Health Policy for Low Income People in Oregon

Health Policy for Low- Income People in Oregon

Michael S. Sparer Joseph L. Mailman School of Public Health Columbia University

Occasional Paper Number 31

Assessing the New Federalism An Urban Institute Program to Assess Changing Social Policies

Health Policy for Low- Income People in Oregon

Michael S. Sparer Joseph L. Mailman School of Public Health Columbia University

Occasional Paper Number 31

The Urban Institute 2100 M Street, N.W. Washington, DC 20037 Phone: 202.833.7200 Fax: 202.429.0687 E-Mail: [email protected] An Urban Institute http://www.urban.org Program to Assess Changing Social Policies Copyright © September 1999. The Urban Institute. All rights reserved. Except for short quotes, no part of this book may be reproduced in any form or utilized in any form by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without written permission from the Urban Institute.

This report is part of the Urban Institute’s Assessing the New Federalism project, a multiyear effort to monitor and assess the devolution of social programs from the federal to the state and local levels. Alan Weil is the project director. The project analyzes changes in income support, social services, and health programs. In collaboration with Child Trends, the project studies child and family well-being.

The project has received funding from The Annie E. Casey Foundation, the W.K. Kellogg Foundation, The Robert Wood Johnson Foundation, The Henry J. Kaiser Family Foundation, The Ford Foundation, The John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, The David and Lucile Packard Foundation, The McKnight Foundation, The Commonwealth Fund, the Stuart Foundation, the Wein- gart Foundation, The Fund for New Jersey, The Lynde and Harry Bradley Foundation, the Joyce Foundation, and The Rockefeller Foundation.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consid- eration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

The author thanks those persons who participated in interviews and provided information. The author also thanks Michael Park for his excellent research assistance and Brian Bruen for compiling the information in the tables. Finally, the author is especially grateful to John Holahan and Josh Weiner for their consistently helpful suggestions. About the Series

ssessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services.A Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively. Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute’s Web site. This paper is one in a series of occasional papers analyzing information from these and other sources.

Contents

Highlights of the Report 1 State Characteristics: Thumbnail Sketch of Oregon 3 Sociodemographic Profile 3 Political Profile 5 Economic Profile 5 The Oregon Health Plan: An Overview 7 The Medicaid Waiver 7 The Employee Retirement Income and Security Act Obstacle 8 The Oregon Medicaid Program: Enrollment and Cost Trends 9 The Impact of Rationing: Rhetoric versus Reality 11 The Medicaid Managed Care Initiative 12 Medicaid Managed Care and the Elderly and Disabled 13 The Medicaid Managed Care Delivery System 13 Marketing and Enrollment 14 Paying Managed Care Plans: The Rate-Setting Process 15 Paying Health Care Providers: The Dispute between Doctors and Hospitals 16 The Quality of Care in Medicaid Managed Care 17 The Oregon Child Health Insurance Program 18 Oregon’s Efforts to Increase the Availability and Affordability of Private Insurance 19 The Oregon Small Employer Health Insurance Reforms 19 The Oregon Medical Insurance Pool 20 The Oregon Insurance Pool Governing Board 21 The Family Health Insurance Assistance Program 22 The Oregon Health Plan: The Impact on the Medical Safety Net 23 Long-Term Care in Oregon: An Emphasis on Home- and Community-Based Services 24 Matching Clients to Services: The Case Management System 25 In-Home Supportive Services 26 Adult Foster Care 26 Assisted Living Facilities 27 The Nursing Home Industry 27 The Rising Cost of Long-Term Care 28 Other Long-Term Care Initiatives 29 Conclusion 29 Notes 31

About the Author 37 vi HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON Health Policy for Low-Income People in Oregon

Highlights of the Report

Over the last decade, Oregon’s health care system has attracted positive atten- tion—and occasional notoriety. Most of the focus is on a series of laws enacted in 1989, known collectively as the Oregon Health Plan (OHP), designed to ensure health insurance for all state residents. The most controversial part of the plan is an effort to rank medical diagnoses and treatments, deny Medicaid coverage for low- priority services, and use the savings to expand coverage to all persons living in poverty. Many observers criticized the plan’s explicit “rationing” of care for the poor. Others claimed the plan undervalued the quality of life of people with disabilities. Federal officials spent more than three years negotiating the terms of the prioritization system before authorizing implementation. Perhaps ironically, however, the prioritization system has so far had little effect on the health care received by Medicaid beneficiaries. The effort to ration has also generated surprisingly small financial savings (state officials suggest that Medicaid costs would be 2 percent higher without the list). One reason for the lack of savings is that federal officials will not let the state impose draconian cuts in the Medicaid benefit package. At the same time, state officials were never in favor of an overly restrictive benefit package. Indeed, the benefit package is actually more expansive than that provided prior to the implementation of the initiative. Finally, health care providers and managed care plans often circumvent the few restrictions that are imposed and deliver services that are not part of the official benefit package. The national focus on prioritization and rationing has obscured the more important story about the Oregon health care system. Between 1990 and 1998, the state’s uninsured residents declined from 18 percent in 1990 to just over 11 percent. This decline is especially impressive given the state’s inability to implement legislation that would have required employers either to provide health insurance to all employees (who worked more than 17.5 hours per week) or to pay into a state program that would provide insurance to this group. There are three factors that best explain the low rate of uninsured residents in Oregon. First are the Medicaid expansions that provide coverage to all persons with income below the federal poverty level (FPL). Second are a series of efforts to reform the state’s small-group insurance market. Third is the strength of the state’s economy throughout much of the 1990s, which has led to new jobs and increased employer-sponsored health insurance coverage. Over the last couple of years, however, the number of residents who are uninsured has begun to grow again. Between 1997 and 1998, the uninsured population increased from 340,000 to 363,000 (from 10.6 percent to 11.1 percent of the state’s population). Policymakers suggest several explanations for the recent growth. Wel- fare reform is one factor. As the number of welfare beneficiaries has declined, so too has the number of Medicaid enrollees. At the same time, the state’s economy has become unstable. There are several problems, most notably the recent Asian economic crisis (which has significantly reduced exports). This downward economic trend has reduced the number of persons with employer-sponsored health insurance. Finally, the recent increase in the state’s minimum wage is another contributing factor: it pushed some families just above the poverty level and therefore off of the Med- icaid rolls. State officials are hopeful that two new programs, the Children’s Health Insur- ance Program (CHIP) and the Family Health Insurance Assistance Program (FHIAP), will stop the growth in the number of uninsured. The state’s CHIP provides coverage to children below the age of six in families between 133 percent and 170 percent of the FPL and to children ages 6 to 18 with income between 100 percent and 170 percent of the FPL. While Medicaid and the child health initiative are separate programs, in practice the distinction is minimal. Both programs are administered by the state’s Medicaid agency; both have a single application, a single benefit package, and the same managed care network. As of November 1998, there were 8,700 enrollees in the new CHIP. State officials expect that number to double by mid-1999. FHIAP, established in 1997 with funds generated from a state tobacco tax, subsidizes the cost of private health insurance for persons with income less than 170 percent of the FPL. FHIAP began enrolling clients in July 1998 and consumer interest seems strong. State regulators estimate that by mid-1999 there will be just over 7,000 beneficiaries and that another 7,000 will express interest in enrolling. The problem, however, is that the downturn in the state’s economy minimizes the odds that the program will receive enough funding to cover more than 7,000 or so clients. Several other important issues are on the state’s health policy agenda. One is the state’s Medicaid managed care initiative. Oregon is a leader in the national effort to require Medicaid beneficiaries to enroll in managed care: More than 80 percent of the state’s Medicaid population is enrolled in managed care, including most elderly and disabled recipients. Moreover, Medicaid officials have long had a good relation-

ship with the state’s managed care industry, paying relatively high rates and treating 2 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 3

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The pop- The g,icesn rm28mlini 90t . ilo n19 tbe1). (table 1997 in million 3.2 to 1990 in million 2.8 from increasing age,

During the 1990s, Oregon’s population grew at a rate twice the national aver- national the twice rate a at grew population Oregon’s 1990s, the During

Sociodemographic Profile Sociodemographic

State Characteristics: Thumbnail Sketch of Oregon of Sketch Thumbnail Characteristics: State

is in very good shape. good very in is

agenda. Instead, there is a bipartisan consensus that the state’s long-term care system care long-term state’s the that consensus bipartisan a is there Instead, agenda.

the fee-for-service system. Nevertheless, these issues are not high on the legislative the on high not are issues these Nevertheless, system. fee-for-service the

disabled receive acute care from a managed care organization and long-term care in care long-term and organization care managed a from care acute receive disabled

coordination between the acute and long-term care systems: Most of the elderly and elderly the of Most systems: care long-term and acute the between coordination

would have gone without. Moreover, there is occasional concern about inadequate about concern occasional is there Moreover, without. gone have would

initiative is budget neutral. Clearly, some clients receive services they previously they services receive clients some Clearly, neutral. budget is initiative

To be sure, there is little evidence to support state claims that the long-term care long-term the that claims state support to evidence little is there sure, be To

25 percent of assisted living facility residents Medicaid beneficiaries. beneficiaries. Medicaid residents facility living assisted of percent 25

had a decline in the number of nursing home beds. Only in Oregon are more than more are Oregon in Only beds. home nursing of number the in decline a had

institutional care provided in nursing homes. The state is one of only two that have that two only of one is state The homes. nursing in provided care institutional

spends more Medicaid dollars on home- and community-based services than on than services community-based and home- on dollars Medicaid more spends

These policy initiatives have worked. Oregon is the only state in the nation that nation the in state only the is Oregon worked. have initiatives policy These

trols nursing home construction. home nursing trols

their home into an adult foster care setting. A strict certificate-of-need process con- process certificate-of-need strict A setting. care foster adult an into home their

In the 1980s, an aggressive effort was waged to recruit families willing to convert to willing families recruit to waged was effort aggressive an 1980s, the In

the assisted living industry to place Medicaid enrollees in community-based facilities. community-based in enrollees Medicaid place to industry living assisted the

alternatives to institutionalization. In addition, an ongoing state effort works with works effort state ongoing an addition, In institutionalization. to alternatives

entering a nursing home. Case managers ensure that this population is aware of the of aware is population this that ensure managers Case home. nursing a entering

elderly and disabled to receive home- and community-based services rather than rather services community-based and home- receive to disabled and elderly

than 20 years, state lawmakers have enacted policies designed to encourage the encourage to designed policies enacted have lawmakers state years, 20 than

The Oregon health care system of long-term care is a national model. For more For model. national a is care long-term of system care health Oregon The

could lead to many physicians opting not to treat Medicaid patients. patients. Medicaid treat to not opting physicians many to lead could

icaid (an extraordinarily high number), and state officials worry that the dispute the that worry officials state and number), high extraordinarily (an icaid

utive intervention. More than 95 percent of Oregon’s physicians participate in Med- in participate physicians Oregon’s of percent 95 than More intervention. utive

plans and their providers. There is growing pressure, however, for legislative or exec- or legislative for however, pressure, growing is There providers. their and plans

that the allocation is the outcome of a private negotiation process between health between process negotiation private a of outcome the is allocation the that

the charge. Nonetheless, state officials have tried to stay out of the debate, arguing debate, the of out stay to tried have officials state Nonetheless, charge. the

hospitals prosper under Medicaid, physicians do not. There is evidence to support to evidence is There not. do physicians Medicaid, under prosper hospitals

pitals over the division of the Medicaid capitation dollar. The allegation is that while that is allegation The dollar. capitation Medicaid the of division the over pitals

State officials are also trying to mediate a bitter dispute between doctors and hos- and doctors between dispute bitter a mediate to trying also are officials State

profitable. With no quick fix in sight, this trend troubles many state officials. officials. state many troubles trend this sight, in fix quick no With profitable.

commercial plans have withdrawn from the Medicaid market, claiming it is no longer no is it claiming market, Medicaid the from withdrawn have plans commercial

challenged the adequacy of the Medicaid rates, especially in rural counties. Some counties. rural in especially rates, Medicaid the of adequacy the challenged

Oregon’s were the most generous. Nonetheless, several health plans have recently have plans health several Nonetheless, generous. most the were Oregon’s

Medicaid rates in 10 states to those in the commercial sector and found that found and sector commercial the in those to states 10 in rates Medicaid health plans as partners rather than adversaries. Indeed, a recent study compared study recent a Indeed, adversaries. than rather partners as plans health Table 1 State Characteristics Oregon United States Sociodemographic Population (1994–95)a (in thousands) 3,187 260,202 Percent under 18 (1998)b 25.9% 27.4% Percent 65+ (1998)b 13.8% 12.7% Percent Hispanic (1994–95)a 5.3% 10.7% Percent Non-Hispanic Black (1994–95)a 1.7% 12.5% Percent Non-Hispanic White (1994–95)a 88.4% 72.6% Percent Non-Hispanic Other (1994–95)a 4.5% 4.2% Percent Noncitizen Immigrant (1994–95)a 6.5% 9.3% Percent Nonmetropolitan (1997)c 29.7% 21.3% Population Growth (1995–96)d 1.7% 0.9% Economic Per Capita Income (1997)c $24,393 $25,598 Percent Change in Per Capita Personal Income (1995–96)e 5.6% 4.6% Percent Change in Personal Income (1995–96)e 7.4% 5.6% Employment Rate (1997)f,g 64.6% 63.8% Unemployment Rate (1997)g 5.8% 4.9% Percent below Poverty (1995–96)b 11.5% 13.8% Percent Children below Poverty (1994)h 18.1% 21.7% Health Vaccination Coverage of Children Ages 19–35 Months (1996)i,j 70.0% 77.0% Low Birth-Weight Births (<2,500 g) (1995)k 5.5% 7.3% Infant Mortality Rate (Deaths per 1,000 Live Births) (1996)l 5.6 7.2 Premature Death Rate (Years Lost per 1,000) (1995)m 40.9 46.7 Violent Crimes per 100,000 (1996)n 463.1 634.1 AIDS Cases Reported per 100,000 (1996)o 14.5 25.2 Political Governor’s Affiliation (1998)p D Party Control of Senate (Upper) (1997)q 10D-20R Party Control of House (Lower) (1997)q 29D-31R

a. Two-year concatenated March Current Population Survey (CPS) files, 1995 and 1996. These files are edited by the Urban Insti- tute’s TRIM2 microsimulation model. Excludes those in families with active military members. b. AARP. Reforming the Health Care System: State Profiles, 1998 (Washington, D.C., 1998). c. AARP. Reforming the Health Care System: State Profiles, 1997 (Washington, D.C., 1997). d. U.S. Bureau of the Census. Statistical Abstract of the United States: 1997 (117th edition). Washington, D.C., 1997. 1995 population as of April 1. 1996 population as of July 1. e. Bureau of Economic Analysis, U.S. Department of Commerce, January 1998. f. U.S. Department of Labor. State and Regional Unemployment, 1997 Annual Averages. USDL 98-78. Washington, D.C., Feb- ruary 27, 1998. g. Employment rate is calculated using the civilian noninstitutional population 16 years of age and over. h. CPS three-year average (March 1994–March 1996, where 1994 is the center year) edited using the Urban Institute’s TRIM2 microsimulation model. i. U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Sta- tistics. “National Immunization Survey, 1996.” Morbidity and Mortality Weekly Report 46 (29). Hyattsville, Md., July 25, 1997. j. 4:3:1:3 series: four or more doses of DTP/DT, three or more doses of poliovirus vaccine, one or more doses of any MCV, and three or more doses of Haemophilus influenzae type b vaccine. k. S.J. Ventura, J.A. Martin, S.C. Curtin, and T.J. Mathews. ”Advance Report of Final Natality Statistics, 1995.” Monthly Vital Sta- tistics Report 45 (11, supp). Hyattsville, Md.: National Center for Health Statistics, 1997. l. National Center for Health Statistics. ”Births, Marriages, Divorces, and Deaths for June 1996.” Monthly Vital Statistics Report 45 (12). Hyattsville, Md.: Public Health Service, 1997. m. Rate was calculated using years of potential life lost from age 65 (National Center for Health Statistics. Multiple Cause of Death Mortality Tapes, 1995) as the numerator and population estimates (U.S. Bureau of the Census. ST-96-1. Estimates of the Pop- ulation of States: Annual Time Series, July 1, 1990, to July 1, 1996) as the denominator. n. U.S. Department of Justice, FBI. Crime in the United States, 1996. September 28, 1997. o. Centers for Disease Control and Prevention. HIV/AIDS Surveillance Report 8 (2), 1996. p. National Governors’ Association. The Governors, Political Affiliations, and Terms of Office, 1998. January 15, 1997.

