House Committee on Health Care receives updates on Medicaid Buy-In and SB 889

Jeremy Vandehey, director of health policy and analytics for Oregon Health Authority (OHA), updated the House Committee on Health Care on Senate Bill 889 and the Medicaid buy-in Friday afternoon.

 

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For the last few decades, the state has tried to expand coverage and ensure health coverage is both affordable and of the highest quality, Vandehey said. Significant gains over the last five years, mostly due to the Affordable Care Act, have allowed Oregonians who struggled to access care to find the services they need.

Because of the state’s previous efforts to expand health care coverage, 94 percent of all Oregonians are now covered, Vandehey added on Friday.

“That’s remained fairly stable for the last couple of years,” Vandehey said. “But the challenge is really on the cost side.”

Health care costs in Oregon have grown faster than the national average, according to Vandehey, outpacing national rates by 6.5 percent per person, per year. The state used to see rates far below what the rest of the country paid, but with rising costs over the last several years, families and employers across the state have struggled to pay for these costs.

“Increasingly, that burden is being shifted to families directly,” Vandehey said. 

Household income has grown by 15 percent from 2010-2016, but conversely, family premiums have risen by 25 percent and deductibles have grown by 77 percent. With the average premium for employer-provided coverage totaling 29 percent of average household income, health care expenditures are continually eating away at wages and income, Vandehey said. 

“It’s taking away from increased wages, but also the large amount of the benefit is trapped in health care and not able to go towards things like housing or school and other important things that folks need to pay for,” Vandehey said. 

The state’s Medicaid buy-in is supposed to help combat this growing trend. Senate Bill 889, which passed last year, creates a state-wide cost growth target for the state. Total health care spending, which has targets set by a per-capita budget, would create a new framework for how the state manages health care costs. The target would allow for greater accountability between payers and providers, and help bring the cost growth down to match the rest of the nation’s economy. 

One key component is to tie the health care costs to wage and economic growth in the state, keeping the rates from growing to two or three times the rate of wage growth. 

“Our hope is to advance to value-based payments and away from a fee-for-service model,” Vandehey said. 

Oregon would join three other states, including Massachusetts, in launching a program of this nature. Rhode Island, Delaware and Connecticut also launched similar programs. California, among other states, is making efforts to move towards this type of health care cost payment plan.

“This is starting to pick up some pretty serious steam nationally,” Vandehey said. 

A per capita target will be measured against providers and insurers, who will be held accountable for meeting the target. An annual cost trends hearing will help to keep the data in the public eye, allowing officials to figure out where problems are in the system of care. An implementation committee will look at details, consisting of 18 people appointed by Gov. Jay Inslee last fall. That group met four times so far, and it is scheduled to deliver a report to the legislature this fall containing recommendations for how to calculate the target costs, how to adjust it and what data is needed, among other facets of that report. 

The committee will also propose a piece of legislation in 2021, which will address enforcement and accountability measures, long-term governance of the program and quality and equity.

“We’re talking a lot about costs, but we want to make sure we’re not losing sight of quality and equity and that we’re not putting quality at risk in the name of trying to contain costs,” Vandehey said. “We certainly do not want to exacerbate existing inequities and disparities in the state.”