Oregon has a health care affordability crisis, and many, many Oregonians are suffering. Nearly three quarters of respondents to a 2024 survey reported delaying or foregoing care in the past 12 months due to costs. That’s over 3 million Oregonians. Health insurance premiums for individuals in the Oregon Health Insurance Marketplace are going up by an average of 8% next year. For small groups, the average increase is 12% -- some are as high as 16%. And we know that high health care costs worsen health and wealth inequities.
The Governor and the Oregon Health Policy Board have made health care affordability one of their top priorities for 2025. We can build on the fact that Oregon is a leader among all the states in programs that are intended to improve affordability. Specifically, Oregon has the Cost Growth Target program, which has established targets and accountability mechanisms, and has published reports on specific health systems, provider groups, and health plans on their performance vs. the targets. Oregon also has the Health Care Market Oversight (HCMO) program – a mechanism for reviewing and approving, denying, or approving with conditions, proposed acquisitions and mergers.
As the Oregon Health Authority’s HCMO program evaluates OHSU’s proposed acquisition of Legacy Health, the primary question is whether this will make the problem worse or better. Despite the public statements made by OHSU leadership, it’s very questionable whether this transaction would improve affordability for patients, consumers, employers, and public purchasers.
A key question: how would merging two massive organizations that are struggling financially somehow improve their financial situation? Would a merger result in improved operational or administrative efficiency? It’s unlikely; merging organizations often promise this, but it almost never pans out. Would they save money by providing more preventive care and avoiding unnecessary hospitalizations? This is also unlikely, since organizations like OHSU and Legacy make more money when they increase hospital admissions. Will they receive higher payment rates for Medicare and Medicaid patients? These rates are set by federal and state policy, and Congressional Republican leaders’ threats to cut Medicaid make it more likely that payments will be reduced instead of increased.
The most obvious way to improve OHSU’s and Legacy’s financial performance is to increase the prices they charge to privately insured patients. In a recent interview for OPB’s “Think Out Loud”, the interim OHSU President said they only want to be paid “fairly” for their privately insured patients. The interviewer did not ask what OHSU would consider to be a “fair” price, but it’s likely to be much higher than current prices. Right now, OHSU is demanding a 36% price increase from UnitedHealthcare for its commercial plans over two years and a 15% increase for Medicare Advantage plans.
This has been the tried-and-true strategy for hospital mergers across the country – using increased market power to insist on higher prices for privately insured patients. A recent public comment letter submitted to the Oregon Health Authority (OHA) by health care industry experts at Brown University and the American Economic Liberties Project stated that “OHSU is likely to leverage its market power to substantially increase prices for health care services without quality improvements”. The report also stated that “. . . the merger would significantly increase market concentration” and that “substantial if not overwhelming research indicates that transactions of this sort increase costs without improving quality.”
What would this mean for Oregon employers and their employees? We know that high health insurance premiums lead to slower business growth and lower wages. We also know that the high cost of health insurance has made it impossible for many small employers to offer health benefits at all. Would OHSU’s acquisition of Legacy make this situation better or worse? OHSU is often cited as an engine of economic growth, but it’s likely that higher prices charged by OHSU would accelerate the increase in health insurance premiums, seriously damaging business growth and squeezing out wage increases.
And what would this mean for patients and consumers? Already, the situation is dire. According to the Oregon Consumer Healthcare Experience State Survey conducted by OHA in 2024:
- Over 3 in 4 (76%) experienced at least one health care affordability burden in the past year;
- Over 4 in 5 (83%) worry about affording health care in the future;
- Nearly 3 in 4 (74%) of all respondents delayed or went without health care due to cost in the last twelve months;
- Low-income respondents and those with disabilities had higher rates of going without care due to cost and incurring medical debt, depleting savings, and/or sacrificing basic needs due to medical bills.
Would OHSU’s acquisition of Legacy make this better or worse? It’s hard to see how it would make health care more affordable. As a result, patients will continue to avoid or delay needed health care because of high costs.
In summary HCMO must fulfill its responsibility to evaluate the proposed OHSU-Legacy transaction to determine how it would affect costs, quality, access, and equity. There are serious questions regarding the impact on the prices charged to privately insured patients. The critical question is whether this merger would make the health care affordability crisis in Oregon better or worse. Sadly, the evidence indicates it would likely make it even worse.
Bill Kramer is a member of the Oregon Health Policy Board (OHPB) and Senior Advisor for Health Policy at the Purchaser Business Group on Health (PBGH). The opinions stated here are his own and do not purport to represent the positions of the OHPB or PBGH.
While I appreacite Mr. Kramer's expertise, as a clinician in Portland for over 20 years all I have seen is health systems using patients and clinicians as pawns. Continual gamesmanship between competing entities run by non-physicians means patients can't keep their providers as their insurance coverage changes over and over. Patient steerage is monopolized by these entities to the point even efforts like our value based care outpatient surgery centers can't gain traction. Despite lower costs and higher quality. Even when we go straight to ERISA, TPAs, etc. It's why there is a new coalition of independent practitioners in Portland, but the struggle they are up against is the one raising the prices. Here, OHSU hopes to do nothing more than what successful university heatlh systems around the US have done: expand access. Community based care is integral to those health systems. Including cost saving measures such as leverage over PBMs, Payers and appropriate site of care. I'd appreciate coverage from Lund showing how UW Health or Stanford Health or many others impacted care as they did exactly what OHSU plans. I've seen nothing but benefit from the patient and provider perspective. Full disclosure, I took a position within the OHSU community network precisely to expand community care, while integrating the triage of more complex care to appropriate sites. It's been nothing but revelatory for all involved for the past 2 years.