr Kitzhaber. …
I agree with Dr Kitzhaber. We've worked hard to make the OHP work as well as it can....does it need adjustment? Yes. However, it is a great start and much better than yanking coverage from our most vulnerable citizens.
Oregon's CCOs have not saved…
Oregon's CCOs have not saved money. Oregon's per Medicaid beneficiary costs have increased more rapidly than the national average since CCOs were implemented, as can be documented fairly readily with data from the Medicaid Budget and Expenditure System (MBES). There is a state whose model has saved money while improving patient and provider satisfaction - Connecticut got rid of its private capitated Medicaid managed care organizations in 2012 and implemented managed fee-for-service. It has indeed saved money and improved care, because there is no private intermediary that needs to make money by bearing risk. Instead, the state bears the risk, but it still hires private intermediaries and pays them for the management services they provide. Compared to states that use capitated managed care entities like Oregon does (and most states do), the lower overhead costs save around 10% of total costs. That can help, but it cannot come close to making up for potential major Medicaid cuts, such as going back on the ACA reforms that helped so many people - especially in rural Oregon.
Re Kitzhaber’s comment …
Re Kitzhaber’s comment “There's no conversation that I'm aware of going on in Oregon right now about, okay, how do we reduce the total cost of care?” He has certainly been told about such conversations going on through the work of Oregon’s Universal Health Plan Governance Board (UHPGB). It just seems that he is unwilling to consider a single-payer system that can greatly decrease administrative costs and burdens on both the payer and provider side.
It is unclear why he seems to think that the state should not follow the lead of most private companies with a large enough employee base to make self-insurance sufficiently predictable. With a single risk pool of all residents in the state, predictability, affordability, and equity can all increase while decreasing the total cost of care. Of course, uncertainty and animosity at the federal level makes things more difficult, but he should be well aware that there are indeed conversations going on regarding reducing the total cost of care.
The Universal Health Plan…
The Universal Health Plan Governance Board (appointed by the Governor in January 2024, Senate confirmed in February 2024) is currently working a transformational approach to increasing access, increasing quality and comprehensive care, eliminating health inequities through universal coverage and access, and .... in a way that could actually save the great state of Oregon upwards of $1 Billion a year (that's a billion with a capital B!). This would be done by eliminating the middle people and introduce a plan that features people and businesses of Oregon as the financier, the state as the payer, and the health systems as the deliverer. And allowing the State of Oregon to negotiate drug prices as a state, which would create much greater leverage during negotiations, similar to how the VA negotiates and receives the best pharma prices in America. The details are currently being worked out by subcommittees of the UHP Governance Board such as Finance & Revenue, Implementation & Design, Operations, and Community Engagement. Lund Report readers are encouraged to learn more about this transformational, cost-savings approach by visiting the State of Oregon's website about the Universal Health Plan Governance Board - and getting involved! https://www.oregon.gov/uhpgb/pages/index.aspx All meetings are open to the public and the committees want to hear Oregonian input while they build the plane. No more band aids. No more building the plane while flying. Just years of diligent work, informed by physicians, finance experts, and most of all patients - to create the health system that Oregon's need and deserve. - Valdez G. Bravo, FACHE President, Health Care for All Oregon www.hcao.org
Great article and thanks for mentioning dental where the rates have been cut compounded nearly 30% since 2021 and a directed payment plan implemented to encourage more providers and more care. Interesting though the providers rather than getting paid so much per patient per month, now have to wait till July of 2026 to get paid. Also there is really no administration for this so what I hear from the CCO's is more costly burdensome overhead.
The cuts are from the OHA not applying enough value to the work being done, not because there is not enough work. HB 2597 is an attempt to rectify this by applying a national standard on dental rates that is more realistic. When I first started being involved with this in 1995, the dental composite rate were around $20pmpm. With the rates cuts, the pmpm is now just over $20. In essence no increase. As Jim Bunn pointed out in his testimony on HB2597, how many hospitals would still be in busy if this same methodology applied to them or for that matter CCO's. in 2000 dental was around 13.5% of the total Medicaid spend, today it is about 4%. Since CCO's are an integration of physical health, behavioral health and oral health, why are the dental rates still proposed separately and though integrated into the CCO composite rate, why are they treated separately? Since dental helps keep people out of the hospital ED and OR, since dental helps cut down on meds that are not really good for people such as opioids and antibiotics, and can cut down on expensive specialty care, I wonder why if dental helps here, these are not measured and factored in to CCO rates?
It is interesting, given what we know today, if applied, it is possible to get better care, better health at a better cost. Having worked recently to help independent dentist access to OHP recipients and worked to increase access to care in places like Josephine, Jackson, Curry Counties and others, the issue is not finding enough dentists, hygienists, and staffing, it is the current lack of understanding by the bureaucratic system and the cost cutting that gets in the way of getting access to the patients. Like Gov. Kitzhaber infers, it is not the Oregon system that is the issue, it is the people currently running it do not understand how to run it. People running the current system want to blame dentistry, but maybe just maybe, they ought to ask those of us who know better what the some of the issues are.
Mike Shirtcliff DMD