Legislative Task Force Tackles Rising Medical Costs

A legislative task force has taken a crack at attacking rising health care costs. 

They've come up with a recommendation that could be the framework for new legislation in 2019. The proposal would establish a target limit on the growth of health care spending statewide, reflecting a promise by the Oregon Health Authority to cap Medicaid spending at 3.4 percent annually.

The rise in health care spending poses a big problem in the United States where it's eaten up more and more of the country’s income. The U.S. spends more than other industrialized countries on health care but Americans aren’t healthier because of it.

In 1970, the U.S. spent nearly $75 billion on health care. That rose to more than $1 trillion by 2000, according to data from the Centers for Medicare & Medicaid Services. By 2016, That number had tripled, the data show.

The rise has been constant, worrying policymakers about the future.

When the Oregon Legislature convenes in 2019, it will have an opportunity to examine the trajectory of rising health care costs in Oregon and decide the fate of the task force’s proposal.

The proposal includes four phases. The first calls for creating a framework to establish a statewide spending benchmark by 2020 and a blueprint for 2020-21 while outlining the entities that would be involved. Subsequent phases include spelling out the short-and long-term oversight of the plan and putting other things in place, such as establishing the necessary infrastructure and support, creating a reporting system, setting up accountability and enforcement, writing a timeline and gathering feedback.

Rep. Rob Nosse (D-Portland), who served on the bipartisan task force, said the bill represents a good fit for Oregon.

“It is a simple model with the potential for a big impact,” Nosse said.

Some observers agree.

"The proposal represents a step in the right direction,” said Mark Griffith, a health care advocate for Oregon State Public Interest Research or OSPIRG. "It's less ambitious than a concept like single payer but it's still something that's worth doing for the state."

The bipartisan task force started working on the issue last November and met 10 times since. They examined plans that took on rising health care from other states, including Maryland, Massachusetts, Pennsylvania and Vermont.

They initially examined Maryland’s plan, which focuses on hospitals. The task force decided it was not comprehensive enough to have the impact needed in Oregon.

“We discovered that focusing on hospital cost alone didn't get us very far in controlling total health care cost,” said Sen. Lee Beyer (D-Springfield), one of SB 419’s chief sponsors.

The Massachusetts plan, spanning 2013 to 2017, created a benchmark limiting health care cost increases to 3.6 percent annually.  Over four years, the state saw an annual cost increase of just under its benchmark of 3.6 percent. That resulted in billions of dollars of savings for employers and payers. In the next five years, Massachusetts officials estimate they’ll save nearly $5 billion in health care costs.

In Pennsylvania, health care officials are working on the financial stability of rural hospitals, which struggle to operate in the black. The plan, from 2018 to 2023, will include global budgets for the hospitals to reduce costs and boost revenue. State officials hope to cap cost increases at 3.38 percent and expect $35 million of Medicare savings.

And in Vermont, officials have devised a plan that aims to get people enrolled in accountable care organizations, a  group of health care providers who agree to come together to provide coordinated high-quality care to patients. Using this model, the state hopes to limit the increase in costs to 3.5 percent from 2018 to 2022 and to cut Medicare growth by 1 percent to 2 percent below the national level.

The task force bill includes elements of the other plans that seemed most appropriate for Oregon.

“The report recommends Oregon's adoption of a cost cap similar to what Massachusetts and Vermont are doing,” Beyer said. “The cap would require reporting of cost increases by all health providers and payers and require that they complete a corrective action plan if their cost exceeds the cap.”

The extent of Oregon’s cost cap has yet to be determined, but it may resemble the one in Massachusetts.

Beyer said Oregon’s plan covers all health care cost increases and was supported by hospitals, provider groups and insurance companies. The lone task force dissenter was Rep. Ronald Noble (R-McMinnville), who felt the plan drifted from its initial focus on hospitals to include other areas not represented within the group.

“What I’m seeing is scope creep,” Noble said. “My concern is that the recommendation is beyond the stuff of just hospitals, and not all the critical stakeholders are involved with the process. We’re talking about systemwide – all providers.”

In addition to lawmakers, the task force included members from health care services and entities such as Moda Health Plan, Samaritan Health Services, Santiam Memorial Hospital, Adventist Health, Providence Health & Services, St. Charles Health System, OSPIRG, the Oregon Health Authority, the Oregon Health Policy Board, SEIU Local 49 and the Department of Consumer and Business Affairs.

The proposal had near-unanimous support.

Beyer said if enacted, details would be worked out over the Legislature’s 2020 interim session. 

Beyer is confident that the proposal will elicit interest.

“I think it will be well received within the 2019 Legislature,” he said. “A test of that will be the reaction of House and Senate health care committees during the next legislative days where the report will be presented.”