q. National Conference of State Legislatures. D indicates Democrat and R indicates Republican. 4 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON ulation growth is concentrated in the 50-mile corridor between Portland (the largest city) and Salem (the state capital), where two-thirds of the state’s population now lives. Despite the recent growth, the state’s residents are less racially and ethnically diverse than those of most states. Only 6.4 percent of Oregonians are racial minori- ties (compared with 17.4 percent nationally)2 and only 6.5 percent are first- generation immigrants (compared with 9.3 percent nationally).3 In contrast, 88.4 percent of the state’s residents are non-Hispanic whites (compared with 72.6 percent nationally).4 The state follows national trends in the age distribution of its population. The percentage of the state’s population that is 65 or older is just over the national average (13.8 percent, compared with 12.7), while the percentage of children under 18 is just below (25.9 percent, compared with 27.4 percent).5

Political Profile

Oregon’s governor is Democrat John Kitzhaber, a physician and a long-time sup- porter of health care reform. As a state legislator in the mid-1980s, Kitzhaber was the key sponsor of the OHP. By most accounts, however, Kitzhaber is now less focused on health policy than he was as a state legislator. At the top of his current agenda are education, environmental issues, and the state’s economic infrastructure. Nonetheless, he remains knowledgeable about health care and interested in preserv- ing the state’s reform activities. He would oppose any effort to significantly restrict the state’s health reform program. The Republicans have controlled both houses of the state legislature since the 1995 legislative session. In 1999, 31 Republicans and 29 Democrats legislated in the Oregon House of Representatives and 20 Republicans and 10 Democrats legislated in the Oregon Senate. As a result of term limits, a large majority of the Oregon legislators are relative novices: Seventy percent of the state’s legislators are in their first or second terms. The Oregon legislature meets once every other year. Each session begins in Jan- uary of the odd-numbered years and runs for approximately six months. The most recent legislative session began in January 1999 and concluded in July 1999. When the legislature is not in session, it appoints a Legislative Emergency Board, composed of a handful of key legislators, to meet as needed and to appropriate emergency funds when necessary.

Economic Profile

Before the 1980s, timber production and distribution were the state’s dominant industries. As logging faltered in the 1970s, the state’s economy declined. In an effort to end a crippling recession, state officials began an extensive effort to diversify the state’s economy. The effort’s most notable success was the creation of a thriv- ing network of high-technology and computer companies. The Intel Corporation, the nation’s largest manufacturer of computer chips, located its corporate headquar- ters in the state. Intel now has the largest payroll in the state and is the biggest con-

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INSTITUTE HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 5 tributor to the state’s tax revenue, paying nearly 40 percent of all corporate income taxes. During most of the 1990s, Oregon’s economy continued to diversify and prosper. The economic growth led to a 32 percent increase in average wages between 1990 and 1997 (10 percent adjusted for inflation).6 While the average income in the state is still below the national average ($24,393 versus $25,598),7 the gap is closing quickly. Moreover, the number of state residents living in poverty is less than the national average (11.5 percent versus 13.8).8 The economic growth, and the budget surpluses it produced, prompted a taxpayer referendum, under which the state is required to return to the taxpayers any tax revenue that exceeds state predictions by more than 2 percent (the “2 percent kicker” law). Over the last couple of years, however, the state’s economy has become more unstable and state revenues have declined. There are six key problems. First, the state is a large exporter of goods to Asia (6.3 percent of the state’s gross state product comes from these exports), and the recent economic crisis in Asia is reducing the continent’s demand for goods.9 Second, the state’s rate of job growth is slow- ing: It was 3.4 percent in 1997, but dropped to 2.6 percent in 1998 (it is expected to decline to 1.3 percent in 1999).10 Third, the state does not have a sales tax, making it unusually dependent on income tax revenues, a source whose growth is declining. Fourth, local taxpayers have voted twice in the 1990s to lower property taxes, reducing local tax revenues by more than $1 billion between 1997 and 1999. The state legislature in 1997 allocated nearly $800 million to replace the lost school tax revenue, but maintaining this level of support will be difficult. Fifth, because of the 2 percent kicker law, the state’s financial reserves are not as large as they would otherwise be. Sixth, the Oregon Supreme Court recently ruled that the state needs to reimburse federal retirees for taxes paid on federal retirement benefits. The decision will require the state to provide tax refunds of more than $300 million. The weakened state economy and drop in state revenues are accompanied by an unsettling rise in the number of persons without health insurance. Between 1997 and 1998, the number of uninsured residents increased from 340,000 to 363,000 (from 10.6 percent to 11.1 percent of the state’s population).11 This rise ends a seven-year period in which the number of uninsured residents declined rapidly. Policymakers suggest several hypotheses for the recent growth in the uninsured. Welfare reform may be one factor. While most former welfare beneficiaries remain eligible for Medicaid, many fail to enroll either because they are unaware of their ongoing eligibility or because they are deterred by the administrative burden of the enrollment process. The downturn in the state’s economy is a likely cause as well, since the number of persons with employer-sponsored health insurance is declining. A recent increase in the state’s minimum wage (the effect of which is to push some of the working poor off of Medicaid) is another possible explanation. It is too soon to tell, however, whether or not the rise in the number of uninsured will be a short-term phenomenon. Even with the recent increase in the number of uninsured residents, the state is considered a national leader in the development of programs to reduce the uninsured population. The main reason for the state’s reputation is a series of programs

that form the OHP. 6 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 7

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ers (five doctors, four consumers, a nurse, and a social worker) held public hearings public held worker) social a and nurse, a consumers, four doctors, (five ers

ments, ranked from the most important to the least important. The 11 commission- 11 The important. least the to important most the from ranked ments,

The first task was for the OHSC to develop a list of health diagnoses and treat- and diagnoses health of list a develop to OHSC the for was task first The

The Medicaid Waiver Medicaid The

menting an employer mandate. employer an menting

federal Employee Retirement Income Security Act prohibited the state from imple- from state the prohibited Act Security Income Retirement Employee federal

implementing the proposed changes to the state’s Medicaid program. Second, the Second, program. Medicaid state’s the to changes proposed the implementing

tract. First, Medicaid law required the state to obtain federal permission before permission federal obtain to state the required law Medicaid First, tract.

There were, however, two obstacles to the implementation of the new social con- social new the of implementation the to obstacles two however, were, There

managed care initiative. care managed

generated from the prioritization process (the “rationing” of care) and from the from and care) of “rationing” (the process prioritization the from generated

ers themselves. The state planned to finance this insurance expansion with savings with expansion insurance this finance to planned state The themselves. ers

health status would receive insurance from a high-risk pool subsidized by the insur- the by subsidized pool high-risk a from insurance receive would status health

receive insurance from their employer. Those denied insurance because of their of because insurance denied Those employer. their from insurance receive

sons living in poverty would receive public insurance. Persons who worked would worked who Persons insurance. public receive would poverty in living sons

the state received at least a minimum benefit package. According to the plan, all per- all plan, the to According package. benefit minimum a least at received state the

The OHP established a new social contract for health care in which everyone in everyone which in care health for contract social new a established OHP The

needed to cover. to needed

lature could decide which medical services both Medicaid and private employers private and Medicaid both services medical which decide could lature

goal was to rank diagnoses and treatments in order of importance so that the legis- the that so importance of order in treatments and diagnoses rank to was goal

sion (OHSC) was created and assigned the task of prioritizing health services. The services. health prioritizing of task the assigned and created was (OHSC) sion

from a preexisting medical condition. Fifth, the Oregon Health Services Commis- Services Health Oregon the Fifth, condition. medical preexisting a from

excluded from or priced out of the regular insurance market because they suffered they because market insurance regular the of out priced or from excluded

ated and assigned the task of developing a subsidized insurance pool for persons for pool insurance subsidized a developing of task the assigned and ated

employer mandate). Fourth, the Oregon Medical Insurance Pool (OMIP) was cre- was (OMIP) Pool Insurance Medical Oregon the Fourth, mandate). employer

pay into a state program to provide insurance to this group (a “play-or-pay” (a group this to insurance provide to program state a into pay

health insurance to all workers (who worked for more than 17.5 hours a week) or to or week) a hours 17.5 than more for worked (who workers all to insurance health

required to enroll in managed care. Third, employers were required either to provide to either required were employers Third, care. managed in enroll to required

was roughly 57 percent of the FPL). Second, nearly all Medicaid beneficiaries were beneficiaries Medicaid all nearly Second, FPL). the of percent 57 roughly was

(the previous criterion previous (the cover all persons with income below 100 percent of the FPL the of percent 100 below income with persons all cover

islation contained five key provisions. First, Medicaid eligibility was expanded to expanded was eligibility Medicaid First, provisions. key five contained islation

The OHP, enacted in 1989, was the culmination of the reform activity. The leg- The activity. reform the of culmination the was 1989, in enacted OHP, The

reform the state’s entire health care system. system. care health entire state’s the reform

was also the beginning of an effort, led by then state senator John Kitzhaber, to Kitzhaber, John senator state then by led effort, an of beginning the also was

much publicity and there was a backlash against the Medicaid benefit cutback. There cutback. benefit Medicaid the against backlash a was there and publicity much

Coby Howard, went without a needed transplant and died. Howard’s death received death Howard’s died. and transplant needed a without went Howard, Coby

bone marrow transplants. Within just a few months, a seven-year old beneficiary, old seven-year a months, few a just Within transplants. marrow bone

bill, enacted in July 1987, that included the elimination of Medicaid coverage for coverage Medicaid of elimination the included that 1987, July in enacted bill,

Medicaid bill. One response to the financial crisis was a Medicaid cost-containment Medicaid a was crisis financial the to response One bill. Medicaid

gon legislature faced a daunting budget shortfall caused, in part, by the state’s rising state’s the by part, in caused, shortfall budget daunting a faced legislature gon

In 1987, the Ore- the 1987, In documented. well are Plan Health Oregon the of origins The 12 The Oregon Health Plan: An Overview An Plan: Health Oregon The around the state. The hearings helped to produce an initial list of 700 diagnoses and treatments ranked in order of importance. The OHSC then recommended that the first 587 be covered by Medicaid. This process, and the list it produced, generated significant controversy around the country (though much less so within the state). Many observers decried the explicit “rationing” of the care provided to the poor. Others claimed that the choices did not properly value the quality of life of people with disabilities. Still others opposed the decision to exempt the needs of the elderly and disabled from the stric- tures of the list. Some also raised technical challenges to the process used to develop the rankings. The Bush administration, in the midst of a reelection campaign, rejected the state’s request for a Medicaid waiver that would include the list of pri- orities, citing concerns about how it would affect people with disabilities. Over the next two years, the national debate over the Oregon proposal continued. The OHSC revised the list in an effort to subdue federal objections. OHSC’s efforts were aided immeasurably by Bill Clinton’s election and his determination to encourage state experimentation and innovation. After much political maneuvering, the Clinton administration approved the waiver (which included a revised priority list) in March 1993.14 By this time, however, state officials acknowledged that neither the conversion to managed care nor the implementation of the list would produce enough savings to fund the eligibility expansion and that new revenues were needed. As a result, the state enacted legislation creating two new sources of Medicaid funding: a 10 cents per pack tobacco tax15 and a 17 percent increase in the general revenues allocated to Medicaid. The 1993 state legislation also made two substantive changes to the health plan. First, the priority list would cover, beginning in February 1995, the elderly and disabled, many of whom would also be enrolled in managed care. Second, the priority list was amended to cover mental health services and chemical dependency services, changes to be phased in over time.16 With the new funding, and with the substantive changes, the Medicaid expansion was implemented on February 1, 1994.

The Employee Retirement Income and Security Act Obstacle

Enacted in 1974, the Employee Retirement Income and Security Act (ERISA) prohibits states from requiring employers to provide health insurance to their employees.17 ERISA was intended to ensure that workers are not unfairly denied expected pension benefits. The statute requires that employers disclose relevant information about company pension plans, adequately capitalize such plans, and avoid arbitrary and inequitable vesting requirements. At the same time, however, the statute prohibits states from regulating in areas that “relate to” employee benefit plans, except if the regulation constitutes the “traditional regulation of insurance.” This provision limits state efforts to regulate the health insurance market. The drafters of the OHP were well aware of the ERISA obstacle. The drafters assumed, however, that the tides of reform would persuade Congress to amend the law to permit the employer mandate. This assumption proved wrong. Neither Ore-

gon, Washington state (which enacted its own employer mandate in 1993), nor the 8 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 9

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benefits increased from 110,000 in 1994 to 233,000 in 1997. Indeed, between 1994 between Indeed, 1997. in 233,000 to 1994 in 110,000 from increased benefits

ple, the number of adults and children receiving Medicaid but not receiving cash receiving not but Medicaid receiving children and adults of number the ple,

now receiving Medicaid is significantly higher than in the pre-OHP era. For exam- For era. pre-OHP the in than higher significantly is Medicaid receiving now

Despite the recent enrollment downturn, however, the number of state residents state of number the however, downturn, enrollment recent the Despite

their welfare rolls. welfare their

from 128,000 in 1994 to 68,000 in 1997. Only three states had a larger decline in decline larger a had states three Only 1997. in 68,000 to 1994 in 128,000 from

beneficiaries receiving benefits through AFDC or TANF, as shown in table 2, fell 2, table in shown as TANF, or AFDC through benefits receiving beneficiaries

Needy Families (AFDC/TANF) cases declined rapidly. The number of Medicaid of number The rapidly. declined cases (AFDC/TANF) Families Needy

age number of Aid to Families with Dependent Children/Temporary Assistance for Assistance Children/Temporary Dependent with Families to Aid of number age

result of the state’s welfare-to-work waiver, first implemented in July 1995, the aver- the 1995, July in implemented first waiver, welfare-to-work state’s the of result

As a As Finally, welfare reform has also contributed to the enrollment slowdown. enrollment the to contributed also has reform welfare Finally,

sons each month. month. each sons

if it were not for the state’s decision to grant premium waivers to around 5,000 per- 5,000 around to waivers premium grant to decision state’s the for not were it if

The number would be significantly higher significantly be would number The month after failing to pay their premium. their pay to failing after month

