Health Policy Monitor
Skip Navigation

Update on Oregon Health Plan (OHP) Restructuring

Country: 
USA
Partner Institute: 
Institute for Global Health (IGH), University of California Berkeley/San Francisco
Survey no: 
(11)2008
Author(s): 
Conis, Elena and Carol Medlin
Health Policy Issues: 
Political Context, Funding / Pooling, Benefit Basket, Access
Reform formerly reported in: 
Oregon Health Plan Cuts
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes yes yes yes
Featured in half-yearly report: Health Policy Developments 11

Abstract

In 2004, Oregon restructured its Medicaid program, a process that entailed benefit cuts, increasing cost-sharing and closing the program to new enrollees. Results were a steep decline in enrollment and a growing uninsured population with declining health status and heavy reliance on ER care. In 2008, the program reopened enrollment for new members, though membership for the working poor remains limited. A newly created board plans to present a new state health proposal in 2009.

Recent developments

Creation of the Oregon Health Plan in 1989 to expand health insurance coverage

In 1989, Oregon became one of the first states to obtain a federal waiver to restructure its state Medicaid program, which it used to create the Oregon Health Program (OHP). The OHP, which began enrolling members in 1994, expanded coverage to adults earning up to 100% Federal Poverty Line (FPL), largely by cutting benefits down to a list of cost-effective, prioritized services. In its first year, the OHP enrolled 120,000 new members.

Initially, the program had a significant positive impact: the percentage of the state's population without health insurance fell from 18 percent in 1994 to 10 percent in 1998. Oregon was widely hailed as a national leader in improving access to health care, and the OHP drew attention from lawmakers across the U.S. interested in reforming their own Medicaid programs.

Budget pressures force government to cut down OHP in 2003

In 2003, in response to a growing fiscal crisis, Oregon restructured the Oregon Health Program. The state increased premiums, implemented co-payments, and eliminated several benefits, including mental health services, durable medical equipment, dental coverage and vision services. Prescription drug coverage was briefly eliminated and then restored.

The restructured plan was given the name OHP 2, which was divided into OHP Plus and OHP Standard. OHP Plus provided coverage to those eligible for Medicaid; this segment of the program was largely spared any changes in the restructuring process, barring a new $3 copayment for some services. Enrollment in OHP Plus was approximately 360,000 in 2004; by 2005 it had had dropped to about 340,000.

Increased cost-sharing for working poor covered under OHP

OHP Standard was created to cover those who had been previously eligible for coverage through OHP's original expanded eligibility criteria, ie. typically those who earn less than the federal poverty line but do not qualify for traditional Medicaid. Under OHP Standard, enrollees were charged premiums ranging from $6 to $20 per month. Premium exemptions for the homeless and those without income were eliminated. Copayments introduced under the restructured program ranged from $5 copayments for doctor visits to $250 for inpatient hospital visits. (Prior copayments in the OHP had been rare and nominal.)

OHP Standard began enforcing strict premium payment policies; those who missed a payment were forced to wait six months before they could re-enroll in the program. Physicians and pharmacists were also permitted to deny services to those who were unable to make co-payments. In August 2004, OHP placed further limits on hospital services covered by the plan and closed any further enrollment in OHP Standard. Enrollees who missed premium payments were dropped from the program and no longer permitted to re-enroll. 

While these cost-saving measures were taking place, the state also took steps to enable it to continue to cover some segments of the uninsured population. The state expanded OHP to cover children and pregnant women earning up to 185% of the FPL, and folded its Family Health Insurance Assistance Program (FHIAP), which subsidized private health insurance premiums for low-income individuals, into OHP Standard, a move that enabled the state to receive additional federal matching funds for those enrollees.

Sharp increase in the number of uninsured working poor

In the summer of 2004, the state reintroduced some previously eliminated OHP Standard benefits and, following a court ruling, eliminated the newly introduced copayments for adults enrolled in the program. Nonetheless, the number of Oregon residents covered by OHP Standard dropped dramatically. In March of 2003, 88,874 people were enrolled; six months later, enrollment stood at about 50,000. By October 2004, enrollment in OHP Standard was 46,520. In November 2004, the Oregon Association of Hospitals and Health Systems reported that charity care at the state's hospitals had doubled since the cuts. By early 2005, enrollment in OHP Standard had dropped to 38,000, and the Department of Human Services announced that enrollment would have to drop to 24,000 for the program to remain financially solvent. At the same time, the Department briefly considered a proposal to eliminate the $6 premium for people making less than $77 per month, but ultimately rejected the idea as too costly. Enrollment continued to drop, plummeting to 19,000 by late 2007 and 18,000 by early 2008. At the same time, more than 615,000 Oregonians are now uninsured, a total of 17 percent of the population. 

