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Gridlock on the Oregon trail.

Gridlock, partisan politics, empty wallets, and the blame game are usually associated with life inside the D.C. "Beltway," but they have surfaced recently in the state of Oregon and brought efforts to implement the controversial Oregon Health Plan (OHP) to a virtual standstill. In a 19 March 1993 decision greeted with much enthusiasm by state political leaders, the medical community, and health care activists, the Clinton administration approved a Medicaid waiver to permit implementation of the OHP. The core of the plan restricts access of Medicaid patients to some health services in order to provide a basic package of benefits for some 120,000 Oregonians currently without health care insurance. The Bush administration had denied the Medicaid waiver in August 1992 because of concerns that quality of life assessments were embedded in a prioritized list of 688 health services, and that the priorities thereby might result in discrimination against the disabled and violate the Americans with Disabilities Act. A revised version, submitted in December 1992, attempted to eliminate the quality of life methods and guaranteed funding for 568 of the 688 services, including such previously excluded conditions as low birthweight babies, cirrhosis of the liver, and chronic bronchitis.

After persistent lobbying by the Oregon congressional delegation and Gov. Barbara Roberts, the approval of the waiver was announced by Donna E. Shalala, secretary of health and human services. Shalala's approval, which was subject to twenty-nine conditions (primarily "technical" and "reporting" issues), allows the OHP to proceed for a five-year "experimental" period, beginning in January 1994. Under the OHP the income level for Medicaid eligibility would be raised from its current 50 percent of the federal poverty index to 100 percent ($14,343 for a family of four in 1992), and expand the total number of Medicaid recipients in the state from 240,000 to 360,000. The waiver approval also triggers a state version of a "pay or play" program, in which employers will be mandated to provide health insurance for employees or be subject to a new payroll tax. Employers who "play" must offer health plans substantially similar" to the Medicaid priority list and bear at least 75 percent of the cost for employees and 50 percent of the cost for their dependents.

Among the more substantive conditions of federal approval, Shalala requested that the state submit within 60 days (18 May) another priority ranking to ensure that persons with disabilities are not potential subjects of discrimination. For example, the OHP will not be permitted to consider "functional limitations" (such as inability to walk) or impairments that persist after treatment as a measure of a treatment's "effectiveness." The state was also asked to consider whether infertility (currently excluded from coverage) should be covered as a "disability." And Oregon was also required not to rescind its guarantee of funding up to the level of the 568 services without prior approval from HHS.

Oregon's political leaders were unanimous in asserting that Oregon was blazing a new path for the nation to follow as it takes up reform proposals at the national level to be issued by Hillary Rodham Clinton's task force. Rep. Ron Wyden (D-Ore.), a principal advocate of the OHP before the Clinton administration, remarked: "Any good national health bill has to contain features of the Oregon plan, . . . universal coverage, preventive health care, cost containment through managed care, extensive use of nonphysician providers, and an emphasis on what's medically effective for our citizens" (Washington Post, 20 March 1993). However, since the granting of the waiver, the OHP has looked like it would be an exemplar only of the obstacles that any national proposal might face.

A major problem with implementation that has emerged is financial. The costs of the OHP over the five-year period are estimated at $6.5 billion, with a substantial portion funded by the federal government. However, the state government, which had previously authorized $34 million for the 1991 plan sent to the Bush administration, now finds itself needing $83.6 million to fund the revised plan during the 1993-95 biennium. This comes precisely at a time when the state is facing a $1.2 billion budget shortfall, without any "layaway" provision for allocating money to the health plan. The question of funding for the plan is thus very much up in the air.

Gov. Roberts and state Senate majority leader Bill Bradbury (both Democrats) have favored a 1 percent tax on the gross receipts of health care providers. Needless to say, this proposal did not sit well with the medical community, and the Oregon Medical Association in turn proposed a 25 percent increase in "sin taxes" for beer, wine, and cigarettes. The Republican leadership, which controls the state House of Representatives, meanwhile is opposed to any new taxes for any purpose until "efficiency" in government is achieved; it petitioned the Oregon federal congressional delegation to ask the Clinton administration if the federal government would foot the bill. A joint committee established to make sure all parties were on the same page did not identify funding alternatives and concluded with a consensus that the meetings be deferred until additional research could be done on specific questions about the implementation and costs of the plan. The month of April ended with no agreement and with the Governor and the House Speaker at public odds over who should take responsibility to come up with a funding plan.

An additional obstacle is that, due to the budget shortfall, other state services are under-going draconian cutbacks. The state legislature did agree, after a lengthy stalemate, to a $550 million reduction in revenue support for secondary school education over the next two years (an approximately 11 percent decrease). Thus, the OHP is one of many programs competing for very scarce dollars in a political climate currently unfavorable to tax increases. It has confronted legislators with a stark choice between educational and health care priorities. As one representative argued, "Before we make an obligation for a new program, we need to take care of existing programs" (Oregonian, 20 March 1993). It is also reasonable to question the sustained commitment of the legislature to the OHP, since, due to electoral turnover, over one-third of its current members did not vote on the initial version of the plan approved in 1989.

The unraveling of the carefully crafted coalition that lobbied for the OHP has also begun. Associated Oregon Industries, the state's largest business lobby, has now distanced itself from its original position of support and contended that state officials and legislators reneged on promises (regarding taxes, the level and stability of the basic benefits package, and the cost to employers) in the course of obtaining the federal Medicaid waiver. The consequence of such changes has been to make the 1991 and 1993 plans quite different in principle and philosophy, and to invite a "crushing" impact of the plan on small businesses. Others have seen the retreat of the business community somewhat more cynically. An editorial in the state's leading newspaper, the Oregonian, observed in mid-April: "Many of AOI's business members seem to relish rationing health care for the poor more than they like providing basic health insurance to their workers" (19 April 1993).

It is difficult to determine at this stage whether the game of gridlock will end and whether the fragile coalition of support will remain united. What does seem clear is that the pioneers on the new Oregon trail the state had hoped to blaze for the nation in health care have gotten themselves quite lost.

A Call for Information

Hospital Resource Allocation Project

A Hastings Center project on hospital resource allocation is gathering information on how institutions are responding to issues in resource utilization ranging, for example, from policies on futility or ICU admission to committees that address technology assessment, purchasing, or clinical effectiveness. If you or your organization has in place a process or structure to address hospital resource utilization, or are planning such an initiative, we would appreciate receiving information on your program. If you have heard of such work elsewhere we would like that information also.

Information or questions should be addressed to: Philip J. Boyle, Associate for Medical Ethics, The Hastings Center, 255 Elm Road, Briarcliff Manor, NY 10510; (914) 762-8500; (914) 762-2124 (fax).
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Title Annotation:Oregon Health Plan
Author:Campbell, Courtney S.
Publication:The Hastings Center Report
Date:Jul 1, 1993
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