According to one state report, approximately 700 persons lose their insurance each insurance their lose persons 700 approximately report, state one to According

age premium is $11.82), are imposed on adult beneficiaries who are not pregnant. not are who beneficiaries adult on imposed are $11.82), is premium age

to pay premiums. The premiums, which range from $6 to $28 per month (the aver- (the month per $28 to $6 from range which premiums, The premiums. pay to

who were eligible because of the recently enacted expansions were suddenly required suddenly were expansions enacted recently the of because eligible were who

income information) toughened the application process. In addition, beneficiaries addition, In process. application the toughened information) income

months of income statements (the previous requirement was for one month of month one for was requirement previous (the statements income of months

and the required submission of three of submission required the and (where previously there had been none) been had there previously (where

1995 that made it more difficult to obtain benefits. The new $5,000 liquid asset test asset liquid $5,000 new The benefits. obtain to difficult more it made that 1995

The recent Medicaid enrollment decline is due in part to legislation enacted in enacted legislation to part in due is decline enrollment Medicaid recent The

number of enrollees remained substantially larger than before the OHP began.) OHP the before than larger substantially remained enrollees of number

enrollees was down to approximately 330,000. (Even with the decline, however, the however, decline, the with (Even 330,000. approximately to down was enrollees

has slowly but consistently declined. By August 1998, the number of Medicaid of number the 1998, August By declined. consistently but slowly has

approximately 395,000 Medicaid beneficiaries. Since that time, Medicaid enrollment Medicaid time, that Since beneficiaries. Medicaid 395,000 approximately

by the summer of 1995 there were there 1995 of summer the by what fewer than expected (around 125,000), (around expected than fewer what

400,000. While new enrollees during the first year of implementation were some- were implementation of year first the during enrollees new While 400,000.

to increase the number of Medicaid beneficiaries from 260,000 to more than more to 260,000 from beneficiaries Medicaid of number the increase to

The implementation of the Medicaid expansion in February 1994 was expected was 1994 February in expansion Medicaid the of implementation The

The Oregon Medicaid Program: Enrollment and Cost Trends Cost and Enrollment Program: Medicaid Oregon The

imposed the employer mandate were repealed on January 2, 1996. 1996. 2, January on repealed were mandate employer the imposed

did not provide the requested ERISA waiver, and the provisions of the OHP that OHP the of provisions the and waiver, ERISA requested the provide not did

be repealed unless Congress granted an ERISA waiver by January 1996. Congress 1996. January by waiver ERISA an granted Congress unless repealed be

than 25 employees). The 1993 law also declared that the employer mandate would mandate employer the that declared also law 1993 The employees). 25 than

mentation (until 1997 for large companies and until 1998 for companies with fewer with companies for 1998 until and companies large for 1997 (until mentation

years later, during the next legislative session, the legislature further delayed imple- delayed further legislature the session, legislative next the during later, years

sion, Oregon legislators deferred the employer mandate start date until 1995. Two 1995. until date start mandate employer the deferred legislators Oregon sion,

With the ERISA waiver application languishing during the 1991 legislative ses- legislative 1991 the during languishing application waiver ERISA the With

gressional approval. gressional

18 dozen or so other candidates for ERISA waivers in the early 1990s ever received con- received ever 1990s early the in waivers ERISA for candidates other so or dozen Table 2 Medicaid Enrollment and Expenditures by Eligibility Group, Oregon and United States, Fiscal Years 1994 and 1997

Oregon United States

Average Average Annual Growth Annual Growth 1994 1997 1994–97 1994 1997 1994–97 (%) (%)

Enrollees (thousands) Elderly 28.0 31.3 3.8 3,477.2 3,575.8 0.9 Blind & Disabled 39.5 44.5 4.1 5,293.5 6,166.3 5.2 Adults 90.5 138.5 15.2 6,880.2 6,070.6 –4.1 Cash 41.6 20.6 –20.9 4,534.7 3,217.9 –10.8 Noncash 49.0 117.9 34.0 2,345.5 2,852.7 6.7 Children 148.3 162.4 3.1 16,435.1 16,212.2 –0.5 Cash 86.4 47.4 –18.2 9,833.7 7,546.8 –8.4 Noncash 62.0 115.1 22.9 6,601.4 8,665.4 9.5

Expenditures per Enrollee (dollars) Elderly 9,111.0 10,760.0 5.7 10,808.0 12,430.0 4.8 Blind & Disabled 9,612.0 12,815.0 10.1 8,760.0 9,793.0 3.8 Adults 2,282.0 2,330.0 0.7 2,251.0 2,655.0 5.7 Cash 2,361.0 2,177.0 –2.7 2,006.0 2,441.0 6.8 Noncash 2,216.0 2,356.0 2.1 2,724.0 2,897.0 2.1 Children 1,632.0 1,773.0 2.8 1,304.0 1,501.0 4.8 Cash 1,775.0 1,541.0 –4.6 1,153.0 1,348.0 5.4 Noncash 1,432.0 1,869.0 9.3 1,529.0 1,634.0 2.2

Expenditures (millions of dollars) Elderly 255.1 337.0 9.7 37,581.8 44,448.6 5.8 Blind & Disabled 379.6 570.2 14.5 46,370.8 60,387.1 9.2 Adults 206.6 322.6 16.0 15,485.0 16,117.3 1.3 Cash 98.2 44.9 –23.0 9,094.8 7,853.6 –4.8 Noncash 108.5 277.8 36.8 6,390.2 8,263.7 8.9 Children 242.1 288.0 6.0 21,424.9 24,329.2 4.3 Cash 153.3 73.0 –21.9 11,333.7 10,171.9 –3.5 Noncash 88.8 215.1 34.3 10,091.2 14,157.3 11.9

Source: The Urban Institute, 1999. Based on HCFA 2082 data.

and 1997 there was a 15.2 percent increase in the total number of adult Medicaid beneficiaries and a 3.1 percent increase in child beneficiaries, both figures that far exceed the national average. Even with the recent slowdown, Oregon is still far ahead of the national curve. While enrollment of adults and children increased faster than the national average, the cost per enrollee increased more slowly than the national rate. Between 1994 and 1997, for example, the average cost per adult and child enrollee grew by 0.7 percent and 2.8 percent, respectively, compared with 5.7 percent and 4.8 percent nationally. However, because of a large increase in the number of enrollees in Ore- gon during this time, total Medicaid costs for adults and children grew by 16 percent and 6 percent, respectively, compared with national growth rates of 1.3 percent for adults and 4.3 percent for children.24 In addition, the cost of caring for the blind and disabled rose by 14.5 percent and the cost for the elderly grew by 9.7 percent—

both faster than the national rates. 10 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 11

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ered primarily cosmetic (such as scar removals). The state also denies coverage for coverage denies also state The removals). scar as (such cosmetic primarily ered

conditions that get better on their own (such as sore throats) or for services consid- services for or throats) sore as (such own their on better get that conditions

lic and private) in other states. For example, OHP will not pay for the treatment of treatment the for pay not will OHP example, For states. other in private) and lic

Many of the denied services are for treatments also denied by insurers (both pub- (both insurers by denied also treatments for are services denied the of Many

fit package, despite federal refusal to contribute to the cost. the to contribute to refusal federal despite package, fit

The state has even added physician-assisted suicide to the bene- the to suicide physician-assisted added even has state The organ transplants. organ

erous coverage of mental health services, dental care, AIDS-related treatments, and treatments, AIDS-related care, dental services, health mental of coverage erous

pays for far more treatments than Medicaid paid for before 1993, with especially gen- especially with 1993, before for paid Medicaid than treatments more far for pays

about services on the edge of medical necessity. Indeed, the benefit package today package benefit the Indeed, necessity. medical of edge the on services about

The battles with federal officials are usually are officials federal with battles The wanted an overly restrictive package: restrictive overly an wanted

Despite their best efforts to reduce covered services, state officials have never have officials state services, covered reduce to efforts best their Despite

sible diagnoses and treatments. and diagnoses sible

result is that the current service package (as of May 1998) covers 574 out of 743 pos- 743 of out 574 covers 1998) May of (as package service current the that is result

The net The bying before the state was permitted to exclude treatment for diaper rash. diaper for treatment exclude to permitted was state the before bying

example, the state’s Medicaid director recently complained that it took hours of lob- of hours took it that complained recently director Medicaid state’s the example,

officials have regularly clashed over state efforts to adjust the service package. For package. service the adjust to efforts state over clashed regularly have officials

mission before amending the list of covered services. As a result, state and federal and state result, a As services. covered of list the amending before mission

priority list. More importantly, the waiver requires the state to seek federal per- federal seek to state the requires waiver the importantly, More list. priority

tion, the Medicaid waiver required the state to cover 606 out of 745 services on the on services 745 of out 606 cover to state the required waiver Medicaid the tion,

over the Oregon plan. Even with lengthy negotiations and a supportive administra- supportive a and negotiations lengthy with Even plan. Oregon the over

age. Federal opposition to cuts began in the early 1990s during the initial debate initial the during 1990s early the in began cuts to opposition Federal age.

cials will not permit the state to impose draconian cuts in the Medicaid benefit pack- benefit Medicaid the in cuts draconian impose to state the permit not will cials

One reason for the limited impact of the rationing initiative is that federal offi- federal that is initiative rationing the of impact limited the for reason One

some modest savings generated by the state’s Medicaid managed care initiative. care managed Medicaid state’s the by generated savings modest some

tax, by significant increases in the general revenues allocated to Medicaid, and by and Medicaid, to allocated revenues general the in increases significant by tax,

Medicaid expansions were financed, instead, by the state’s 10 cents per pack tobacco pack per cents 10 state’s the by instead, financed, were expansions Medicaid

Oregon’s total Medicaid expenditures by only 2 percent between 1993 and 1998. and 1993 between percent 2 only by expenditures Medicaid total

financial savings. Indeed, state officials suggest that the rationing initiative reduced initiative rationing the that suggest officials state Indeed, savings. financial

by Medicaid beneficiaries. The effort to ration has also generated surprisingly small surprisingly generated also has ration to effort The beneficiaries. Medicaid by

Remarkably, the rationing system has had little effect on the health care received care health the on effect little had has system rationing the Remarkably,

gon became famous (or infamous) for its explicit effort to ration care. ration to effort explicit its for infamous) (or famous became gon

more than two years the state’s effort to implement the Medicaid expansions. Ore- expansions. Medicaid the implement to effort state’s the years two than more

The Oregon strategy generated enormous controversy. The debate delayed by delayed debate The controversy. enormous generated strategy Oregon The

bility or provider reimbursement. provider or bility

rose unexpectedly, state policymakers would cut benefits, rather than reducing eligi- reducing than rather benefits, cut would policymakers state unexpectedly, rose

the total number of beneficiaries. The drafters also thought that if Medicaid costs Medicaid if that thought also drafters The beneficiaries. of number total the

age provided to Medicaid beneficiaries would finance much of the cost of increasing of cost the of much finance would beneficiaries Medicaid to provided age

The OHP drafters assumed that savings generated by limiting the benefit pack- benefit the limiting by generated savings that assumed drafters OHP The

The Impact of Rationing: Rhetoric versus Reality versus Rhetoric Rationing: of Impact The

state spending. The national average that year was 20 percent. 20 was year that average national The spending. state

In 1997, for example, Medicaid spending accounted for only 12.4 percent of total of percent 12.4 only for accounted spending Medicaid example, for 1997, In Even with the increased costs, Oregon’s fiscal stake in Medicaid is relatively low. relatively is Medicaid in stake fiscal Oregon’s costs, increased the with Even certain experimental treatments: those with less than a 5 percent chance of extend- ing life for more than five years. Finally, health care providers and managed care plans often provide services that are not covered in the Medicaid benefit package. One explanation is that Medicaid covers all diagnostic services and certain uncovered conditions can be treated during the initial diagnostic visit. At the same time, providers can “game the system” by manipulating a patient’s diagnosis. Health plans also can decide to cover services they deem medically necessary even if the service is not included on the state’s list (though the capitation rates set by the state do not include the cost of such care). One health plan claims that 5 percent of its Medicaid claims are for noncovered services.30 For all of these reasons (federal oversight, state ambivalence, plan and provider discretion), prioritization has not had the expected impact. Nonetheless, the attempt to ration is hardly irrelevant. Health plans and providers do use the list as a reason to reject certain treatment requests. Moreover, and perhaps most importantly, the state ambivalence over the list and federal reluctance to allow the state flexibility may change. One high-ranking state official predicts that if the Oregon economy contin- ues to decline, and Medicaid costs continue to rise, the state may decide to take a much more combative posture. The state’s experiment with rationing is certainly not over.

The Medicaid Managed Care Initiative

Even before the enactment of the OHP, state Medicaid officials were encouraging (and sometimes requiring) beneficiaries to enroll in managed care. In 1985, for example, federal officials approved the state’s request (under section 1915(b) of the social security act) to require beneficiaries in eight counties to enroll in managed care. Over the next five years, 31 percent of the state’s Medicaid beneficiaries enrolled in managed care (about 68,000 persons), most of whom joined partially capitated plans (known as physician care organizations).31 The OHP expanded the managed care initiative in three important ways. First, managed care is mandatory for most beneficiaries around the state (not only those in the eight counties covered under the 1915(b) waiver). As a result, between 82 percent and 87 percent of the state’s Medicaid beneficiaries are enrolled in managed care.32 Second, beneficiaries are required to join fully capitated33 health plans (unless there are not any such plans available in the client’s county of residence). There are fully capitated plans in 33 of the state’s 36 counties; the three without such plans are quite rural and have only a small Medicaid enrollment. Third, while mental health services and dental care services are carved out of the main managed care initiative, beneficiaries receive these services from separate mental health organizations and

dental care organizations. 12 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 13

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and others (including Regence Blue Cross Blue Shield) are scaling back. The com- The back. scaling are Shield) Blue Cross Blue Regence (including others and

mercial HMOs (PACC, PacificCare, and QualMed) have pulled out of the program the of out pulled have QualMed) and PacificCare, (PACC, HMOs mercial

One reason for the shift is commercial disillusionment with Medicaid. Three com- Three Medicaid. with disillusionment commercial is shift the for reason One

Ms oee,i lwydciig aki 95tersaews6. percent. 66.5 was share their 1995 in back declining; slowly is however, HMOs,

percent of the state’s Medicaid beneficiaries. The percentage enrolled in commercial in enrolled percentage The beneficiaries. Medicaid state’s the of percent

As table 3 makes clear, the four commercial HMOs have enrolled about 56.6 about enrolled have HMOs commercial four the clear, makes 3 table As

their enrollment as of February 1999. February of as enrollment their

Medicaid (and other publicly insured) beneficiaries. Table 3 lists the 13 plans and plans 13 the lists 3 Table beneficiaries. insured) publicly other (and Medicaid

of business and nine are provider-sponsored organizations that now enroll only enroll now that organizations provider-sponsored are nine and business of

delivery system: four are commercial HMOs that have added Medicaid as a new line new a as Medicaid added have that HMOs commercial are four system: delivery

There are 13 fully capitated health plans in the state’s Medicaid managed care managed Medicaid state’s the in plans health capitated fully 13 are There

The Medicaid Managed Care Delivery System Delivery Care Managed Medicaid The

determine if it should be expanded. expanded. be should it if determine

enrollees at the three sites. SDSD is now evaluating the state’s PACE initiative to initiative PACE state’s the evaluating now is SDSD sites. three the at enrollees

operates PACE sites at three locations in Portland. There are approximately 350 approximately are There Portland. in locations three at sites PACE operates

abled dual eligibles who choose to enroll. In Oregon, the Providence Health Plan Health Providence the Oregon, In enroll. to choose who eligibles dual abled

exchange for providing a full slate of services (both acute and long-term care) to dis- to care) long-term and acute (both services of slate full a providing for exchange

around the nation receive capitated payments from both Medicaid and Medicare in Medicare and Medicaid both from payments capitated receive nation the around

tion. Under this congressional initiative, nearly two dozen managed care plans care managed dozen two nearly initiative, congressional this Under tion.

