Kitzhaber Signs Overhaul of Oregon Health Plan


John Kitzhaber

Oregon Gov. John Kitzhaber speaks before signing House Bill 3650 and Senate Bill 99 in Portland, Ore., Friday, July 1, 2011. House Bill 3650 is the Health Care Transformation Bill and Senate Bill 99 creates the Oregon Health Insurance Exchange Corporation. Photo: AP / AP

Written by JONATHAN J. COOPER, Associated Press
Friday, July 1, 2011

PORTLAND, Ore. (AP) — Gov. John Kitzhaber took a victory lap Friday, signing in a public ceremony his ambitious proposal to overhaul the Oregon Health Plan with a focus on providing preventive care.

The overhaul is one of Kitzhaber’s signature legislative accomplishments. Together with another bill creating a health insurance exchange, Kitzhaber’s “health care transformation” is aimed at lowering the cost of health care and expanding coverage to people who lack it.

Health care has been one of the state’s most rapidly rising expenses, and lawmakers faced a nearly $250 million gap in the budget for the Oregon Health Authority, which administers state-funded health care. The gulf between revenue and anticipated expenses is about 40 percent.

“Most states facing the same kind of discrepancy have responded by simply throwing people under the bus, by simply dropping people from coverage,” Kitzhaber said in a speech in downtown Portland. “This state is forging another path.”

Kitzhaber said kicking patients off of Medicaid is counterproductive because they’ll end up seeking more expensive, uncompensated care in the emergency room. The governor hopes Oregon can save money by reducing expensive hospitalizations, particularly on the most-expensive patients with chronic illnesses.

His plan would change the Oregon Health Plan from a fee-for-service model to one that rewards doctors and other care providers for keeping their patients healthy. The health plan is Oregon’s version of Medicaid, a program for low-income health care jointly funded by the state and federal governments.

The bill lays out a framework for creating community-based nonprofits called coordinated care organizations that would be responsible for patients in their region. A CCO would coordinate mental health, physical health and dental care in a way that reduces duplicated treatments and ensures patients have access to the resources they need to stay healthy and away from the hospital.

The plan leaves much to be decided. Kitzhaber’s health care advisers will spend the rest of the year working out details of how the plan should be implemented, and the Legislature will have the sign off when they meet again in February. It’s unclear whether the plan would be able to reduce costs by the needed $250 million.

The proposal calls for restructuring payments and incentives to move away from the current system in which doctors are paid for the services they provide. Kitzhaber, a former emergency room physician, wants doctors to be paid based on their effectiveness at keeping patients healthy. Kitzhaber and the proponents of his plan hope it will serve as a model for other states looking to lower their health care costs.

Rep. Jim Thompson, a Dallas Republican who worked on the bill, said Oregon didn’t follow the path of other states that are mired in debate over President Barack Obama’s federal health care overhaul. “While there’s still question at what will happen at the federal level, we’re relatively sure we’re on the right track for Oregon,” Thompson said.

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