Reallowance of new enrollees

In January 2008, OHP Standard announced it would accept new enrollees for the first time since 2004, to allow new members to take the place of members that had disenrolled. The Department of Human Services announced that it would enroll 3,000 new members in March and another 3,000 new members in April, admitting new members on a lottery basis. More than 83,000 uninsured Oregonians entered their names into the lottery.  

New board to develop further measures to improve access and health care

Moreover, in 2006, Oregon's Senate Commission on Health Care Access and Affordability, chaired by state senators Alan Bates and Ben Westlund, introduced Senate Bill 329, the Healthy Oregon Act. The Act, which was signed into law in June 2007, established the Oregon Health Fund Board. The seven-member Board, appointed by Governor Ted Kulongoski, is tasked with devising a comprehensive plan to reform Oregon's health care system, one that would reduce health care costs, address quality concerns, and provide at least a minimum of coverage to all Oregonians. At present, the Board is comprised of a physician, a union leader, three business executives and two non-profit executives, and led by Barney Speight, former head of Oregon's Medical Assistance Programs, which administers OHP 2. The Board is currently collecting input from state agencies and holding a series of community meetings to obtain input from the public. It's scheduled to present its plan to the 2009 legislature. The Act also calls for investigation into a health insurance pool for individuals and employers, as well as a possible health insurance mandate.  

 Search help

Characteristics of this policy

Degree of Innovation traditional rather innovative innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal rather marginal fundamental
Public Visibility very low high very high
Transferability strongly system-dependent neutral system-neutral
current current   previous previous

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no yes yes yes yes

Initiators of idea/main actors

  • Government
  • Civil Society
  • Opinion Leaders
  • Others

Stakeholder positions

The Oregon Health Plan was implemented under the leadership of former governor John Kitzhaber, a physician who ardently championed the plan from its inception. Kitzhaber left office in 2003, and cuts to the program, begun in 2001, were continued under new governor Ted Kulongoski.

Steps toward a new era of reform have been led by state senators Alan Bates and Ben Westlund. Former governor John Kitzhaber remains actively involved in promoting health care reform in the state through his Archimedes Movement, an advocacy project of the non-profit organization Foundation for Medical Excellence.  

Stakeholders include current and former OHP enrollees, hospitals and managed care providers (taxes on both help fund OHP), taxpayers, charities, state government, and the federal government, which mandates Medicaid. Taxpayers, hospitals and other care providers have been resistant to new taxes proposed to keep OHP afloat (new taxes have failed to win approval in recent years). At the same time, hospitals have a strong interest in reducing emergency care use-as well as related, unreimbursed costs.

Actors and positions

Description of actors and their positions
Government
Governor Ted Kulongoskivery supportivesupportive strongly opposed
Bruce Goldberg, director DHSvery supportivesupportive strongly opposed
State senators Alan Bates and Ben Westlundvery supportivevery supportive strongly opposed
Civil Society
Advocacy groups for the uninsuredvery supportivevery supportive strongly opposed
Opinion Leaders
Former governor John Kitzhabervery supportivevery supportive strongly opposed
Government advisory boards
Oregon Health Fund Boardvery supportivevery supportive strongly opposed
Barney Speight, director Oregon Health Fund Boardvery supportivevery supportive strongly opposed
current current   previous previous

Actors and influence

Description of actors and their influence

Government
Governor Ted Kulongoskivery strongvery strong none
Bruce Goldberg, director DHSvery strongneutral none
State senators Alan Bates and Ben Westlundvery strongstrong none
Civil Society
Advocacy groups for the uninsuredvery strongneutral none
Opinion Leaders
Former governor John Kitzhabervery strongstrong none
Government advisory boards
Oregon Health Fund Boardvery strongvery strong none
Barney Speight, director Oregon Health Fund Boardvery strongvery strong none
current current   previous previous
Advocacy groups for the uninsuredState senators Alan Bates and Ben Westlund, Former governor John KitzhaberOregon Health Fund Board, Barney Speight, director Oregon Health Fund BoardBruce Goldberg, director DHSGovernor Ted Kulongoski