Finally, Oregon also has a Program for All-Inclusive Care (PACE) demonstra- (PACE) Care All-Inclusive for Program a has also Oregon Finally,

care between the acute and long-term care systems. care long-term and acute the between care

has established a task force to consider how to further improve the coordination of coordination the improve further to how consider to force task a established has

Third, the Senior and Disabled Services Division (SDSD) Division Services Disabled and Senior the Third, managed care companies. care managed

receiving benefits from both Medicaid and Medicare) from joining two separate two joining from Medicare) and Medicaid both from benefits receiving

Second, the state prohibits the dual eligibles (those persons (those eligibles dual the prohibits state the Second, and coordinate care. coordinate and

coordinators” to work with the long-term care case managers in an effort to improve to effort an in managers case care long-term the with work to coordinators”

systems. First, managed care plans are required to assign “exceptional need care need “exceptional assign to required are plans care managed First, systems.

vices. State officials have taken three steps to improve coordination between the two the between coordination improve to steps three taken have officials State vices.

in prescription drug regimens that could impact home- and community-based ser- community-based and home- impact could that regimens drug prescription in

care system complain, for example, that they often are not informed about changes about informed not are often they that example, for complain, system care

between the acute and the long-term care systems. Case managers in the long-term the in managers Case systems. care long-term the and acute the between

As in other states, there is occasional concern about inadequate coordination inadequate about concern occasional is there states, other in As

system.

vices) are carved out of the managed care initiative and remain in the fee-for-service the in remain and initiative care managed the of out carved are vices)

(such as nursing home care, assisted living, adult foster care, and most in-home ser- in-home most and care, foster adult living, assisted care, home nursing as (such

the managed care plan. Importantly, however, the other long-term care services care long-term other the however, Importantly, plan. care managed the

(home health, physical therapy, and prescription drugs) are also the responsibility of responsibility the also are drugs) prescription and therapy, physical health, (home

care plan. In addition, certain services traditionally considered part of long-term care long-term of part considered traditionally services certain addition, In plan. care

beneficiaries receive their Medicaid-covered acute care services through a managed a through services care acute Medicaid-covered their receive beneficiaries

ficiaries and 81 percent of the disabled beneficiaries were in managed care. These care. managed in were beneficiaries disabled the of percent 81 and ficiaries

care. As of November 1998, nearly two-thirds of the state’s elderly Medicaid bene- Medicaid elderly state’s the of two-thirds nearly 1998, November of As care.

Oregon requires most elderly and disabled beneficiaries to enroll in managed in enroll to beneficiaries disabled and elderly most requires Oregon Medicaid Managed Care and the Elderly and Disabled and Elderly the and Care Managed Medicaid Table 3 Managed Care Enrollment, February 1999 (Total Enrollment—283,063)

Enrollment Name of Plan Type as of 2/99 Enrollment (%)

Care Oregon Provider 35,740 12.69 Cascade Provider 6,594 2.33 Central Oregon Provider 20,746 7.33 Douglas County IPA 10,724 3.79 Evergreen Provider 19,254 7.80 Inter-Community Provider 12,764 4.51 Kaiser HMO 22,751 8.04 Mid-Rogue IPA 4,461 1.58 ODS HMO 28,185 9.96 OR Health Management Provider 10,511 3.71 Providence HMO 41,803 14.76 Regence HMO 67,550 23.86 Tuality Provider 1,980 0.7

Source: Materials received from the Oregon Health Plan.

mercial plans complain that rates are too low and administrative demands are too high. In addition, many of these plans are not doing well in the commercial markets that comprise most of their business and are hoping to concentrate on their primary market by cutting back on their small, unprofitable Medicaid line. Finally, in the midst of this organizational turbulence, the Medicaid-only plans have become more experienced in managed care operations and are better able to compete effectively. The organizational environment is less uncertain in the world of dental and mental health managed care. There are 13 dental care organizations and 12 mental health organizations that participate in the OHP, nearly all of whom are likely to remain in the market.

Marketing and Enrollment

The Oregon Medicaid program prohibits health plans from engaging in any direct marketing.36 Instead, each health plan produces a state-approved four-page brochure that describes the plan and is distributed to Medicaid applicants. Each applicant is then required to select a managed care plan during the Medicaid enrollment process. Medicaid officials reject the applications of those persons who do not select a health plan. Roughly 5 percent of all applications are rejected for failure to select a managed care plan.37 For this reason, unlike other states, Oregon does not need a system for assigning to a health plan those beneficiaries who do not voluntarily enroll.38 Health care providers are permitted to inform their patients about the health plans with which they have contracts. The providers are prohibited, however, from encouraging beneficiaries to enroll in a particular plan. By most accounts, Medicaid staff work hard to enforce the prohibition against provider marketing. The rule is especially important given that several of the plans in the Medicaid market were formed by providers anxious to retain their patient population. Nevertheless, even state officials concede that individual providers surely guide the choices of individual

clients. The goal, however, is to keep such efforts to a minimum. 14 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 15

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some of its Medicaid contracts. Medicaid its of some

claims to be losing money in the Medicaid market and is threatening to abandon to threatening is and market Medicaid the in money losing be to claims

more urban counties). ODS, another HMO with a sizable Medicaid enrollment, also enrollment, Medicaid sizable a with HMO another ODS, counties). urban more

million in the Medicaid market in 1998, will continue its contracts in the larger, the in contracts its continue will 1998, in market Medicaid the in million

abandoned its Medicaid contracts in several rural areas. (Regence, which lost $30 lost which (Regence, areas. rural several in contracts Medicaid its abandoned

Blue Shield, the HMO with the largest number of Medicaid beneficiaries in the state, the in beneficiaries Medicaid of number largest the with HMO the Shield, Blue

(PACC, PacificCare, and QualMed). In January 1999, however, Regence Blue Cross Blue Regence however, 1999, January In QualMed). and PacificCare, (PACC,

a trend that began with three HMOs that each had relatively small market share market small relatively had each that HMOs three with began that trend a

concerns encouraged several commercial HMOs to exit from the Medicaid market, Medicaid the from exit to HMOs commercial several encouraged concerns

the adequacy of the capitation rates, especially for enrollees in rural counties. These counties. rural in enrollees for especially rates, capitation the of adequacy the

Over the last couple of years, however, health plans have increasingly challenged increasingly have plans health however, years, of couple last the Over

plans and government regulators were open and cordial. and open were regulators government and plans

have a system of “managed cooperation” in which relationships between the health the between relationships which in cooperation” “managed of system a have

State officials also were determined to determined were also officials State high in an effort to accomplish that task. that accomplish to effort an in high

however, state officials hoped to attract commercial HMO participation and set rates set and participation HMO commercial attract to hoped officials state however,

More fundamentally, More set rates based on Medicaid fee-for-service rate schedules. rate fee-for-service Medicaid on based rates set

tion amount based on estimates of reasonable provider costs, while most other states other most while costs, provider reasonable of estimates on based amount tion

The technical explanation for the generous rates is that Oregon sets the capita- the sets Oregon that is rates generous the for explanation technical The

according to this criterion. this to according

commercial sectors in 10 states: Oregon’s Medicaid rates were the most generous most the were rates Medicaid Oregon’s states: 10 in sectors commercial

Similarly, a recent study compared Medicaid capitation rates to those in the in those to rates capitation Medicaid compared study recent a Similarly, $80.

for a similar client was $100 per member per month, while in California the rate was rate the California in while month, per member per $100 was client similar a for

under the age of 65 was $130 per member per month; in Tennessee the average rate average the Tennessee in month; per member per $130 was 65 of age the under

years of the OHP. For example, the average rate in 1996 for a nondisabled adult nondisabled a for 1996 in rate average the example, For OHP. the of years

By most accounts, the capitation rates were relatively high during the first few first the during high relatively were rates capitation the accounts, most By

are not on Medicare). on not are

general assistance, single adults and childless couples, and the blind and disabled who disabled and blind the and couples, childless and adults single assistance, general

account for the health risk status of individuals in three of the categories (those on (those categories the of three in individuals of status risk health the for account

The third task (added in late 1998) is to adjust the rates paid to particular plans to plans particular to paid rates the adjust to is 1998) late in (added task third The

is to reduce those costs by about 10 percent to encourage managed care efficiencies. care managed encourage to percent 10 about by costs those reduce to is

different categories of beneficiaries in five different geographic areas. The second task second The areas. geographic different five in beneficiaries of categories different

ies to estimate the actual cost of providing the managed care benefit package to 15 to package benefit care managed the providing of cost actual the estimate to ies

plex (though not unconventional) administrative process. The first step is for actuar- for is step first The process. administrative unconventional) not (though plex

through a com- a through rates capitation plan health calculate officials Medicaid Oregon

Paying Managed Care Plans: The Rate-Setting Process Rate-Setting The Plans: Care Managed Paying

also mail Medicaid applications to prospective applicants. applicants. prospective to applications Medicaid mail also

The inmates The (HealthChoice) that the state used during the first year of the OHP. the of year first the during used state the that (HealthChoice)

questions and concerns. The inmates took over this task from the enrollment broker enrollment the from task this over took inmates The concerns. and questions

staffed by inmates in the Oregon State Correctional Institute for answers to common to answers for Institute Correctional State Oregon the in inmates by staffed

office and speak to an eligibility worker. Third, clients can call a toll-free hotline toll-free a call can clients Third, worker. eligibility an to speak and office

pitals and community health centers. Second, clients can visit a Medicaid eligibility Medicaid a visit can clients Second, centers. health community and pitals

information. First, the state Medicaid agency places eligibility workers at many hos- many at workers eligibility places agency Medicaid state the First, information. Clients with questions about their managed care options have several sources of sources several have options care managed their about questions with Clients The rate controversy is unusual for a program that is proud of its partnership with health plans. State officials acknowledge that the geographic adjustment in the rate- setting process may cause rates in rural counties to be too low, and they intend to adjust the formula. Nonetheless, the likelihood of significant rate increases is rather slim. The first obstacle is the recent consultant report that suggests that Oregon Medicaid comes closer than other states to paying the rates offered in the commercial market.46 The state’s current fiscal downturn makes an increase even less likely. One alternative to higher rates is to shift rural beneficiaries into a primary care case management system. Another approach would be to abandon administratively set rates altogether and to move to a system of competitive bidding, a change that would probably lead to lower, not higher, capitation rates. It is hard to overstate the importance of the current rate controversy. State officials have to balance the effort to be a smart purchaser with the goal of encouraging commercial HMO participation. As part of this equation, state officials need to eval- uate the impact on the system if other commercial HMOs exit the market. Will there be an adequate network of health plans? Are the rates high enough so that most of the Medicaid-only plans can survive? Should the state switch to a different rate- setting methodology? Nearly every state in the nation is dealing with each of these issues. Nevertheless, Oregon officials have a particular strength to build upon: their reputation for dealing fairly and openly with the health plan industry. State Medicaid managers and health plan officials will need to maintain this positive relationship to most effectively resolve these problems.

Paying Health Care Providers: The Dispute between Doctors and Hospitals

The Oregon Medical Association (OMA) and the Oregon Association of Hospi- tals and Health Systems (OAHHS) are in the midst of a bitter dispute over the division of the OHP capitation dollar. The battle, which Medicaid officials characterize as a private dispute between health plans and their providers, was on the agenda of the 1999 legislative session. The catalyst for the dispute is a 1997 report by health care consultant Joseph Henery47 alleging that hospitals do far better under the OHP than do physicians. Henery sets forth three main arguments. First, physicians receive a higher percentage of the capitation dollar spent in the commercial managed care market than they do in the OHP. In the commercial managed care market, physicians receive 47.8 percent of the capitation dollar and hospitals receive 34.6 percent; in the OHP, physicians receive 35.9 percent of the capitation dollar and hospitals get 49.5 percent. Second, the disparity is caused in part by the payment methodology employed by most OHP plans: Physicians are capitated but hospitals are paid on a fee-for-service basis. This becomes important since hospitals have increased their outpatient visits and dramatically boosted their charges for those visits. Third, while overall OHP payments to hospitals have increased, payments to physicians have decreased. Not surprisingly, the hospital association dismisses the Henery report as inaccu-

rate and misleading.48 Hospital representatives argue that OHP payment rates lag far 16 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 17

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priority list would lead to inadequate care. inadequate to lead would list priority

given the national scrutiny that the program receives and the initial concern that the that concern initial the and receives program the that scrutiny national the given

quality of care is generally high. The lack of controversy is especially compelling especially is controversy of lack The high. generally is care of quality

or quality. There is instead an assumption shared by most of the key players that the that players key the of most by shared assumption an instead is There quality. or

advocates nor the government regulators have alleged serious shortcomings in access in shortcomings serious alleged have regulators government the nor advocates

care initiative is that there is little controversy over the issue. Neither the consumer the Neither issue. the over controversy little is there that is initiative care

Perhaps the most persuasive evidence about the quality of care in the managed the in care of quality the about evidence persuasive most the Perhaps

remains significant. significant. remains

those who are ill). The variation of patient experience from provider to provider to provider from experience patient of variation The ill). are who those

ous and do not report important information (such as the level of satisfaction among satisfaction of level the as (such information important report not do and ous

encounters with patients. The results of the satisfaction surveys are generally ambigu- generally are surveys satisfaction the of results The patients. with encounters

ries. State officials indicate that health care providers often do a poor job of tracking of job poor a do often providers care health that indicate officials State ries.

quality of care (in Oregon or elsewhere) received by individual Medicaid beneficia- Medicaid individual by received elsewhere) or Oregon (in care of quality

Despite these positive findings, there is little data that accurately measures the measures accurately that data little is there findings, positive these Despite

cent satisfaction in 1994. in satisfaction cent

that 88 percent of beneficiaries are satisfied with their care, compared with 70 per- 70 with compared care, their with satisfied are beneficiaries of percent 88 that

about 5 percent. Finally, client satisfaction seems relatively high: A state study reports study state A high: relatively seems satisfaction client Finally, percent. 5 about

receiving immunizations is on the rise. In addition, emergency room use is down by down is use room emergency addition, In rise. the on is immunizations receiving

increasing, infant mortality is declining (slightly), and the number of young children young of number the and (slightly), declining is mortality infant increasing,

officials, the percentage of pregnant beneficiaries receiving adequate prenatal care is care prenatal adequate receiving beneficiaries pregnant of percentage the officials,

lesser extent the state, point to data that suggest improved care. According to OHP to According care. improved suggest that data to point state, the extent lesser

the quality of care received by the Medicaid beneficiary. The health plans, and to a to and plans, health The beneficiary. Medicaid the by received care of quality the

In Oregon, as in other states, it is hard to know the impact of managed care on care managed of impact the know to hard is it states, other in as Oregon, In

The Quality of Care in Medicaid Managed Care Managed Medicaid in Care of Quality The

for some sort of state intervention. intervention. state of sort some for

Finally, the political visibility of the intramural dispute imposes additional pressure additional imposes dispute intramural the of visibility political the Finally,

reducing the percentage of the capitation dollar available for other providers). other for available dollar capitation the of percentage the reducing

disparity by requiring that rural hospitals receive cost-based reimbursement (thereby reimbursement cost-based receive hospitals rural that requiring by disparity

cant physician exit. Moreover, the legislature arguably contributed to the allocation the to contributed arguably legislature the Moreover, exit. physician cant

narily high number), and state officials worry that the dispute could lead to signifi- to lead could dispute the that worry officials state and number), high narily

