The Oregon Health Plan…A Bold Experiment That Failed

September 9, 2010

Media Release
Contact Steve Buckstein
(503) 242-0900
[email protected]

The Oregon Health Plan:
A “Bold Experiment” That Failed

Cascade Policy Institute has released a new report on how well the Oregon Health Plan met its promised goals.

Conceived in the late 1980s, the Oregon Health Plan has been called a “bold experiment” designed to expand health insurance to Oregon’s low-income residents. It relied on explicit rationing of care through a prioritized list of conditions and treatments.

Launched in 1994, the OHP sought simultaneously to expand coverage, control costs, and foster provider participation.

Sixteen years later, report author Dr. Eric Fruits concludes that:

“[L]ike the experimental drug that performs no better than a placebo, the Oregon Health Plan has produced results that are not significantly different from the outcomes seen by the U.S. as a whole.”

Dr. Fruits makes three major findings about the goals of the Oregon Health Plan:

• Covering the uninsured: Over the life of the plan, the share of uninsured in Oregon has not been significantly different from the rest of the U.S. for any sustained period of time. Similarly, over time, Oregon’s share of the population covered by Medicaid is virtually no different from the rest of the U.S. Data presented by the state tended to overstate the number of uninsured prior to implementation of the Oregon Health Plan and understate the number of uninsured after the plan was rolled out, thereby inflating the plan’s early success in expanding coverage.

• Medicaid spending: Total Medicaid expenditures and Medicaid expenditures per enrollee have closely tracked U.S. expenditures, an indication that the Oregon Health Plan has not been any more or less successful than the U.S. as a whole in controlling costs.

• Provider participation: Initial hopes for broad provider participation 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.

Cascade Senior Policy Analyst and founder Steve Buckstein points out that “no other state has followed this ‘bold experiment,’ and now we know why.”

“Based on Dr. Fruits’ findings,” Buckstein says, “I think it’s safe to say that if we showed a knowledgeable observer the results of five random states’ Medicaid programs, they would not be able to pick Oregon out of the crowd.”

Dr. Fruits suggests one way to improve Oregon’s Medicaid results:

“A program offering some type of health savings accounts to Oregon’s Medicaid eligibles is one way that Oregon may meet many of the Oregon Health Plan goals at a lower cost and with smaller demands on administrative overhead. In addition to helping the state get out of the health care management business, a program of health savings accounts would save money by making the insured more aware of the expected costs and benefits of health care services.”

Buckstein points out that South Carolina has a program similar to what Dr. Fruits recommends: Health Opportunity Accounts that place funds in Medicaid participant accounts every year. “While still an experiment itself,” Buckstein adds, “such a program holds out promise to better meet goals that the Oregon Health Plan clearly has failed to achieve.”

Steve Buckstein is Senior Policy Analyst and Founder at Cascade Policy Institute, Oregon’s free market public policy research center.