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High-Powered Committee Sets 3.4% Cost Growth Cap For Health Care Spending In Oregon

February 12, 2020

An Oregon committee assigned to setting a statewide cap on the rise in health care spending has agreed to a number: 3.4%.

The Sustainable Health Care Cost Growth Target Committee also set a timeframe at its meeting on Wednesday. Members agreed that the 3.4% percent growth target should be maintained for five years and then be lowered to 3% for the five years after that, provided an advisory group agrees that the lower number is feasible.

“We have a number and we have a timeframe,” said the committee’s vice chair, Dr. Kevin Ewanchyna, a leader of Samaritan Health Services and the Oregon Medical Association. “Now we have a lot of work ahead of us as we’re building through the process.”

The committee has been meeting since last year and includes the head of the Oregon Health Authority, economists, advocates, and top executives in health care and the insurance industry who were appointed by Gov. Kate Brown.

Members still have to decide how to measure quality and equity, ensure that the program is transparent and that the industry is held accountable. But Wednesday’s decisions marked a milestone.

Numi Lee Griffith, patient health care advocate at OSPIRG, was the only person to speak during a public comment period in the middle of the meeting. She pressed the group to keep the target low to make health care more affordable for Oregonians.

“As both individual and group health plans continue to shift towards high-deductible plans, this cost is increasingly borne by consumers directly,” Griffith said.

Griffith told The Lund Report after the meeting she was pleased with the result: “The committee seems receptive to our view that the benchmark program should actually reduce costs relative to the economy, rather than merely keeping them stable.”

The target would apply to the commercial market, Medicare and Medicaid starting in 2021.

"It won’t be until 2022 when we will know whether we met the target in 2021, but the intent is that the target will apply to all three markets beginning in calendar year 2021," Jeremy Vandemey, head of the Oregon Health Authority's Health Policy and Analytics Division, told The Lund Report after the meeting.

There was a lot of discussion during the three-hour meeting but no sharp disagreement about the 3.4% target, which was initially proposed by Felisa Hagins, political director of Service Employees International Union, or SEIU Local 49. Some committee members suggested 3.5% -- the gross domestic product in Oregon between 1999 and 2019, but 3.4% is already in effect in the state. It applies to spending by the Oregon Health Plan, the state’s Medicaid system which operates under a federal waiver. And state statute mandates that the Public Employees’ Benefit Board and the Oregon Educators Benefit Board, which are in charge of health care insurance for 300,000 employees, contain cost growth at 3.4%.

That number falls under the projected state gross domestic product for the state, which Mark McMullen, state economist and committee member, said is expected to be 3.8 percent between 2025 and 2029. It's more than wages, which rose 2.7% between 2001 and 2018 and income, which rose 3.1% between 1999 and 2019.

In setting the figure, committee members considered programs in Massachusetts, Delaware and Rhode Island. They tied their cost growth targets to their projected state gross domestic product. But several of the Oregon committee members said they felt more comfortable with a figure that's closer to historical growth data.

The target is not tied to GDP, however. But GDP could factor into the discussion, along with wage and income increases, when an advisory group meets before the first five years end to consider whether a cut to 3 percent for the following five years would be feasible.

Everyone agreed that getting to 3.4% growth cap in health care spending in Oregon will be a big challenge for the industry. Already, health care spending in Oregon is nearly double that. Between 2013 and 2017, spending rose 6.5%, according to the Oregon Health Authority.

“That varies by market a little bit,” said Vandehey. “Commercial is about that, Medicare was a little higher and Medicaid was lower.”

But the idea is to rein in costs so that Oregon’s don’t go bankrupt paying their medical bills or have enough money to pay for prescriptions.

The group meets next on March 10.

You can reach Lynne Terry at [email protected] or on Twitter @LynnePDX.