More than 95 percent of Oregon’s physicians participate in Medicaid (an extraordi- (an Medicaid in participate physicians Oregon’s of percent 95 than More

There is growing pressure, however, for legislative or executive intervention. executive or legislative for however, pressure, growing is There

negotiation process between health plans and their provider networks. networks. provider their and plans health between process negotiation

ferent provider groups. The allocation is instead considered the outcome of a private a of outcome the considered instead is allocation The groups. provider ferent

not made any effort to regulate the allocation of the capitation dollar between dif- between dollar capitation the of allocation the regulate to effort any made not

As this debate unfolds, state officials try to stay uninvolved. So far, the state has state the far, So uninvolved. stay to try officials state unfolds, debate this As

festo, not serious health services research. services health serious not festo,

hospitals. Finally, the hospital association sees the Henery report as a political mani- political a as report Henery the sees association hospital the Finally, hospitals.

cases is one reason that OHP pays a greater percentage of the capitation dollar to dollar capitation the of percentage greater a pays OHP that reason one is cases

tal outpatient data cited by Henery are flawed. The high number of OHP maternity OHP of number high The flawed. are Henery by cited data outpatient tal

gins are roughly the same as they were before the OHP. They claim that the hospi- the that claim They OHP. the before were they as same the roughly are gins behind both Medicare and the commercial markets and that hospital operating mar- operating hospital that and markets commercial the and Medicare both behind The Oregon Child Health Insurance Program

The Child Health Insurance Program (CHIP), enacted by Congress as part of the 1997 Balanced Budget Act, provides states with $20.3 billion over five years50 to expand insurance programs for children under age 19.51 Oregon’s share of the CHIP revenue is $39 million annually. In order to receive its full allotment, however, the state needs to contribute $14.2 million in state general revenues. Under this division of payments, the federal government contributes 72 percent of the cost of the Ore- gon CHIP (substantially more than the 61.5 percent it contributes to the state’s Medicaid bill). Shortly before Congress enacted CHIP, in November 1996, the Oregon voters enacted their own child health insurance expansion initiative. The voters approved a referendum to increase the state’s tobacco tax by 30 cents per pack and to use 90 percent of the tax revenue52 to expand the OHP (the other 10 percent was for an anti-smoking education campaign and for other public health initiatives). The referendum, which passed with 56 percent of the vote, gives Oregon the third-highest tobacco tax in the nation (at 68 cents per pack). In early 1997, the Oregon legislature decided to use some of the new tobacco tax revenue to fund expanded Medicaid eligibility for children. At that time, children six and under in families with income below 133 percent of the FPL were Medicaid- eligible, as were all other children in families with income below 100 percent of the FPL. The 1997 legislation increased the eligibility level to 170 percent for children 12 and under (the eligibility criteria for older children remained the same). The new rules were scheduled to take place in January 1998. Following the enactment of CHIP, in late 1997, state policymakers reconsidered the Medicaid expansion. The state could maximize federal dollars by using CHIP dollars to finance the cost of the scheduled eligibility expansion. At the same time, however, state officials were not anxious to use their CHIP dollars to finance a Medi- caid expansion. The state would have more discretion to set program policy under a new state-administered CHIP than it would under a straight Medicaid expansion.53 Moreover, while Medicaid expansions were open-ended entitlements, the number of persons enrolled in a state-created CHIP could be capped. After much debate, the state decided to create a separate state CHIP. The new program covers those children targeted by the proposed Medicaid expansion as well as older children left out of the earlier initiative. The program provides insurance coverage to children below age six in families with income between 133 percent and 170 percent of the FPL and to children ages 6 to 18 with income between 100 percent and 170 percent of the FPL.54 While Medicaid and CHIP are separate programs, in practice the distinction between the two is minimal. Both programs are administered by the state’s Medicaid agency (the Oregon Medical Assistance Program). There is a single CHIP/Medicaid application form. Only clients that are not Medicaid-eligible are considered for CHIP.55 CHIP enrollees receive six months of guaranteed eligibility (as do certain

Medicaid beneficiaries).56 Clients in both programs enroll in the same managed care 18 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 19

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no-frills (or “bare bones”) insurance policies to small companies. The policy assump- policy The companies. small to policies insurance bones”) “bare (or no-frills

for example, Oregon became the first state in the nation to permit insurers to offer to insurers permit to nation the in state first the became Oregon example, for

that govern health insurance policies sold to the small-business community. In 1989, In community. small-business the to sold policies insurance health govern that

Over the last several years, the Oregon legislature has enacted a series of rules of series a enacted has legislature Oregon the years, several last the Over

The Oregon Small Employer Health Insurance Reforms Insurance Health Employer Small Oregon The

for persons with income less than 170 percent of the federal poverty level. poverty federal the of percent 170 than less income with persons for

purchasing alliance. Fourth is a program that subsidizes the cost of private insurance private of cost the subsidizes that program a is Fourth alliance. purchasing

conditions). Third is a program that enables small businesses to join a state-created a join to businesses small enables that program a is Third conditions).

high-risk pool (which subsidizes the premiums for persons with high-cost health high-cost with persons for premiums the subsidizes (which pool high-risk

First are rules that govern the sale of insurance policies. Second is a state-created a is Second policies. insurance of sale the govern that rules are First

ance markets. The state’s reform initiatives can be divided into four broad categories. broad four into divided be can initiatives reform state’s The markets. ance

Oregon is a leader in the effort to reform the small-group and individual insur- individual and small-group the reform to effort the in leader a is Oregon

high premium. premium. high

excluded from the individual insurance market even if they can afford a relatively a afford can they if even market insurance individual the from excluded

health insurance policy. Third, persons with high-cost medical needs are often are needs medical high-cost with persons Third, policy. insurance health

the employees in these companies generally earn too little to purchase their own their purchase to little too earn generally companies these in employees the

munity often cannot afford to provide health insurance to their employees. Second, employees. their to insurance health provide to afford cannot often munity

three problems in the health care system. First, employers in the small-business com- small-business the in employers First, system. care health the in problems three

vate health insurance more available and more affordable. These initiatives focus on focus initiatives These affordable. more and available more insurance health vate

Over the last decade, nearly every state has enacted a series of efforts to make pri- make to efforts of series a enacted has state every nearly decade, last the Over

Affordability of Private Insurance Private of Affordability

Oregon’s Efforts to Increase the Availability and Availability the Increase to Efforts Oregon’s

experimentation.

ever agree on an alternative strategy, or whether federal officials will permit such permit will officials federal whether or strategy, alternative an on agree ever

It is unclear, however, whether state officials will officials state whether however, unclear, is It safety net health care providers. care health net safety

A second strategy is to use CHIP dollars to fund the cost of care provided by provided care of cost the fund to dollars CHIP use to is strategy second A dren.

uninsured. One possibility is to use CHIP dollars to cover the parents of eligible chil- eligible of parents the cover to dollars CHIP use to is possibility One uninsured.

there needs to be more than a traditional insurance response to the problems of the of problems the to response insurance traditional a than more be to needs there

ing other uses of the federal dollars. Many state policymakers are convinced that convinced are policymakers state Many dollars. federal the of uses other ing

While Oregon’s CHIP seems to be working fairly well, state officials are explor- are officials state well, fairly working be to seems CHIP Oregon’s While

between 60,000 and 70,000) in the state. the in 70,000) and 60,000 between

tion toward reducing the number of uninsured children (now estimated to be to estimated (now children uninsured of number the reducing toward tion

cap of 16,800 children. The program should therefore make a significant contribu- significant a make therefore should program The children. 16,800 of cap

State officials expect that by late 1999 the program will reach its reach will program the 1999 late by that expect officials State 11,000 enrollees. 11,000

summer of 1998, but the program grew quickly. By May 1999, there were more than more were there 1999, May By quickly. grew program the but 1998, of summer

According to most observers, there were fewer applications than expected during the during expected than applications fewer were there observers, most to According

outreach and education immediately and enrolled the first beneficiaries in July 1998. July in beneficiaries first the enrolled and immediately education and outreach

In June 1998, federal officials approved the state’s CHIP plan. The state began state The plan. CHIP state’s the approved officials federal 1998, June In

itation rate for enrollees in the two programs. programs. two the in enrollees for rate itation network and have a single benefit package. Managed care plans receive the same cap- same the receive plans care Managed package. benefit single a have and network tion was that by waiving various coverage requirements, the cost of the policy would be lowered sufficiently to be more attractive. By 1995, 42 other states had followed the Oregon model and had authorized the sale of bare-bones policies.61 Oregon policymakers were also among the first to impose guaranteed issue and guaranteed renewal.62 In 1991, the state legislature required all insurers in the small- group market (then defined as companies with 3 to 25 employees) to offer a bare- bones policy to all applicants. The 1991 law also required insurers to renew small-group coverage regardless of changes in health status. These requirements became effective in April 1993. Two years later, the state required insurers in the small-group market (this time defined as 2 to 25 employees) to guarantee issue of all insurance products. Finally, in 1997, the legislature modified the guaranteed issue and renewal requirements again, this time to comply with the recently enacted federal Health Insurance Portability and Accountability Act (HIPAA). The new rules extend guaranteed issue and guaranteed renewal to groups with up to 50 employees. In each of the last five legislative sessions (1989–1997), Oregon policymakers have enacted additional insurance reform initiatives. One of the most important changes is a system of modified community rating in the small-group market. Under this system, enacted in 1993 and then amended in 1995, insurers are prohibited from considering health status when determining premiums for firms with 2 to 25 employees. While insurers can vary rates based on the age of the firm’s employees, the most expensive small-group policy cannot be more than twice as costly as the least expensive. Oregon has also enacted strict limits on insurers’ ability to deny coverage for medical conditions that began prior to the insurance policy (limits on preexisting- condition exclusions). In the small-group market (2 to 50 employees), insurers cannot exclude preexisting conditions for more than six months, nor can they treat pregnancy as a preexisting condition. Insurers also must shorten the six-month exclusion if the insured had insurance coverage within the prior 62 days. While Oregon’s reforms in the small-group market are impressive, it is less aggressive in the individual insurance market. For years, reformers have unsuccess- fully proposed guaranteed issue and modified community rating in the individual insurance market. Instead, state law simply requires that carriers use a state-approved standard health statement in the underwriting process. The limits of preexisting condition exclusions do apply, though in this market pregnancy is considered a preexisting condition.

The Oregon Medical Insurance Pool

The Oregon Medical Insurance Pool (OMIP) subsidizes the cost of insurance for high-risk individuals. There are no income or resource limits on eligibility. The only requirement is that individuals have been denied coverage for medical reasons by a private health insurer within six months of their OMIP application. There is, however, a six-month exclusion on coverage for preexisting conditions. OMIP provides coverage to approximately 4,500 persons, most of whom are

women over the age of 50. These beneficiaries pay no more than 125 percent63 of the 20 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 21

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employees. The availability of this option has decreased interest in the IPGB pool; as pool; IPGB the in interest decreased has option this of availability The employees.

munity-rated insurance product to all persons who work for companies with 2 to 50 to 2 with companies for work who persons all to product insurance munity-rated

reform initiatives. Insurance companies are now required to provide a modified com- modified a provide to required now are companies Insurance initiatives. reform

The main reason for the decline is the increased impact of the state’s insurance state’s the of impact increased the is decline the for reason main The

groups and 21,177 covered individuals (11,554 employees and 9,623 dependents). 9,623 and employees (11,554 individuals covered 21,177 and groups

ever, enrollment has steadily declined. As of June 1998, there were only 7,994 only were there 1998, June of As declined. steadily has enrollment ever,

covered individuals (16,765 employees and 15,041 dependents). Since then, how- then, Since dependents). 15,041 and employees (16,765 individuals covered

Less than two years ago, the purchasing pool had 11,053 groups and 31,806 and groups 11,053 had pool purchasing the ago, years two than Less

prices.

in the cost of the different policies, the IPGB is able to guarantee below-market guarantee to able is IPGB the policies, different the of cost the in

policies with the participating health plans. As a result, while there is some variation some is there while result, a As plans. health participating the with policies

than the typical small-group policy). Second, the IPGB negotiates the cost of the of cost the negotiates IPGB the Second, policy). small-group typical the than

or a more comprehensive policy (the “enhanced plan”) that offers fewer benefits fewer offers that plan”) “enhanced (the policy comprehensive more a or

The policies must instead contain one of two benefit packages: a bare-bones policy bare-bones a packages: benefit two of one contain instead must policies The

ance policies available through the IPGB are exempt from state benefit mandates. benefit state from exempt are IPGB the through available policies ance

Two main strategies of the purchasing pool keep costs down. First, health insur- health First, down. costs keep pool purchasing the of strategies main Two

toward the cost of the employee premium. employee the of cost the toward

years prior to the application. The employers must agree to pay at least $48 monthly $48 least at pay to agree must employers The application. the to prior years

is available to small employers who have not provided health insurance over the two the over insurance health provided not have who employers small to available is

50 employees) the opportunity to buy health insurance at affordable rates. The pool The rates. affordable at insurance health buy to opportunity the employees) 50

The main IPGB initiative is a purchasing pool that gives small companies (with 1 to 1 (with companies small gives that pool purchasing a is initiative IPGB main The

1987 to encourage small businesses to provide health insurance to their employees. their to insurance health provide to businesses small encourage to 1987

The Oregon legislature created the Insurance Pool Governing Board (IPGB) in (IPGB) Board Governing Pool Insurance the created legislature Oregon The

The Oregon Insurance Pool Governing Board Governing Pool Insurance Oregon The

ance coverage. coverage. ance

or unemployed individuals who are unable to receive Medicaid or some other insur- other some or Medicaid receive to unable are who individuals unemployed or

sons who work for companies with 2 to 50 employees. OMIP caters to self-employed to caters OMIP employees. 50 to 2 with companies for work who sons

require insurers to provide a modified community-rated insurance product to all per- all to product insurance community-rated modified a provide to insurers require

for the informal enrollment cap is that Oregon’s small-group insurance reforms insurance small-group Oregon’s that is cap enrollment informal the for

however, that the number of OMIP enrollees will increase significantly. The reason The significantly. increase will enrollees OMIP of number the that however,

OMIP program and, by most accounts, the program is well run. It is quite unlikely, quite is It run. well is program the accounts, most by and, program OMIP

The state has hired Regence Blue Cross Blue Shield of Oregon to administer the administer to Oregon of Shield Blue Cross Blue Regence hired has state The

enrollees. Less than 1 percent are enrolled in the limited benefit indemnity plan. plan. indemnity benefit limited the in enrolled are percent 1 than Less enrollees.

nity option, which is by far the most expensive choice, has about 14 percent of percent 14 about has choice, expensive most the far by is which option, nity

option is also popular, with roughly 36 percent of enrollees. The traditional indem- traditional The enrollees. of percent 36 roughly with popular, also is option

selected by 50 percent of the enrollees, is the preferred provider plan. The HMO The plan. provider preferred the is enrollees, the of percent 50 by selected

HMO option, and a limited benefit indemnity plan. The most popular option, popular most The plan. indemnity benefit limited a and option, HMO

option, a preferred provider plan (which works like a point-of-service plan), an plan), point-of-service a like works (which plan provider preferred a option,

OMIP enrollees have a choice of four types of plans: a traditional indemnity traditional a plans: of types four of choice a have enrollees OMIP

is then levied to eliminate the gap. the eliminate to levied then is

calculates the difference between actual costs and premium income; the assessment the income; premium and costs actual between difference the calculates

At the end of each year, the state the year, each of end the At financed through a tax on insurers and reinsurers. and insurers on tax a through financed

64 cost of comparable coverage for healthy individuals. The balance of the cost is cost the of balance The individuals. healthy for coverage comparable of cost a result, state officials now expect the pool to be eliminated sometime in the next couple of years. Even if the pool is discontinued, state officials expect the IPGB to expand its role in the provision of information and referrals to the small-business community.66 The goal would be to create a source of education and outreach using a structure already in place.

