News flaws in Oregon Health Plan

Health care policy: New research on the Oregon Health Plan
By Dr. Eric Fuits, Oregon Economist

The Oregon Health Plan has been called a “bold experiment” designed to expand health insurance to Oregon’s low-income residents. Its promoters promised the impossible: To expand health insurance coverage while simultaneously controlling costs and fostering provider participation. These promises would be met by the explicit rationing of care through a prioritized list of conditions and treatments.

A recent study by Dr. Eric Fruits, finds that like the experimental drug that performs no better than a placebo, Oregon’s bold experiment has produced results that are not significantly different from the outcomes seen by the U.S. as a whole. In this way, the experiment has failed.

Expanding coverage. When the Oregon Health Plan was first proposed in the late 1980s, proponents claimed that nearly 20 percent of Oregonians did not have health insurance, a claim that state agencies have echoed ever since. Unbeknownst to them, however, their data was incorrect. Revised estimates by the U.S. Census Bureau show that between 1987 and 1989, only 14.5 percent of Oregonians were uninsured, a percentage that was not much different from the U.S. as a whole. Indeed, census data show that the rate of uninsured during the life of the Oregon Health Plan has not been significantly different from the U.S. as a whole. In the end, one cannot confidently conclude that the Oregon Health Plan had any significant and sustained impact on reducing the number of uninsured as a share of Oregon’s population.

Controlling costs. The architects of the Oregon Health Plan recognized that costs had to be contained. Rationing via the prioritized list was one way the plan would contain costs. A requirement that beneficiaries enroll in managed care plans was another. Despite the hype and controversy, the prioritized list did little to ration health care services. For example, one researcher found that in many ways, the Oregon Health Plan’s coverage of mental health and dental care was superior to commercial insurance coverage in Oregon. On top of that, some providers found ways to get around the limits imposed by the prioritized list. For example, one study found that the plan pays for all diagnostic visits and procedures even if the associated treatment is not covered. Physicians have used this provision as a loophole to provide medical services under the guise of diagnostics.

Fostering provider participation. Initial hopes for broad participation by providers have been dashed by the pullout of larger managed care providers and a shrinking pool of providers willing to accept Oregon Health Plan enrollees as new patients. With the pullout of many managed care providers, some of the promised cost savings vanished.

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