Cost growth target number aims to bring Oregon’s health care costs down

Health officials have set a health care cost growth goal to help lower the cost of services for Oregonians.

 

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Oregon Health Authority (OHA) Health Policy and Analytics Division Director Jeremy Vandehey discussed the rising costs of health care services in Oregon, and throughout the U.S., during a meeting Friday. He said U.S. health care costs are twice the average of other countries.

“We spend more per capita than every other country, despite the fact not everyone’s insured,” Vandehey said. “And we actually live significantly shorter lives. It’s not translating to better health.”

U.S. health care costs increased by 4.6 percent in 2019 to $3.8 trillion, or $11,582 per capita. Oregon was one of 15 states where cost barriers worsened between 2016-18, while 15.7 percent of Oregonians reported that they delayed care because of costs in 2019, Vandehey said. 

“Adults reported they went without care because of cost,” he said.

Low-value services, waste, new technology, and administrative requirements all contributed to the state’s high health care costs, Vandehey said. But the largest cause for projected cost growth was rising prices, he said.

OHA’s plan to lower cost growth numbers includes four initiatives:

  • Increased transparency 
  • Rallying around a statewide target for total health care spending 
  • Moving to a total cost-of-care approach
  • Working toward a common goal of focusing on total cost

OHA’s statewide cost growth target for the next 10 years to try to bring costs down. The cost growth target for the next five years will be 3.4 percent, a goal that was set based on historical GDP and median wage numbers. The cost growth target will drop to 3 percent after that. Following that model, Vandehey said Oregon could save $31 billion between 2022-2030.

“The program will work on an annual cycle,” Vandehey said. “The first step is collecting data on an annual basis. We’ll measure different markets, and different health plans, so we understand what’s happening at different parts within the system. A big part of it will be taking data and translating it into policy questions.”

Kaiser Family Foundation Vice President Cynthia Cox discussed national trends. She said almost one in every five dollars in the U.S. economy goes toward health care costs

“The growth and health spending is largely driven by private insurance,” Cox said. “Medicare and Medicaid costs are also growing.”

About one in 10 U.S. adults has significant medical debt, Cox said. 

“A lot of people owe in the thousands of dollars, or even tens of thousands of dollars,” she said. “We’re expecting health care costs to grow by about 5 percent per year over the next 10 years.”

Sen. Lee Beyer (D-Springfield) said state officials will continue working with OHA on health care cost containment.

“Oregon has the highest prices in the west in health care costs,” Beyer said. “We can’t continue that trend; it’s unsustainable. Many people have catastrophic insurance because the deductibles are so high, and can’t afford to use health insurance.”