Oregon’s Major Medicaid Experiment

As the reporters in this Washington Post article explain, the effort to get more effective health care while controlling costs is the goal of many of the health reform efforts now underway. This Oregon project may be the most of all. If it works, it can create a model for others to emulate.

So Kitzhaber did something that many before him have done in desperate times. The governor who favors cowboy boots over dress shoes made a bet that Oregon could not afford to lose.

The deal Kitzhaber struck was this: The Obama administration would give the state $1.9 billion over five years, enough to patch the budget hole. The catch: To secure that, Oregon’s Medicaid program must grow at a rate that is 2 percent slower than the rest of the country, ultimately generating $11 billion savings over the next decade. If it fails, those federal dollars disappear.

Oregon is pursuing the Holy Grail in health-care policy: slower cost growth. If it succeeds, it could set a course for the rest of the country at a pivotal moment for the Affordable Care Act. Under the law, many states will expand Medicaid programs to cover everyone below 133 percent of the federal poverty line, adding 7 million Americans to the program in 2014 and leaving states looking for the most cost-effective way to cover that influx of patients.

In Oregon alone, Medicaid is expected to enroll 400,000 new patients by 2022, nearly doubling its current numbers, according to an Urban Institute analysis.

As Oregon’s population grows, the state has come to realize that Medicaid is not a bottomless bucket of money. The state’s budget cannot sustain that. Instead, it strives to deliver what health policy experts call “the triple aim”: higher-quality care that leads to better outcomes, all delivered at a lower cost.