Health Care & Prescription Drugs In the News

Steve Milligan is a Monmouth city councilor, a former small-business owner, a former congressional candidate and an admitted health nut. He also is bankrupt — the result of an episode of heart problems last spring.

Milligan's employer had dropped its employee health insurance, citing rising costs. He got a $37,000 bill for his nine-day hospital stay, and in August he was laid off.

"People may have a stereotype of who could be in trouble, but now it's hitting the middle income and high income levels as well," Milligan said. "If it can happen to me, it can happen to anyone."

As Congress and the states struggle to fix a health care system that many people say is broken, the Oregon Legislature this year passed sweeping legislation that could put the state at the forefront of reforms.

It takes aim at every part of the system — affecting patients with insurance and without, health care workers, employers, medical providers and taxpayers.

Backers say the bills — House Bills 2009 and 2116 — have the potential to cut health care costs by $5.4 billion during the next decade.

Already, some of the provisions are taking effect. For example, 80,000 more children are now eligible for state health coverage.

Legislators punted on other important provisions, sending them back for more study.

That means the full reforms won't play out for years.

But lawmakers say their timeline will allow Oregon to quickly implement likely federal reforms — or lead the way if national efforts fail.

"We passed some historic legislation," said Sen. Laurie Monnes Anderson, D-Gresham. "I think it's going to go down as a turning point for health care in Oregon."

Reform slow and expensive

Fifteen years ago, Oregon was a national model for health care, beginning with the creation of the Oregon Health Plan.

But those gains have eroded.

Last year, Oregon had a higher percentage of uninsured people — 17 percent — than nationwide average of 15 percent. One in five Oregonians has no prescription drug coverage.

Residents with health insurance have seen their premiums nearly triple during the past 10 years, from $371 to $968 for a family of four.

Doctors, meanwhile, are getting squeezed by declining reimbursements.

Thirty-nine percent of Oregon doctors recently surveyed told the state they plan to limit or eliminate new Medicare patients because of rate reductions.

And Oregon businesses say they are having trouble affording rising premiums for their employees.

In 2006, Gov. Ted Kulongoski charged a state commission with developing concrete reforms that could be implemented by 2011.

The process has been slow and expensive.

Already, the state has spent more than three years and $2 million studying the problems and vetting possible solutions at town hall meetings across the state.

But that process was key to passing the legislation this year, Monnes Anderson said.

"We had all the stakeholders at the table," she said.

It also didn't hurt that Democrats held a supermajority in both the House and the Senate, she said.

Part of the reforms will be funded with a new tax on health care providers. Only two Republicans voted for the tax in the Senate; none did in the House, Monnes Anderson said.

Powerful new entity

Central to Oregon's reform effort is creation of a new state agency — called the Oregon Health Authority — that will oversee all of the state's health care and health insurance functions.

It will be led by a new, governor-appointed citizen group — the Oregon Health Policy Board — with broad powers to set the state's health care agenda.

"The vast majority of people in the health care system in this state have no idea what happened this legislative session, said Peter Bernardo, a Salem doctor who is president of the Oregon Medical Association.

"The new Health Authority has been given a tremendous amount of power."

Some say it's too much power.

"What we did was create clusters of issues and give the Health Authority jurisdiction to come up with solutions," said Sen. Jeff Kruse, R-Roseburg.

"Not only are we creating a whole new state agency with undefined responsibility but we gave them a heck of a lot of authority to go ahead and do what they want on their own," Kruse said. "Those are decisions we should be making, not some governor-appointed group of folks."

Kruse also isn't convinced that the agency consolidation will save money.

Bruce Goldberg, director of the state Department of Human Services, also will serve as director of the new consolidated health agency, responsible for carrying out the board's agenda.

Goldberg said costs will be minimal, with enormous potential savings.

"We're not building anything new. We are consolidating several state agencies into one. We're eliminating some levels of what have been duplicative bureaucracy in the state," he said. "We're really making this more efficient and more effective."

