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Kitzhaber: Health care crises present opportunity for Kotek, lawmakers

The former governor stresses urgency, suggesting Kotek convene important health care system collaboration.
Former Gov. John Kitzhaber speaks Sept. 29, 2022, at CCO Oregon's annual conference at the Salem Convention Center. | BEN BOTKIN/THE LUND REPORT
January 12, 2023

In its upcoming session, the Oregon Legislature has the opportunity to make significant health system changes while addressing the crises exacerbated by the coronavirus pandemic, as long as all sides work toward solutions, former-Gov. John Kitzhaber told The Lund Report.

Kitzhaber knows something about crisis and opportunity. In 1989, as president of the Oregon Senate and a medical doctor, he oversaw the creation of the Oregon Health Plan, the state’s unique riff on Medicaid intended to provide low-income people with access to basic coverage. In 2012, having returned for a third gubernatorial term, he forged bipartisan consensus and leveraged industry support for new health plan reforms lauded around the country.

The following year, Modern Healthcare magazine ranked him nationally as the second most influential person in health care.

But in a recent interview, Kitzhaber said there has been a disappointing lack of “transformative” ideas from the health care system to address systemic issues. And his efforts to win support for a broader vision have had mixed results.

“I’ve been a little bit frustrated, I’m not quite sure what their strategy is,” he said.

The apparent reason, according to Kitzhaber, is that leaders within Oregon’s health systems are too overwhelmed to look beyond current crises, which he called a “real missed opportunity.”

“To me, it’s like standing in front of a train and being afraid to jump off the tracks because you might break your ankle,” he said.

Kitzhaber told The Lund Report the state’s health care and political leaders — many in new positions of power after the recent election — need to coalesce around a vision of what Oregon’s health system should look like now and in the future, and start building toward it, with an eye toward lower costs system-wide.

Kitzhaber has stayed active in health care policy in recent years, sharing his thoughts with political leaders, giving speeches and doing some out-of-state consulting work, he said. He also serves on the board of the national reform group, Families USA.

To him, the current health care staffing crisis and providers’ desire for relief from Oregon’s health care cost-growth targets presents an opportunity for lawmakers.

Oregon’s hospitals and health care providers are facing widespread staffing shortages, and bed capacities have been near their limits since the pandemic started. The shortages and labor costs have driven health care inflation that’s above the target of 3.4% that Oregon lawmakers put into place in 2021, risking penalties for providers.

Study after study has found that the country’s dominant model of fee-for-service care fuels a surprising amount of waste, and 30% or more of health care spending is unnecessary. Kitzhaber has long pushed for a more efficient value-based model, and he said Oregon can make progress by leveraging the need to address the current health care workforce shortages.

In a value-based capitation system, a health care provider receives a flat rate per person per year and must provide certain services for a large patient population. In the current fee-for-service model, each procedure is billed at a different rate based on negotiated prices.

Kitzhaber said value-based reforms would be a more effective way to reduce health care costs than a public option, which is a policy progressive Democrats have hoped to implement at the state and federal levels for years.

“Somehow we need to have a strategy that actually changes the underlying payment model, which a public option doesn’t,” Kitzhaber said, adding that while a public option would change how the system is funded, the funding would still pay for “a delivery model that is unsustainable and inefficient.”

Kitzhaber has circulated his ideas among health care leaders and Oregon political leaders, but said he wants any bills for solutions to come from within the system itself.

While a collaborative grand compromise as envisioned by Kitzhaber has yet to surface, other legislation has already been introduced.

The Oregon Nurses Association is behind a bill that would set minimum staffing standards at hospitals to manage staff burnout and retention issues. Meanwhile, legislative leaders have spent much of the past year looking into creating a new health insurance “bridge” program for people with incomes between 138% and 200% of the federal poverty level.

As far as value-based care, Rep. Maxine Dexter, D-Portland, has joined with Sen. Dick Anderson, R-Lincoln City, and Rep. Lisa Reynolds, D-Portland, to introduce House Bill 2878, which would establish a pilot program in one region to see how it could work.

Kitzhaber said changing the underlying system should be the priority. As for the “bridge” plan, he is concerned that removing those who make under 200% from the federally subsidized individual health insurance marketplace would destabilize it and increase prices for those who make 201% of the federal poverty level and above.

The individual market served by the marketplace is where Kitzhaber thinks a larger compromise around value-based reforms could take hold.

“I think the idea of linking some short-term relief from the cost growth targets to a strategy that actually begins to change the payment model in a part of the commercial market — which I would say would be the individual market — it solves the problem that the bridge is trying to solve, but in a more comprehensive way,” he said.

Additionally, Kitzhaber expressed concern about the state Oregon Health Plan reforms of 2012, which were centered around local control of the insurer-contractors who serve it on a regional basis, known as coordinated care organizations, or CCOs. 

Centene, a multinational for-profit company, now operates two of the regional CCOs, and CareOregon, which operates two CCOs and is part of another, recently announced a proposed merger to become part of a California-based nonprofit, though its executives say CareOregon operations will remain based in state.

To Kitzhaber, lawmakers should be looking to accomplish three items: 

  • Delay the next round of CCO contracts and reconsider what the CCO system should look like to focus on local control.
  • Begin to move away from a fee-for-service model in the individual health insurance marketplace and replace it with value-based capitation.
  • Seek federal funding to jumpstart a push toward lowering cost growth in the commercial health insurance market.

Kitzhaber returned to a topic he’d raised last October in a keynote address at the State of Reform conference in Portland: the need for Oregon leaders to get health care’s major players to the table to hash things out.

Currently, Kitzhaber said, health care leaders don’t have a forum where they can work together toward a common goal.

Lawmakers could use their positions to bring the different elements of the health care industry together to work on legislation. Kitzhaber said Gov. Tina Kotek would be the obvious choice, since the governor tends to command the most authority when convening disparate parties. 

Time is of the essence, he said: “The longer we wait to convene that conversation, the less likely it becomes that we’ll be able to shape what happens in health care over the next couple of years.”

Reporter Connor Radnovich can be reached at [email protected].