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Monitoring and evaluation

OHP cuts lead to lower coverage, lower access to care and declines in health

The Oregon Health Research and Evaluation Collaborative (OHREC), a public-private partnership of health care researchers, has conducted several studies on the impacts of the implementation of OHP Standard. Several studies, by OHREC and others, have shown that following cuts to OHP and related programs, Oregon residents previously reliant on such programs have faced losses in coverage, trouble accessing needed care, increased financial hardship, and overall declines in health.

Former OHP enrollees forgo preventive care, rely on third-party financial support

A series of focus groups conducted by the KaiserCommission on Medicaid and the Uninsured found that lapsed enrollees were forgoing preventive care as well as prescription drugs and eyeglass prescription updates they could no longer afford. They also reported choosing the least costly care when care was critically needed (such as having a tooth pulled instead of treated). Enrollees also said that they were often relying on family, friends, churches, and charitable organization for help making payments. In some cases, hospitals and managed care provided paid premiums for some of their poorest patients.

A longitudinal cohort study conducted by OHREC, published in 2005, found that two-thirds of those enrolled at the beginning of the study lost their coverage during the study period. Those who lost coverage reported less access to primary care, increased use of emergency room care, and increased financial hardship, in particular due to accumulation of medical debt. Following cuts, disenrollment in OHP2 increased steeply; however, far more people remained enrolled in OHP Plus than in OHP Standard. Compared to former OHP Plus members, former OHP Standard members were also less likely to find other coverage once they left the program. Increased premiums and cost-sharing, the study authors concluded, appeared to result in the most economically vulnerable members leaving the system-thereby creating a "highly unstable, newly uninsured population with significant dependence on safety net providers and charity care in hospital [emergency departments]." 

Expected outcome

The newly formed Oregon Health Fund Board has a long list of mandates: to develop a health care plan that covers all Oregon residents, providing each individual with a primary care or medical "home," while focusing on prevention and improving cost-efficiency, access to services, quality of services and affordability. The Board is informed by the recommendations of eight subcommittees, which are presently identifying potential means to realizing such improvements. Committees are currently investigating, for example, mechanisms for identifying essential services, ways to increase transparency and accountability on the part of service providers, revised eligibility requirements, various funding scenarios, and measures to promote equitable access to care. Whatever the Board's ultimate proposal, it will need to take into consideration several challenges that have besieged the current plan, including a statewide shortage of primary care providers, a growing population of uninsured residents, and rapidly increasing health care costs.

Impact of this policy

Quality of Health Care Services marginal rather marginal fundamental
Level of Equity system less equitable two system more equitable
Cost Efficiency very low high very high
current current   previous previous

References

Sources of Information

Colburn, Don. "Panel Keeps $6 Health Plan Fee". The Oregonian. January 7, 2005.

Colburn, Don. "Thousands Enter Health Plan Drawing". The Oregonian. January 29, 2008

Healthy Oregon Act. www.hopeforahealthyoregon.com/overview.php

LeCouteur, G. et al. The Impact of Medicaid Reductions in Oregon: Focus Group Insights. Kaiser Commission on Medicaid and the Uninsured. December 2004.

Mann, C.  and S. Artiga. The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon's Medicaid Program. Kaiser Commission on Medicaid and the Uninsured. June 2004.  

Oregon Progress Board. Health Insurance. www.oregon.gov/DAS/OPB/2005report/obm54.shtml

Wright, B. et al. Impact of Changes to Premiums, Cost-sharing, and Benefits of Adult Medicaid Beneficiaries: Results from an Ongoing Study of the Oregon Health Plan. The Commonwealth Fund. July 2005.    

Reform formerly reported in

Oregon Health Plan Cuts
Process Stages: Legislation, Change

Author/s and/or contributors to this survey

Conis, Elena and Carol Medlin

Suggested citation for this online article

Conis, Elena and Carol Medlin. "Update on Oregon Health Plan (OHP) Restructuring". Health Policy Monitor, April 2008. Available at http://www.hpm.org/survey/us/d11/2