The cost of health care has been growing faster than wages and faster than the state economy. Some Oregonians cannot get the health care coverage they want or worry they can’t afford going to the doctor.
There are numbers that back up those concerns. Deductibles in Oregon are the third highest in the nation, according to the Oregon Health Authority. And Oregon is fourth highest in the country for the percent of individuals with high out-of-pocket costs relative to their income.
Oregon is looking at doing what Delaware, Massachusetts and Rhode Island have done: put a cap on the increase in health care costs. A state committee is charged with coming up with a plan to present to the Oregon Legislature.
One real benefit could be the incentives the cap creates to change how providers are compensated for patient care. One real worry is the unintended consequences any reforms may create along the way.
The magic number for Oregon may well be 3.4% for 2021-25, and then 3% for 2026-30. That’s how much costs would be allowed to go up. What happens if the cap breaks? Would it be enforced? Will quality of care suffer? Those are questions that need to be answered.
Massachusetts got off to a start with cost controls in 2012. Other states followed. So, did it work in Massachusetts? Costs did decline. For instance, that state stayed below a benchmark of a 3.6% increase in overall health care spending in 2013, 2016, 2017 and 2018. But if you look into the data a little deeper, there were also worrisome trends. For instance, costs for consumers and patients rose more quickly in 2018. Individuals with private insurance had their out-of-pocket costs increase by 6.1% and premiums rose 5.2% from 2016-18, according to the Boston Globe. More residents also signed up for high-deductible plans.
Those changes should not be discounted. The theory has been if overall costs are controlled it will translate eventually into lower insurance costs for consumers. That logic is hard to argue with. But there do seem to be unintended consequences, such as cost-shifting to consumers. And if more people move to high-deductible plans, should that be considered victory?
SEIU Local 49 expressed concern at the committee’s last meeting that health care workers will see their wages get squeezed as Oregon health care providers cut costs. The Oregon Association of Hospitals and Health Systems said it was worried that because of the pandemic the state and providers may not have the money to quickly ramp up spending to do more data collection and analysis.
Surely, though, there is room in Oregon’s health care system to save money and improve quality. There are too many perverse incentives driven by the fee-for-service model. It can drive providers to do more tests, for instance, because more tests mean more revenue. Instead, the committee wants Oregon to move in the direction of a payment model that bundles payments for treating groups of patients. That transformation may be the biggest benefit of Oregon’s pursuit of a cap.