The policy committee is led by Eric Parsons, who recently retired as head of Standard Insurance Co., and Lillian Shirley, director of the Multnomah County Health Department.

"The governor has appointed a set of great people from all over the state with a lot of expertise in health care, public health and the business world to be on that board," said Laura Etherton, health policy advocate for OSPIRG.

Changes under way

The legislation already is making an impact.

"We're a little over 90 days into this and have made a lot of progress," Goldberg said.

The Oregon Health Plan now is open to about 80,000 more children.

That's the biggest increase in children's health care in the nation this year.

And in January, a new program will roll out offering subsidized insurance, on a sliding scale, to children in families with incomes between 200 percent and 300 percent of the federal poverty level.

Meanwhile, a voluntary, statewide registry of end-of-life care directives already has collected 2,000 forms, Goldberg said.

"(Emergency medical technicians) have already used it," he said.

And reforms to insurance rate requests are under way. They'll give the state one of the toughest reporting requirements in the country.

"Oregon is on the forefront of what states are doing in terms of rate review," said Teresa Miller, administrator of the Oregon Insurance Division. "We're going to be scrutinizing rate requests more closely than before."

Beginning in April, when Oregon insurers ask the state to approve premium rate changes, they'll have to provide detailed information about administrative expenses and an explanation of the basis for any increases.

Consumers also can sign up to receive an e-mail from the state whenever their insurer files for a rate change. The e-mail will direct consumers to a Web site where they can see the documents justifying the rate increase and can comment on the proposal.

"I don't know of any other state that has made their process as open as ours is going to be from beginning to end," Miller said.

Still on the table

Meanwhile, committees are forming to tackle the tougher questions:

-How to provide an insurance exchange, where people can shop for reasonably priced policies that could even include a state-sponsored plan.

-How to standardize and consolidate health plans paid for with tax money. The state buys health coverage for about 800,000 people, Goldberg said. That includes state employees, educators, local government employees, Medicaid recipients and more.

Standardizing plans and increasing buying power could bring down costs significantly, he said.

-How to ensure that every Oregon resident has health care coverage.

The committees will come up with proposals, which still must go before the 2011 Legislature.

Monnes Anderson said she's confident those reforms will go through.

Lawmakers didn't want to cede control of those issues to the Health Authority, she said.

"Many legislators wanted to make sure we still had some oversight," she said.

The longer timeline also positions the state to mesh its plans with any federal reforms, lawmakers said.

"What Oregon is doing is incredibly similar to what the President's proposing," Kruse said.

A comprehensive package

Most of the ideas in Oregon's health reform package aren't new. Other states are trying similar elements, with varying degrees of success.

For example:

-Massachusetts is the only state that requires all residents to carry health insurance. It also offers an insurance exchange, offering dozens of insurance options for people at all income levels. But insuring more people has led to a shortage of doctors there.

-In Illinois, the state's Health Connect Program has saved the state's Medicaid program $20 per member per year. It's similar to Oregon's proposed Patient Centered Primary Care Home program.

-In Arizona, IBM and its insurer, UnitedHealth Group, launched a "Patient-Centered Medical Home," coordinating patient treatments and reducing emergency room visits.

"Legislators looked at what a lot of other states are doing and picked the best," OSPIRG's Etherton said.

However, Oregon may be the only state to launch such an ambitious array of reforms and to consolidate all health care functions and authority in one entity, said Sen. Alan Bates, D-Ashland, who helped launch the reform effort six years ago.

"We are blazing a trail here," Bates said. "If this works the way we want it to, it may be one of the few models in the United States that will really bring down costs and improve quality."

Reform can't come too soon for Salem small-business owners Homer and Annette Owen.

They've been unable to afford insurance — or medical care — since opening their business, Zantana Creations, five years ago.

"We feel we're one sickness or accident away from losing everything we have," Homer Owens said.