Congress should embrace Oregon-style reforms, Kitzhaber says

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.