The Family Health Insurance Assistance Program

In 1997, the Oregon legislature appropriated $23.7 million of tobacco tax revenue (for the 1997–1999 biennium) to create the Family Health Insurance Assis- tance Program (FHIAP), administered by IPGB. The goal of the program is to subsidize the cost of a standard benefit plan with a private health insurer for persons with income less than 170 percent of the FPL.67 The amount of the subsidy varies based on the income of the beneficiary. The subsidy is 95 percent for persons below 125 percent of the FPL, 90 percent for persons between 125 percent and 150 percent of the FPL, and 70 percent for persons between 150 percent and 170 percent. The IPGB ensures that applicants meet the income eligibility criteria and that they have not had insurance (other than Medicaid) during the previous six months. In addition, IPGB confirms that FHIAP does not subsidize any adults who have not enrolled their children either in Medicaid or FHIAP. Once clients pass this scrutiny, they receive a certificate of FHIAP eligibility. The beneficiary then purchases health insurance from any certified insurance company (unless their employers offer insurance through a certified carrier, in which case they must purchase from that carrier). Finally, enrollees receive the state subsidy (which averages $82 per month per enrollee). FHIAP began enrolling clients in July 1998. So far, consumer interest in the program seems strong. As of November 1998, there were 1,153 persons receiving subsidies, 4,191 who had been certified eligible and were shopping for insurance, and 2,124 applicants under review. Program officials expect that by late 1999 there will be just over 7,000 total beneficiaries. The key issue now facing program officials is the adequacy of state funding. The initial assumption was that there was enough funding to cover about 15,000 of the 67,000 Oregonians believed to be eligible. IPGB officials now suggest that to finance the cost of 15,000 enrollees the program will need between $50 million and $60 million for the 1999–2001 biennium. The officials acknowledge, however, that the likelihood of such an appropriation is minimal. Most observers believe the legislature will only allocate another $24 million for the next biennium. For that reason, the IPGB recently stopped sending out FHIAP applications. Persons who inquire are told that there is a waiting list for access to the program. For now, enrollment will be capped at around the 7,000 beneficiaries. Given this bleak fiscal scenario, IPGB officials hope to generate federal dollars to expand the FHIAP initiative. The main strategy is to seek CHIP funding for children who enroll in FHIAP instead of CHIP (and perhaps even use CHIP dollars to

finance part of the parents’ care). Obstacles make this effort difficult. For example, 22 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 23

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last few years, plan membership has grown by approximately 10 percent annually, percent 10 approximately by grown has membership plan years, few last

CareOregon ranks third in the state in the number of Medicaid enrollees. Over the Over enrollees. Medicaid of number the in state the in third ranks CareOregon

One indication of success is its membership growth. With just over 28,000 members, 28,000 over just With growth. membership its is success of indication One

care organization called CareOregon. By all accounts, the organization is doing well. doing is organization the accounts, all By CareOregon. called organization care

ter) and the Multnomah (Portland) county health department, formed a managed a formed department, health county (Portland) Multnomah the and ter)

with the Oregon Health Sciences University (the state’s only academic medical cen- medical academic only state’s (the University Sciences Health Oregon the with

Association (which represents the state’s community health centers), in a consortium a in centers), health community state’s the represents (which Association

In an effort to minimize these and related problems, the Oregon Primary Care Primary Oregon the problems, related and these minimize to effort an In

suit.

the financial edge. Three clinics closed in 1998 and others are at risk of following of risk at are others and 1998 in closed clinics Three edge. financial the

aged care revolution. For these reasons, most community health centers operate at operate centers health community most reasons, these For revolution. care aged

cost of patient care, and to simply cope with the changes associated with the man- the with associated changes the with cope simply to and care, patient of cost

clinics to upgrade their information systems, to assume increased financial risk for the for risk financial increased assume to systems, information their upgrade to clinics

patients in some clinics are uninsured. Third, the managed care industry requires the requires industry care managed the Third, uninsured. are clinics some in patients

community health center association reports that as many as 75 percent of the of percent 75 as many as that reports association center health community

ond, most clinics have had a slight increase in their uninsured population. The state’s The population. uninsured their in increase slight a had have clinics most ond,

caid beneficiaries and to the increase in competition for the remaining enrollees. Sec- enrollees. remaining the for competition in increase the to and beneficiaries caid

patients. The decline is attributable to the decrease in the overall number of Medi- of number overall the in decrease the to attributable is decline The patients.

centers are coping with three problems. First, many clinics have fewer Medicaid fewer have clinics many First, problems. three with coping are centers

In addition to having less revenue per Medicaid beneficiary, community health community beneficiary, Medicaid per revenue less having to addition In

English-speaking clients) are often not covered by managed care contracts. contracts. care managed by covered not often are clients) English-speaking

covered under the old fee-for-service rates (such as providing interpreters for non- for interpreters providing as (such rates fee-for-service old the under covered

Moreover, certain services that were that services certain Moreover, less than under the old fee-for-service system. fee-for-service old the under than less

the contracting process. According to one report, rates now are roughly 25 percent 25 roughly are now rates report, one to According process. contracting the

health centers must negotiate rates with the managed care organizations as part of part as organizations care managed the with rates negotiate must centers health

As a result, community result, a As facilities receive cost-based reimbursement from Medicaid. from reimbursement cost-based receive facilities

as well. The main problem is that the OHP eliminated the requirement that these that requirement the eliminated OHP the that is problem main The well. as

At the same time, however, the state’s community health centers have not fared not have centers health community state’s the however, time, same the At

– – 94 to more than $540 million in 1997 in million $540 than more to 94 98. 1993

its negotiated discounts for the privately insured rise from less than $260 million in million $260 than less from rise insured privately the for discounts negotiated its

This revenue is a windfall to an industry that has seen has that industry an to windfall a is revenue This lion during that same period. same that during lion

– 98, and outstanding medical debts declined from $98 million to $78 mil- $78 to million $98 from declined debts medical outstanding and 98, in 1997 in

care declined from nearly $94 million statewide in 1993–94 to just over $55 million $55 over just to 1993–94 in statewide million $94 nearly from declined care

safety net providers. According to the state hospital association, for example, charity example, for association, hospital state the to According providers. net safety

net. The reduced number of uninsured should translate into increased revenue for revenue increased into translate should uninsured of number reduced The net.

It is hard to decipher the impact the OHP has had on the state’s medical safety medical state’s the on had has OHP the impact the decipher to hard is It

The Impact on the Medical Safety Net Safety Medical the on Impact The

The Oregon Health Plan: Health Oregon The

program’s future is not secure. secure. not is future program’s

to subsidize care for adults. Nonetheless, without an infusion of federal money the money federal of infusion an without Nonetheless, adults. for care subsidize to

FHIAP copayment rules). Also, federal officials are resistant to using CHIP dollars CHIP using to resistant are officials federal Also, rules). copayment FHIAP inconsistencies between CHIP and FHIAP need to be worked out (such as the as (such out worked be to need FHIAP and CHIP between inconsistencies which is especially impressive given the overall decline in Medicaid enrollment. Care- Oregon is also popular with its provider sponsors because it is considered “provider friendly” and pays the sponsors higher rates for primary care services than it pays to other network providers. Finally, CareOregon seems to be making a small surplus. The community centers are efficient, the inpatient care payments to the Oregon Health Sciences University are well below charges, and the plan is the chief beneficiary of the state-implemented risk adjustment. Even with CareOregon, however, the safety net’s future is uncertain. To protect it, state officials allocated $3.1 million (over two years), funds generated by the 1997 tobacco tax, to safety net providers. The money was distributed to 37 clinics in 17 counties, each of which demonstrated both fiscal need and an acceptable spending plan. The grants were used for a variety of purposes, the most common of which was for general operating costs (such as salaries, rent, and medical supplies). Other clinics purchased computers or adjusted their sliding-fee scale so that more uninsured individuals could remain patients. State officials, who are now evaluating the effectiveness of the safety net assistance program, are undecided whether the initiative will be renewed.

Long-Term Care in Oregon: An Emphasis on Home- and Community-Based Services

For more than 20 years, Oregon lawmakers have enacted policies that have suc- cessfully encouraged the elderly and disabled to receive home- and community-based services rather than enter a nursing home. Between 1981 and 1997, the number of Medicaid beneficiaries residing in nursing homes declined from 8,400 to 6,800, despite a substantial increase in the elderly population of Oregon. During that same period, the number who received home- and community-based services increased from 3,000 to 26,200. Oregon is the only state that spends more Medicaid dollars on home- and community-based services than on institutional care provided in nursing homes.72 The linchpin for the state’s long-term care system is legislation enacted in 1981 mandating that long-term care services be delivered in the least-restrictive and least- institutional environment possible. The 1981 legislation designated the newly created Senior Services Department (now called the Senior and Disabled Services Division, or SDSD) as the state agency responsible for supervising and coordinating the various long-term care programs for the elderly. The legislation also delegated to the local Area Agencies on Aging (AAAs) the responsibility of developing a single point of entry for persons seeking long-term care so that they are informed of all available options. Several factors are responsible for the enactment of the 1981 legislation. First, the senior advocacy community in the state is unusually influential and is strongly supportive of home- and community-based services. Second, state officials, strug- gling to cope with a severe recession and rapidly rising Medicaid costs, were

persuaded that home- and community-based services are cost-efficient and a good 24 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 25

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a screener. The screener schedules an in-home visit by a case manager. During the During manager. case a by visit in-home an schedules screener The screener. a

and speaks to speaks and eficiary’s behalf) in need of long-term care services contacts the AAA the contacts services care long-term of need in behalf) eficiary’s

The system works as follows: A Medicaid beneficiary (or someone acting on the ben- the on acting someone (or beneficiary Medicaid A follows: as works system The

clients with needed services (preferably in home- and community-based settings). community-based and home- in (preferably services needed with clients

The key to the Oregon system is its case management system, which matches which system, management case its is system Oregon the to key The

The Case Management System Management Case The

Matching Clients to Services: to Clients Matching

clients to receive care in an unrestrictive environment. unrestrictive an in care receive to clients

tantly, SDSD and the AAAs developed a case management system that allowed that system management case a developed AAAs the and SDSD tantly,

be accommodated by community-based residences. Sixth, and perhaps most impor- most perhaps and Sixth, residences. community-based by accommodated be

censed (but trained) staff can be responsible for more patients and more people can people more and patients more for responsible be can staff trained) (but censed

sugar levels (by sticking the client’s finger to get a blood sample). As a result, unli- result, a As sample). blood a get to finger client’s the sticking (by levels sugar

ing to do it themselves. For example, staff in assisted living facilities can take blood take can facilities living assisted in staff example, For themselves. it do to ing

nurses can train unlicensed staff to perform numerous medical tasks rather than hav- than rather tasks medical numerous perform to staff unlicensed train can nurses

Fifth, Oregon has the most liberal nurse delegation act in the nation. Under the law, the Under nation. the in act delegation nurse liberal most the has Oregon Fifth,

ing, and other nonmedical residential settings, rather than traditional home care. home traditional than rather settings, residential nonmedical other and ing,

based services infrastructure. The focus was to develop adult foster care, assisted liv- assisted care, foster adult develop to was focus The infrastructure. services based

Fourth, government officials worked diligently to expand the state’s community- state’s the expand to diligently worked officials government Fourth,

$77 (compared with the national average of $84). of average national the with (compared $77

75 75

minimizing the incentive for new entrants. The average per diem rate in the state is state the in rate diem per average The entrants. new for incentive the minimizing

Third, Medicaid regulators kept nursing home reimbursement relatively low, thereby low, relatively reimbursement home nursing kept regulators Medicaid Third,

had an actual decline in the number of nursing home beds during this period. this during beds home nursing of number the in decline actual an had

decreased from 14,922 in 1980 to 14,502 in 1995, making it one of two states that states two of one it making 1995, in 14,502 to 1980 in 14,922 from decreased

nursing home growth. As a result, the number of nursing home beds in Oregon in beds home nursing of number the result, a As growth. home nursing

Second, state officials used the nursing home certificate-of-need program to limit to program certificate-of-need home nursing the used officials state Second,

but who choose to remain at home, now serves nearly 21,000 persons. persons. 21,000 nearly serves now home, at remain to choose who but

waiver program, designed for individuals who qualify for nursing home admission home nursing for qualify who individuals for designed program, waiver

community-based services that otherwise would not be covered. This Medicaid This covered. be not would otherwise that services community-based

from the federal government to provide Medicaid funding for certain home- and home- certain for funding Medicaid provide to government federal the from

tion. First, in 1981, Oregon became the only state at the time to receive permission receive to time the at state only the became Oregon 1981, in First, tion.

the state’s long-term care system. Six other initiatives were instrumental in its execu- its in instrumental were initiatives other Six system. care long-term state’s the

Standing on its own, however, the 1981 legislation could not have reconfigured have not could legislation 1981 the however, own, its on Standing

director of SDSD. of director

care reform. Ladd headed one of the county pilot projects and later became the first the became later and projects pilot county the of one headed Ladd reform. care

getic and charismatic public officials, such as Dick Ladd, who promoted long-term promoted who Ladd, Dick as such officials, public charismatic and getic

pilot project that became a model for the 1981 legislation. Fourth, there were ener- were there Fourth, legislation. 1981 the for model a became that project pilot

1979 and 1981 four Oregon counties implemented a long-term care reallocation care long-term a implemented counties Oregon four 1981 and 1979

Similarly, between Similarly, home services to persons with incomes too high for Medicaid. for high too incomes with persons to services home

state enacted the Oregon Project Independence, which provides state-funded in- state-funded provides which Independence, Project Oregon the enacted state

thus characterized as providing an incremental change. In 1975, for example, the example, for 1975, In change. incremental an providing as characterized thus cost-containment strategy. Third, the legislation added to prior initiatives and was and initiatives prior to added legislation the Third, strategy. cost-containment visit, the case manager assesses the extent of functional disability to determine if the beneficiary is truly in need of long-term care services. The AAA then assigns a case manager to work with eligible clients to develop a care plan. The first task is to select among several systems of care: in-home care, adult foster care, residential care facilities, assisted living facilities, and nursing homes. The second task is to authorize the care and to select a provider, which sometimes includes negotiating a rate with community-based providers (though the state is trying to minimize this sort of negotiation). The third task is to monitor the client’s case and to modify the care plan as needed.

In-Home Supportive Services

State policymakers rely heavily on in-home supportive services as an alternative to institutional care. As a result, the number of Medicaid beneficiaries who receive home care is much higher than the national average (60.3 per 1,000 beneficiaries, compared with the national average of 45 per 1,000).77 The main home care program relies on beneficiaries to hire and fire their own workers. The workers can be friends, relatives, or home care professionals. SDSD provides beneficiaries with administrative support (including the actual payment of wages). The client-employed provider program is especially helpful for relatively healthy elderly individuals (who need low-level homemaker-type services) and for younger individuals who have disabilities. The state also contracts with home care agencies to provide specialized care to the more disabled population. There are two key issues in the state’s home care program. First, it is increasingly difficult to hire home care workers because the wages are simply too low. Second, there is growing concern about the quality of care provided by many in-home workers. SDSD hopes to respond to both concerns with its Caregiver Quality Initiative; if enacted by the legislature, it would increase wages based on the amount of training a worker has and on the length of time the worker is employed.

