Kitzhaber Returns from Exile to Target Social Determinants of Health

The former governor called for an increasing share of CCO funding to be invested in social services to reduce health disparities caused by social determinants of health. After resigning in February 2015, the speech marks a new effort by Kitzhaber to serve the public in his role as a health policy icon from out of office.

Former Gov. John Kitzhaber took a step out of the shadows Wednesday, sharing his latest health policy ideas at the annual State of Reform conference in Portland, and calling for changes to the Medicaid waiver that would have coordinated care organizations pay an increasing share of their funding on social services.

Kitzhaber left office embittered by his swift fall from grace, but on Wednesday, a sunnier Kitzhaber tried to turn the page toward the positive role he still might play in transforming the way public dollars are spent to improve the health of Oregonians.

“We know we’re spending money in a way that doesn’t give us the outcomes that we want,” he said. “Investing in the social determinants of health will serve us much better than just paying for medical care.”

Kitzhaber explained that CCOs are expected to spend 85 percent of their revenues on medical care and 15 percent on administration, but have no dedicated funding share for social services.

He proposed a model that would lower the medical spend to 80 percent, with 5 percent earmarked for social services. Each year, the share of social services would increase five percentage points until as much as 25 percent of their funding would go toward social services, with 60 percent for medical care.

“Investing in these things becomes part of their business plan,” he said in one of his most significant speeches since his resignation 19 months ago.

The current waiver proposal calls for an additional $1.25 billion in federal investment for community health collaboratives, which will target the social determinants of health, particularly the access to stable housing -- but the waiver makes no mention of adjusting the medical-loss ratio of CCOs.

It was unclear how much Kitzhaber had discussed his ideas with current top health officials such as the governor’s health policy advisor Jeremy Vandehey and Oregon Health Authority Director Lynne Saxton, let alone his successor, Gov. Kate Brown.

A letter from the Centers for Medicare & Medicaid Services praised the direction of Oregon’s new waiver, and said the federal government wished to have the major policy considerations hashed out by January.

But Kitzhaber told The Lund Report after his speech that his ideas could still be included in negotiations with the federal government, and that a number of amendments will likely be filed to the document that the state has already submitted.

“I’ll be very surprised if the waiver gets approved before this president leaves office. I anticipate that the waiver will be granted under -- hopefully a new Clinton administration,” Kitzhaber said. “Her husband, President Clinton, gave us the first waiver. She’s very familiar with the Oregon Health Plan.”

Kitzhaber shared data showing that among the 35 modernized countries that form the Organization of Economic Cooperation and Development, the United States spends by far the most on medical care but the least on social services. Changing this paradigm would be key, he said, if America was ever to move up from its mediocre ranking in health outcomes.

With coordinated care organizations, the state developed a new model of care that will save money in the long run, and provide healthcare to people on Medicaid while ensuring that hospitals and physicians are compensated adequately.

A $1.9 billion federal investment was offset by $1.7 billion in reduced medical costs, and low inflation trends are expected to continue into the next decade.

The former governor and national health policy leader said he expects CMS to need Oregon to do much more than just keep up the good work.

For it to receive $1.25 billion -- as well as continue the transformation of hospitals by giving them $750 million of their tax assessment to put toward innovating care -- the state will have to show a serious path for changing America’s poor-outcome, high-cost healthcare system.

“We did not get that [$1.9 billion] investment to prop up the old delivery system,” he said. “The next step is going to to take a cultural change.”

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