Oregon health officials and lawmakers are seeking the blessing of the Legislature to crack down on ever-escalating health care costs.
The complex cost-growth-capping program - with a formal report to be sent to the Legislature later this month - would hold insurers and large and medium-sized medical practices to annual per-patient cost growth caps, require them to formally justify themselves if they exceed the cap, and potentially fine them if they exceed the cap in multiple years and their explanations are inadequate.
The program also would try to ensure that insurers and medical practices don’t slow their spending growth by simply cutting back on services to patients.
Oregon would be the fifth state to adopt a cost growth target program.
The committee was formed following the passage of legislative bills in 2019, prompting the Oregon Health Authority to start gathering and scrutinizing spending data. The agency needs legislative approval to implement an enforcement system and other details.
The Sustainable Health Care Cost Growth Target Implementation Committee began meeting in November 2019.
“Rising health care costs present a significant hurdle for far too many,” said Gov. Kate Brown in a statement on Tuesday. “Per capita health care costs in Oregon are growing faster than the national average, and too many families who have insurance can’t use it due to out-of-pocket costs. This has real and disproportionate impacts on Oregonians who already face health inequities.”
Patrick Allen, director of the Oregon Health Authority, said in a statement that cost growth controls are key to the stability of health care and health insurance in Oregon.
“These recommendations will shine a light on parts of our health care entire system that are most expensive, and create tools to bring costs down. If we cannot get health care costs under control, our entire system and our efforts to transform the system are threatened,” Allen said.
The cost-cap system aims to cut Oregon’s overall annual per-capita health care spending increase in half, to 3.4%.
No one agrees on why health care costs in Oregon and around the nation continue to surge. Observers point to many potential causes: insurance and hospital bureaucracies, insurance company and hospital profits, unnecessary medical procedures, high drug costs, high salaries for health care executives and an aging population with more physical ailments.
Committee members hope the new program will zero in on the root causes and pressure insurers and providers to fix them.
However, there is worry that some providers and insurers, anxious to come in under the cap, may try to cut the quality or volume of care. There is also fear that organization executives may try to save money by cutting staff hours, pay or benefits.
Health care insurance companies and several thousand large and medium-sized Oregon medical entities, from hospitals to primary care practices, would need to meet the cap, justify exceeding it, or face the consequences.
The Oregon Health Authority would create an elaborate data gathering and analysis system to identify insurers or providers who exceed the cap. Entities that exceed the cap in 2022 or beyond would have to explain themselves, submit a “performance improvement plan” and face fines for repeated violations.
The big problem, committee members agree, lies in the private market, where almost half of Oregonians get their health insurance, either through employer or individual plans. The state-run Medicaid system and the federally run Medicare system already operate under cost-increase caps.
“For too long, families and individuals have struggled with rising premiums, high out-of-pocket costs and health care costs that prevent them from getting the care and coverage they need,” said state Sen. Lee Beyer, D-Springfield, a member of the Senate Health Care Committee.
Massachusetts, Rhode Island, Delaware and Connecticut all have variations on programs to limit health care cost growth.
More information about Oregon’s plan is here.
You can reach Christian Wihtol at [email protected].