Adult Foster Care

Oregon defines adult foster care as facilities with five or fewer residents and a live- in manager. During most of the 1980s, state officials vigorously promoted adult foster care as an alternative to nursing home care. State officials and AAA case managers worked hard to recruit families willing to convert their home into an adult foster care setting. In some cases, case managers negotiated deals under which facilities received higher reimbursement than was technically allowed under state law. By the early 1990s, Oregon had hundreds of adult foster care facilities, 75 percent of which were family-owned and -occupied. These facilities became popular with both the private-sector market and the Medicaid population. More than 70 percent of the foster care residents were private, making Oregon the only state in which adult foster care was a mainstream long-term care option. More recently, however, the adult foster care industry has entered a state of flux.

The industry is no longer the featured attraction in the state’s reallocation strategy. 26 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 27

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home placement. placement. home

revolutionary period,” because the state abandoned its previous bias for nursing for bias previous its abandoned state the because period,” revolutionary

played in Ladd’s office. A high-ranking state official described the Ladd era as “the as era Ladd the described official state high-ranking A office. Ladd’s in played

recalled seeing a graph showing declining nursing home occupancy prominently dis- prominently occupancy home nursing declining showing graph a seeing recalled

try felt that the industry was unfairly demonized. One industry representative industry One demonized. unfairly was industry the that felt try

During Dick Ladd’s tenure, many representatives from the nursing home indus- home nursing the from representatives many tenure, Ladd’s Dick During

The Nursing Home Industry Home Nursing The

not likely to abate unless demand in the private market slows considerably. slows market private the in demand unless abate to likely not

making it hard for Medicaid beneficiaries to find assisted living placements, a trend a placements, living assisted find to beneficiaries Medicaid for hard it making

rates and the disparity between the two, while still small, is growing. This pattern is pattern This growing. is small, still while two, the between disparity the and rates

accounts, however, the private-pay rates are rising more quickly than the Medicaid the than quickly more rising are rates private-pay the however, accounts,

By all By on behalf of the Medicaid clients were nearly comparable to private-pay rates. private-pay to comparable nearly were clients Medicaid the of behalf on

at least for clients who are significantly disabled. Indeed, until recently, the rates paid rates the recently, until Indeed, disabled. significantly are who clients for least at

According to industry representatives, the Medicaid rates are generally adequate, generally are rates Medicaid the representatives, industry to According

the state’s 4,900 assisted living beds. living assisted 4,900 state’s the

strategy. Medicaid beneficiaries now occupy between 25 percent and 30 percent of percent 30 and percent 25 between occupy now beneficiaries Medicaid strategy.

board). Assisted living soon became an important part of the state’s reallocation state’s the of part important an became soon living Assisted board).

vices provided in assisted living facilities (though Medicaid will not pay for room and room for pay not will Medicaid (though facilities living assisted in provided vices

In 1990, federal officials permitted the state to spend Medicaid dollars on ser- on dollars Medicaid spend to state the permitted officials federal 1990, In

bathroom. bathroom.

tiate service packages that cover everything from making the bed to cleaning the cleaning to bed the making from everything cover that packages service tiate

no mandatory staff-to-resident ratios and few service requirements. Residents nego- Residents requirements. service few and ratios staff-to-resident mandatory no

kitchen and a lockable door. In other ways, however, the rules are vague. There are There vague. are rules the however, ways, other In door. lockable a and kitchen

dent is entitled to a private apartment, at least 220 square feet large, with a private a with large, feet square 220 least at apartment, private a to entitled is dent

ing industry. In some respects, the rules are quite specific. For example, every resi- every example, For specific. quite are rules the respects, some In industry. ing

In 1989, Oregon policymakers set forth rules governing the state’s assisted liv- assisted state’s the governing rules forth set policymakers Oregon 1989, In

Assisted Living Facilities Living Assisted

to those rates. The impact of the new system is still to be determined. be to still is system new the of impact The rates. those to

reimbursement rates but makes it harder for case managers to negotiate exceptions negotiate to managers case for harder it makes but rates reimbursement

rates. The new system, implemented in March 1998, raises the standard foster care foster standard the raises 1998, March in implemented system, new The rates.

percent of all facilities negotiated a rate that was higher than the standard foster care foster standard the than higher was that rate a negotiated facilities all of percent

system, foster care rates varied by county (and even by case manager). More than 75 than More manager). case by even (and county by varied rates care foster system,

rate negotiations between AAA case managers and foster care facilities. Under the old the Under facilities. care foster and managers case AAA between negotiations rate

In this changing environment, SDSD is anxious to supervise more closely the closely more supervise to anxious is SDSD environment, changing this In

lars (though 60 percent of the residents are still private pay). pay). private still are residents the of percent 60 (though lars

placement recruiters. The industry is growing increasingly reliant on Medicaid dol- Medicaid on reliant increasingly growing is industry The recruiters. placement

The supply of foster care now exceeds the demand, leading many facilities to hire to facilities many leading demand, the exceeds now care foster of supply The

adults who need and can afford care gravitate instead toward assisted living facilities. living assisted toward instead gravitate care afford can and need who adults

The private-pay market is declining as declining is market private-pay The demanding greater regulatory oversight. regulatory greater demanding

SDSD audits confirm some problems with quality and the state legislature is legislature state the and quality with problems some confirm audits SDSD

Ombudsman is challenging the quality of care provided in many of the facilities. the of many in provided care of quality the challenging is Ombudsman The number of family-owned facilities is declining. The state’s Long Term Care Term Long state’s The declining. is facilities family-owned of number The As part of this reallocation effort, Ladd (and his successor, Jim Wilson) tried to minimize nursing home reimbursement increases (and to direct funds to home- and community-based services). This effort led to ongoing, costly litigation; the industry sued under the Boren Act for higher reimbursement. According to industry representatives, state officials relied on the litigation to persuade the legislature not to get involved in nursing home reimbursement issues. Amidst the political conflict, the nursing home industry itself has begun to change. Nursing home residents are now more impaired than in previous years. The relatively healthy elderly are diverted to home- and community-based alternatives. At the same time, the average length of stay is shortening. According to industry representatives, 80 percent of nursing home residents stay fewer than 90 days, 64 percent stay fewer than 30 days, and 41 percent stay fewer than 14 days. More than ever before, nursing homes are used as short-term, post-acute settings. Finally, nursing home owners are diversifying their holdings. Some are converting unused beds into alternate levels of care to accommodate patients with different levels of disability. Others are entering the assisted living market and developing campuslike settings in which residents “age in place.”80 Over the last few years, the relationship between SDSD and the “new” nursing home industry has improved dramatically. One explanation is that the current head of SDSD, Roger Auerbach, is less confrontational than his predecessors. Auerbach acknowledges that the industry is an important part of the state’s long-term care infrastructure. One of his first acts was to negotiate a settlement of the rate reimbursement litigation. He then included industry representatives in ongoing discus- sions about the future of the state’s long-term care system.

The Rising Cost of Long-Term Care

The state’s Medicaid waiver requires that the newly designed long-term care system be “budget neutral.” While Oregon officials argue that the system costs less than its predecessor, little evidence supports this claim. State officials point to the reduced per capita costs of long-term care and to the cost-effectiveness of preventive services (for example, the hip fracture prevented by the delivery of in-home bathing services). Nonetheless, there clearly is some “woodwork” effect under which clients now receive services that they previously would have gone without. The extent of the woodwork effect is unknown (and state officials have little incentive to figure it out). However, federal officials have not focused on the budget neutrality issue during the waiver renewal negotiations. Nonetheless, during the 1999 legislative session, SDSD managers need to explain why the agency requires a 20 percent increase in funding simply to maintain its current service budget for 1999–2001. This discussion will surely focus on the blind and disabled, the groups with the fastest-growing long-term care costs. SDSD officials also hope to persuade the legislature to fund several new long-term care initiatives (such as increased wages for in-home workers and expanded Medicaid eligibility for the working disabled).81 While Oregon’s emphasis on home- and community-based services may or may not be cost-effective, the overall cost of Oregon’s

long-term care system is clearly increasing. 28 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 29

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people with disabilities. Since the long-term care reforms were presented to the leg- the to presented were reforms care long-term the Since disabilities. with people

arise. The costs of long-term care services are growing rapidly, especially for younger for especially rapidly, growing are services care long-term of costs The arise.

Finally, as the state’s innovative long-term care system matures, new challenges new matures, system care long-term innovative state’s the as Finally,

quences. quences.

itation dollars. This is a private-sector issue with important public-sector conse- public-sector important with issue private-sector a is This dollars. itation

mediate the dispute between doctors and hospitals over the allocation of OHP cap- OHP of allocation the over hospitals and doctors between dispute the mediate

management program in rural communities? In addition, state officials are trying to trying are officials state addition, In communities? rural in program management

the Medicaid-only health plans survive? Should the state adopt a primary care case care primary a adopt state the Should survive? plans health Medicaid-only the

many plans will withdraw? Which counties will be left without plan coverage? Can coverage? plan without left be will counties Which withdraw? will plans many

drawal from the Medicaid market. They are asking several questions, such as: How as: such questions, several asking are They market. Medicaid the from drawal

Second, state officials are also evaluating the impact of commercial HMO with- HMO commercial of impact the evaluating also are officials state Second,

omy, etc.) and develop strategies to reverse it. it. reverse to strategies develop and etc.) omy,

(welfare reform, premiums charged to some OHP enrollees, downturn in the econ- the in downturn enrollees, OHP some to charged premiums reform, (welfare

(CHIP and FHIAP). State officials are seeking to understand the causes of the trend the of causes the understand to seeking are officials State FHIAP). and (CHIP

cially unsettling given the state’s initiatives on behalf of low-income populations low-income of behalf on initiatives state’s the given unsettling cially

future. First it must address the recent rise in uninsured residents. This trend is espe- is trend This residents. uninsured in rise recent the address must it First future.

Despite its achievements, Oregon still faces three important challenges for the for challenges important three faces still Oregon achievements, its Despite

care provided in institutions. in provided care

across the United States Medicaid spends more than 80 percent of its funds on the on funds its of percent 80 than more spends Medicaid States United the across

services than on the institutional care provided in nursing homes. To the contrary, the To homes. nursing in provided care institutional the on than services

state can claim that it spends more Medicaid dollars on home- and community-based and home- on dollars Medicaid more spends it that claim can state

uninsured residents. Oregon’s long-term care system is a national model. No other No model. national a is system care long-term Oregon’s residents. uninsured

health insurance; state efforts have contributed to a rapid decline in the number of number the in decline rapid a to contributed have efforts state insurance; health

Oregon leads the effort to guarantee low-income residents access to affordable to access residents low-income guarantee to effort the leads Oregon

Conclusion

years. years.

settings can receive the higher nursing home reimbursement rate for five additional five for rate reimbursement home nursing higher the receive can settings

2000” initiative, under which nursing homes that convert beds into alternative care alternative into beds convert that homes nursing which under initiative, 2000”

in order to fund their care. Fourth, the state is implementing the so-called “Vision so-called the implementing is state the Fourth, care. their fund to order in

ries will develop their own in-home service package and receive cash from the state the from cash receive and package service in-home own their develop will ries

government to begin a “cash and counseling” demonstration; up to 300 beneficia- 300 to up demonstration; counseling” and “cash a begin to government

tiveness of this approach. Third, Oregon has requested permission from the federal the from permission requested has Oregon Third, approach. this of tiveness

the cost of this insurance, state officials are eager to test the popularity and the effec- the and popularity the test to eager are officials state insurance, this of cost the

long-term care insurance at the state’s group rate. While the state will not subsidize not will state the While rate. group state’s the at insurance care long-term

Second, Oregon is about to offer state employees the option of purchasing private purchasing of option the employees state offer to about is Oregon Second,

caid nursing home expenditures from this effort, far more than any other state. other any than more far effort, this from expenditures home nursing caid

eligibility. In 1997, the estate recovery division collected nearly 5 percent of its Medi- its of percent 5 nearly collected division recovery estate the 1997, In eligibility.

ing it to claim assets (such as a home) that could not be counted when calculating when counted be not could that home) a as (such assets claim to it ing

tives. First, the state has the nation’s most aggressive estate recovery program, allow- program, recovery estate aggressive most nation’s the has state the First, tives.

Oregon is planning and implementing a host of additional long-term care initia- care long-term additional of host a implementing and planning is Oregon Other Long-Term Care Initiatives Care Long-Term Other islature largely as a cost savings strategy, this is particularly problematic. The state remains firmly committed to further expanding home- and community-based services, but staffing shortages make this difficult. The state’s regulatory structure has emphasized flexible service provision and consumer choice, but reports of poor- quality care in home- and community-based services raise questions about whether

more oversight is needed. 30 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON Notes

1. State of Oregon, Governor’s Recommended Budget: 1999–2001 (1999), page ii-7. 2. AARP, Reforming the Health Care System: State Profiles 1997 (Washington D.C., 1997). 3. Urban Institute, two-year concatenated March CPS files, 1995 and 1996. The Urban Institute TRIM2 microsimulation model edits these files. Excludes those in families with active military members. 4. Ibid. 5. AARP, Reforming the Health Care System: State Profiles 1998 (Washington, D.C., 1998). 6. State of Oregon, Governor’s Recommended Budget: 1999–2001 (1999), page ii-1. 7. AARP, Reforming the Health Care System: State Profiles 1998 (Washington, D.C., 1998). 8. Ibid. 9. State of Oregon, Governor’s Recommended Budget: 1999–2001 (1999), page ii-2. 10. Ibid., pages ii-3 and ii-4. 11. Data received from the Office for Oregon Health Plan Policy and Research. 12. Marsha Gold, “Markets and Public Programs: Insights from Oregon and Tennessee,” Journal of Health Politics, Policy and Law (April 1997); Howard Leichter, “Rationing of Health Care in Ore- gon: Making the Implicit Explicit,” in Health Policy Reform in America: Innovation from the States, second edition, edited by Howard M. Leichter (M.E. Sharpe, 1997); and Martin A. Strosberg, Joshua M. Weiner, and Robert Baker, editors, Rationing America’s Medical Care: The Oregon Plan and Beyond (Washington, D.C.: The Brookings Institution, 1992). 13. The new law also expanded eligibility for pregnant women and children under age 6 to 133 percent of the FPL, as required by federal law. 14. Oregon’s supporters in the White House did not include Vice President Al Gore. Gore was a fierce and prominent opponent. 15. This tax is scheduled to expire on December 31, 1999. State officials are, however, assuming that the legislature will renew the tax and that the tax will generate about $35 million over the next two years. 16. The phase-in was not completed until July 1997. 17. Employer mandates “relate to” employee benefit programs and are not considered part of the traditional state regulation of insurance. 18. The only state ever to receive an ERISA waiver is Hawaii. Hawaii is considered a special case because its employer mandate was enacted prior to ERISA. 19. Enrollment in the first three months of the initiative was higher than expected, leading to a variety of implementation problems. For example, when beneficiaries tried to call HealthChoice (the enrollment broker hired by the state), they generally had trouble accessing the toll-free telephone number. Clients complained of busy signals, long delays, and unanswered messages. Over the next several months, however, the number of new enrollees declined dramatically. 20. Office of Medical Assistance Enrollment and Disenrollment Reports, 1994–1998. 21. Liquid assets include cash, bank accounts, and securities but not a house or car. 22. State officials note that many of these persons subsequently pay their premiums and regain program eligibility (and perhaps later fail to pay and are again disenrolled). 23. An increase in the state’s minimum wage may also be contributing to the reduced enrollment since 1995. The minimum wage increased from $4.75 per hour to $5.50 per hour as of January 1997. This increase raised the household income of the head of a two-person family who worked full-time from 91 percent of the FPL to 103 percent, from Medicaid-eligible to Medicaid-ineligible. 24. The Urban Institute, 1998. Based on HCFA 2082 and HCFA 64 data. 25. AARP, Reforming the Health Care System: State Profiles 1998 (Washington, D.C., 1998). 26. Lawrence R. Jacobs, Theodore Marmor, and John Oberlander, “The Political Paradox of Rationing: The Case of the Oregon Health Plan” (The Innovations in American Government Program, Occa- sional Paper 5-98), p. 4. 27. Peter T. Kilborn, “Oregon Falters on a New Path to Health Care,” New York Times (January 3, 1999), p. A-1. 28. A recent article argues that “state reformers used the rhetoric and process of prioritization and rationing to build a durable political coalition in favor of expanded access for the poor. Jacobs, Mar- mor, and Oberlander, p. 11. 29. Ibid., pages 4–5. 30. Ibid., p. 4. 31. Marsha Gold, “Markets and Public Programs: Insights from Oregon and Tennessee,” Journal of Health Politics, Policy and Law (April 1997), p. 641. 32. In recent months, the percentage of beneficiaries enrolled in fully capitated health plans has declined. The main reason for the decline is the changed demographics of the Medicaid population. The percentage of aged and disabled beneficiaries is increasing (mainly because welfare reform is reducing the number of child beneficiaries) and only 65.4 percent of aged beneficiaries and 81 percent of disabled beneficiaries are enrolled in managed care. 33. Medicaid, like most health insurers, traditionally paid health care providers a separate fee for every medical service they provided. One goal of the managed care movement is to abandon this fee- for-service payment system, on the ground that it encourages providers to provide unnecessary care. There are three main alternatives. One approach is to require health plans to provide enrollees with a full range of primary and acute care services in exchange for a set per-member per-month fee. This is known as a fully capitated system. A second approach is to require the plans to provide primary care services in exchange for a set fee (with the clients receiving acute and specialty care under the old fee-for-service model). This is known as a partially capitated system. The final approach is to keep the basic fee-for-service model, but to pay primary care physicians an extra fee to manage the care of their patients. 34. The exceptional needs care coordinators also help special needs beneficiaries access acute care services. 35. Dual eligibles who are still in the Medicare fee-for-service system are required to join a Medicaid managed care plan. Medicaid also pays the Medicare deductibles and copayments. Dual eligibles who enrolled in a Medicare managed care plan that also participates in Medicaid must receive their Medi- caid coverage through the plan as well. Dual eligibles who are enrolled in a Medicare managed care plan that does not participate in Medicaid are not required to join a different Medicaid managed care plan. The underlying theme is that each aged and disabled beneficiary should be in one (but not more than one) managed care plan. 36. State officials are considering an end to the ban on all direct marketing. The issue is whether new entrants to the market can compete without some marketing initiatives. 37. Irene Fraser, Elizabeth Chait, and Cindy Brach, “Promoting Choice: Lessons from Managed Med-

icaid,” Health Affairs (October/November 1998), p. 172. 32 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 33

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57. Data received from the Office for Oregon Health Plan Policy and Research. and Policy Plan Health Oregon for Office the from received Data 57.

receive six months of guaranteed eligibility; other Medicaid beneficiaries do not. do beneficiaries Medicaid other eligibility; guaranteed of months six receive

56. Those Medicaid beneficiaries who receive coverage because of the Oregon Health Plan expansions Plan Health Oregon the of because coverage receive who beneficiaries Medicaid Those 56.

tim of domestic abuse. domestic of tim

prior to their application, except if the child has an unusually serious medical condition or is a vic- a is or condition medical serious unusually an has child the if except application, their to prior

55. CHIP enrollees must also have not had health insurance (other than Medicaid) for the six months six the for Medicaid) than (other insurance health had not have also must enrollees CHIP 55.

below 170 percent of the FPL. the of percent 170 below

54. The only group still covered by the Medicaid expansion is pregnant women in families with income with families in women pregnant is expansion Medicaid the by covered still group only The 54.

gibility criteria, or to finance a separate state-established program, or to do both. do to or program, state-established separate a finance to or criteria, gibility

53. Like other states, Oregon could choose whether to use the CHIP funds to liberalize its Medicaid eli- Medicaid its liberalize to funds CHIP the use to whether choose could Oregon states, other Like 53.

lion.

52. During the 1997–1999 biennium, the new tobacco tax is expected to generate around $110 mil- $110 around generate to expected is tax tobacco new the biennium, 1997–1999 the During 52.

direct payments to providers. to payments direct

51. States can spend no more than 10 percent of the federal dollars on outreach, administration, or administration, outreach, on dollars federal the of percent 10 than more no spend can States 51.

50. The program appropriates an additional $19.3 billion for the subsequent five years. five subsequent the for billion $19.3 additional an appropriates program The 50.

Reform Demonstration: Part I—Overview of Key Accomplishments Key of I—Overview Part Demonstration: Reform (January 1997). (January

Progress Report—The Oregon Health Plan Medicaid Plan Health Oregon Report—The Progress Programs, Assistance Medical of Office Oregon 49.

(November 10, 1998). 10, (November

48. Letter from Ken Rutledge, president of the Oregon Association of Hospitals and Health Systems Health and Hospitals of Association Oregon the of president Rutledge, Ken from Letter 48.

1997). The OMA commissioned the report. the commissioned OMA The 1997).

Oregon Health Plan—The Financial Impact: A Comparative Study Comparative A Impact: Financial Plan—The Health Oregon Henery, J. Joseph 47. (February

(December 9, 1998). 9, (December Rates

Actuarial Review of the Reasonableness of OHP Managed-Care Capitation Managed-Care OHP of Reasonableness the of Review Actuarial Robertson, and Milliman 46.

erally do not exit from profitable lines of business. of lines profitable from exit not do erally

ket and the need to focus on core product lines. The fact remains, however, that health plans gen- plans health that however, remains, fact The lines. product core on focus to need the and ket

several of its rural provider groups. Other health plans cite the uncertainty in the commercial mar- commercial the in uncertainty the cite plans health Other groups. provider rural its of several

Regence Blue Cross, for example, had trouble negotiating an acceptable risk-sharing contract with contract risk-sharing acceptable an negotiating trouble had example, for Cross, Blue Regence

45. There are certainly many reasons why commercial health plans are exiting the Medicaid market. Medicaid the exiting are plans health commercial why reasons many certainly are There 45.

44. Bodenheimer, “The Oregon Health Plan: Lessons for the Nation.” the for Lessons Plan: Health Oregon “The Bodenheimer, 44.

3 Ibid. 43.

icaid Demonstration” (February 1999), page 55, citing a study by Milliman and Robertson. and Milliman by study a citing 55, page 1999), (February Demonstration” icaid

42. Office for Oregon Health Plan Policy and Research. “Assessment of the Oregon Health Plan Med- Plan Health Oregon the of “Assessment Research. and Policy Plan Health Oregon for Office 42.

(August 28, 1997). 28, (August Medicine of Journal land

41. Thomas Bodenheimer, “The Oregon Health Plan: Lessons for the Nation (Part One),” One),” (Part Nation the for Lessons Plan: Health Oregon “The Bodenheimer, Thomas 41. New Eng- New

fee. This fee is known as the Medicaid capitation rate. capitation Medicaid the as known is fee This fee.

40. Health plans in Oregon provide a full range of medical services to enrollees in exchange for a fixed a for exchange in enrollees to services medical of range full a provide Oregon in plans Health 40.

tract.

39. The state was not satisfied with the performance of the enrollment broker and did not renew its con- its renew not did and broker enrollment the of performance the with satisfied not was state The 39.

icy Research, June 1995. June Research, icy

the Kaiser Family Foundation and the Commonwealth Fund. Washington, D.C.: Mathematica Pol- Mathematica D.C.: Washington, Fund. Commonwealth the and Foundation Family Kaiser the

and Low-Income Populations: A Case Study of Managed Care in Oregon.” A report sponsored by sponsored report A Oregon.” in Care Managed of Study Case A Populations: Low-Income and

voluntarily selected a health plan. Marsha Gold, Karyen Chu, and Barbara Lyons, “Managed Care “Managed Lyons, Barbara and Chu, Karyen Gold, Marsha plan. health a selected voluntarily

not, however, a ground for rejection. Under the previous system, more than 90 percent of applicants of percent 90 than more system, previous the Under rejection. for ground a however, not,

eficiaries were expected to choose a plan during the application process; failure to select a plan was plan a select to failure process; application the during plan a choose to expected were eficiaries 38. Oregon adopted this system in October 1996. Even before the new system was implemented, ben- implemented, was system new the before Even 1996. October in system this adopted Oregon 38. 58. The goal here is to use CHIP dollars to finance part of the cost of the state’s Family Health Insur- ance Assistance Program (FHIAP), which subsidizes the cost of private insurance for families with income below 170 percent of the FPL. 59. Federal law prohibits states from using more than 10 percent of CHIP dollars for outreach and education, or to subsidize directly the cost of care provided to children. Several state officials are hopeful that Congress will either change that rule or authorize federal regulators to waive the rule where appropriate. 60. One obstacle to the effort to use CHIP dollars to finance part of the cost of FHIAP is that FHIAP has cost-sharing rules that are impermissible under CHIP. 61. Gail Jensen and Michael Morrisey, “Small Group Reform and Insurance Provision by Small Firms, 1989–1995” (Kaiser Family Foundation, fall 1997), p. 5. 62. Guaranteed issue laws require insurers to offer health care coverage to all applicants. As of 1997, 38 states have enacted laws that guarantee issue to persons in the small-group market. Guaranteed renewal laws require insurers to offer to renew the health care contracts of members so long as the member has complied with the basic rules of the policy. The laws are important because they pre- vent insurers from denying coverage to members who develop health care problems. As of 1997, 43 states have enacted laws that guarantee renewal to persons in the small-group market. 63. Before October 1996, premiums were not allowed to exceed 150 percent of the prevailing market rate. 64. The federal ERISA statute prevents the state from imposing the tax on companies that self-insure. 65. The price is also kept down because health plans are allowed to refuse to accept companies with high-risk employees. The only restriction on the underwriting is that health plans cannot selectively cover certain employees but not others; the plan must cover all employees (or all managers) or none at all. 66. The elimination of the IPGB purchasing pool would mark the second time an IPGB program was eliminated. In the early 1990s, IPGB administered a system of tax credits for those small businesses that chose to offer health insurance (after not having offered such insurance for at least two years). By most accounts, this initiative was neither effective nor equitable, and it was abandoned in July 1995. 67. The enabling legislation authorized subsidies for persons with income less than 200 percent of the FPL, but state regulators have capped enrollment at the 170 percent level. 68. OAHHS letter dated November 10, 1998. 69. Ibid. 70. Congress imposed the cost-based reimbursement requirement in 1989. The requirement led to increased revenue for most community health centers, including those in Oregon. When approving the Oregon Health Plan, however, federal officials also exempted the state from the cost-based reimbursement requirement. More recently, the Balanced Budget Act enacted by Congress in 1997 required the gradual phaseout of the cost-based reimbursement requirement in the rest of the country. 71. Tom Bodenheimer, “The Oregon Health Plan: Lessons for the Nation (Part Two),” New England Journal of Medicine (September 4, 1997). 72. Richard Ladd, Robert Kane, Rosalie Kane, and Wendy Neilsen, State LTC Profiles Report (Univer- sity of Minnesota, November 1995).

73. This program now serves approximately 3,500 persons. 34 HEALTH POLICY FOR LOW-INCOME PEOPLE IN OREGON 35

OREGON IN PEOPLE LOW-INCOME FOR POLICY HEALTH

INSTITUTE

THE URBAN THE

(Public Policy Institute, September 1996). September Institute, Policy (Public tices

Medicaid Estate Recovery: A Survey of State Programs and Prac- and Programs State of Survey A Recovery: Estate Medicaid Wood, Erica and Sabatino P. Charles 82.

is now off the agenda. the off now is

rate. The proposal was fiercely opposed by providers, advocates, and even government officials and officials government even and advocates, providers, by opposed fiercely was proposal The rate.

providers (from nursing homes to adult foster care facilities) would need to accept the client-based the accept to need would facilities) care foster adult to homes nursing (from providers

Under the proposed system, the state would set reimbursement levels based on client impairment; client on based levels reimbursement set would state the system, proposed the Under

81. In 1997, in an effort to lower costs, SDSD proposed a new long-term care reimbursement system. reimbursement care long-term new a proposed SDSD costs, lower to effort an in 1997, In 81.

leaving the campuslike setting. campuslike the leaving

move from one level of care (such as assisted living) to another (such as a nursing home) without home) nursing a as (such another to living) assisted as (such care of level one from move

80. The term “age in place” is generally used to describe a residential setting in which a consumer could consumer a which in setting residential a describe to used generally is place” in “age term The 80.

Income payments) to cover room and board. and room cover to payments) Income

vices provided, and other government funding (mainly Social Security and Supplemental Security Supplemental and Security Social (mainly funding government other and provided, vices

79. The rate paid on behalf of the Medicaid client includes the Medicaid reimbursement for medical ser- medical for reimbursement Medicaid the includes client Medicaid the of behalf on paid rate The 79.

1996).

78. Senior and Disabled Services Division, Division, Services Disabled and Senior 78. Adult Foster Care: 1996 Audit Report Summary Report Audit 1996 Care: Foster Adult (November

estingly, Oregon ranks last in the nation in home health expenditures per Medicare client. Medicare per expenditures health home in nation the in last ranks Oregon estingly,

Across the States, 1997: Profiles of Long-Term Care Systems Care Long-Term of Profiles 1997: States, the Across AARP, 77. (Washington, D.C., 1997). Inter- 1997). D.C., (Washington,

76. In some of the state’s smaller communities, SDSD workers perform the case management functions. management case the perform workers SDSD communities, smaller state’s the of some In 76.

Across the States, 1997: Profiles of Long-Term Care Systems Care Long-Term of Profiles 1997: States, the Across AARP, 75. (Washington, D.C., 1997). D.C., (Washington,

Institute, AARP, November 1996), p. 7. p. 1996), November AARP, Institute,

and Community Based Alternatives to Nursing Facility Care in Three States” (The Public Policy Public (The States” Three in Care Facility Nursing to Alternatives Based Community and

Steven Lutzky, John Corea, and Barbara Coleman, “Estimated Cost Savings from the Use of Home of Use the from Savings Cost “Estimated Coleman, Barbara and Corea, John Lutzky, Steven

the number had declined to 33.8 (which is well below the national average). Lisa Maria B. Alecxih, B. Maria Lisa average). national the below well is (which 33.8 to declined had number the 74. Similarly, in 1982, Oregon had 47.5 nursing home beds per 1,000 persons age 65 and over; by 1995 by over; and 65 age persons 1,000 per beds home nursing 47.5 had Oregon 1982, in Similarly, 74.

About the Author

Michael Sparer is an associate professor at the Joseph L. Mailman School of Public Health at Columbia University. He studies and writes about the politics of health care, with an emphasis on the state and local role in the American health care system. Mr. Sparer is the author of Medicaid and the Limits of State Health Reform (Temple University Press, 1996) as well as numerous articles and book chapters.

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