IAGS 39:620-621, 1991
PUBLIC POLICY
The Oregon Experiment L. Gregory Pawlson, MD,MPH
In this issue, we open a series of papers on rationing of health care, specifically, commentaries on what has come to be known as The Oregon Experiment. The first paper describes the actions of the State of Oregon. In the sec-
H
ealth care policy in the Unites States reflects a long-standing tension between our belief in rugged individualism and capitalism and our egalitarian belief that health care is a right that should not be denied to anyone regardless of ability to pay. This tension is nowhere more evident than in our publicly financed programs, Medicare and Medicaid. The seemingly inexorable increase of the cost of health care, even when indexed by our gross national product (GNP), has now come face to face with our ambivalence about tax-supported government spending on social programs. The Medicaid program, which was envisioned in 1965 as a #gap filler" when Medicare was enacted, has grown to cost nearly 50 billion dollars a year and is jointly funded by state and federal general tax revenues. It is important to note that not all persons who are poor qualify for Medicaid. Eligibility for Medicaid is limited to those persons in certain categories (for example, families with dependent children and the aged, blind, and disabled) whose income and assets fall below state-specified levels. In addition, most states have a provision that allows persons who are categorically eligible and who have medical care expenditures that cause their net incomes and assets to fall below the qualifying level to receive Medicaid benefits. This "spend-down" provision is a major reason that nearly 50% of Medicaid expenditures are for long-term care of the aged, blind, and disabled. Both states and the federal government have had increasing difficulty in balancing the needs of those dependent on Medicaid with the substantial resistance
From the Department of Health Care Sciences, George Washington University, Washington, DC. Address correspondence to L. Gregory Pawlson, MD, MPH, George Washington University, Dept. of Health Care Sciences, 2150 Pennsylvania Ave., Washington, DC 20037.
01991 by the American Geriatrics Society
ond paper, Daniel Callahan expresses his analysis of these events. In later issues, we expect to publish other viewpoints on The Oregon Experiment. J Am Geriatr SOC39:620-621, 1991
to higher taxes. Despite the growing number of persons below the federal poverty level without health insurance, eligibility for Medicaid was made more restrictive during the Reagan Administration. Over the past few years Congress has made some modest changes, increasing coverage for children and extending coverage to some pregnant women. However, over 40% of those under age 65 with incomes below the poverty level still do not receive Medicaid benefits. In 1987 the Oregon legislature, under the leadership of its president, John Kitzhaber, MD, decided to extend Medicaid coverage to all pregnant women below the poverty level. The legislators felt that raising taxes to increase Medicaid revenues was not politically feasible and instead decided to reduce Medicaid expenditures for organ tran~plantation.'-~ Their judgment was that the 2.3 million dollars projected to be spent to provide organ transplants to about 30 individuals would be better used to provide, for example, prenatal coverage for 3,000 women. The decision quickly ran into the problem predictable when denying benefits to individuals. Colby Howard, a 7-year-old victim of leukemia, was denied a bone marrow transplant and died shortly thereafter from his leukemia. This event raised considerable public concern. By contrast, the infants and women whose deaths may have been prevented by the decision are not identifiable as individuals and thus evoke little public recognition. In order to examine more carefully how citizens of Oregon felt about the relative merits of different health care interventions, Kitzhaber and others formed a public interest group called Oregon Health Decision. This group obtained a Robert Wood Johnson grant and, under Kitzhaber's leadership, established a procedure for organizing and conducting meetings of interested persons throughout the state, aimed at setting health care pri~rities.~ Nineteen meetings were held, and 560 people (56% of whom worked in the health care field) filled out a questionnaire that ranked various health 0002-8614/91/$3.50
JAGS-JUNE 1991-VOL. 39, NO. 6
THE OREGON EXPERIMENT
621
care interventions. The results of the questionnaire, endorse, even indirectly, a program that is seen by together with resolutions from the various local meet- some as being discriminatory to the poor. Because of the special importance of Medicaid (and ings, were considered by a state-wide group, appointed by various means, which was termed the Citizens other publicly financed health care programs) to older Health Parliament. This body formally considered the persons and those who provide services to them, this resolutions and information produced by the local issue of the Journal contains the first of two articles meetings and developed a set of principles which de- that will examine the pros and cons of the Oregon fined the purpose of health care, why allocation deci- program. Following these will be an article which will review the major issues surrounding allocation decisions are needed, and how priorities should be set. Following additional input gained by having groups sions related to health care. Our consideration of this of health care providers rank health service priorities, issue is made even more timely since the recent downthe Oregon legislature passed bills creating and estab- turn in the economy will very likely accelerate preslishing an ongoing community-based mechanism for sures to contain health care costs in the face of our determining health care priorities under the Medicaid growing repetoire of technological advances in patient program and offering tax credits for small businesses care. We invite thoughtful comments from our readers to purchase insurance for their employees from a state on this most importint issue. insurance pool. Establishing overall Medicaid benefits REFERENCES and eligibility in the manner pioneered in Oregon 1. Goldsmith MF. Oregon pioneers “more ethical” medicaid coverrequires a waiver from the federal government. Thus age with priority-setting project. JAMA 1989;262:176-177. far, the waiver has not been granted, partly because of 2. Kosterlitz J. Rationing medical care. National Journal 1990 strong opposition from Congressman Henry Waxman (June);1590-1595. (D-Calif), chairman of the US House of Representa- 3. Kitzhaber J. The Oregon health care initiative. Lancet 1989;(2) July 8:106. tives’ committee with jurisdiction over Medicaid. In 4. Crenshaw R, Garland M, Hines B et al. Developing principles addition, the Health Care Financing Administration for prudent health care allocation: the continuing Oregon experand others in the Bush Administration are reluctant to iment. Western J Med 1990;152:441-446.
PUBLIC POLICY
The Oregon Experiment L. Gregory Pawlson, MD,MPH
In this issue, we open a series of papers on rationing of health care, specifically, commentaries on what has come to be known as The Oregon Experiment. The first paper describes the actions of the State of Oregon. In the sec-
H
ealth care policy in the Unites States reflects a long-standing tension between our belief in rugged individualism and capitalism and our egalitarian belief that health care is a right that should not be denied to anyone regardless of ability to pay. This tension is nowhere more evident than in our publicly financed programs, Medicare and Medicaid. The seemingly inexorable increase of the cost of health care, even when indexed by our gross national product (GNP), has now come face to face with our ambivalence about tax-supported government spending on social programs. The Medicaid program, which was envisioned in 1965 as a #gap filler" when Medicare was enacted, has grown to cost nearly 50 billion dollars a year and is jointly funded by state and federal general tax revenues. It is important to note that not all persons who are poor qualify for Medicaid. Eligibility for Medicaid is limited to those persons in certain categories (for example, families with dependent children and the aged, blind, and disabled) whose income and assets fall below state-specified levels. In addition, most states have a provision that allows persons who are categorically eligible and who have medical care expenditures that cause their net incomes and assets to fall below the qualifying level to receive Medicaid benefits. This "spend-down" provision is a major reason that nearly 50% of Medicaid expenditures are for long-term care of the aged, blind, and disabled. Both states and the federal government have had increasing difficulty in balancing the needs of those dependent on Medicaid with the substantial resistance
From the Department of Health Care Sciences, George Washington University, Washington, DC. Address correspondence to L. Gregory Pawlson, MD, MPH, George Washington University, Dept. of Health Care Sciences, 2150 Pennsylvania Ave., Washington, DC 20037.
01991 by the American Geriatrics Society
ond paper, Daniel Callahan expresses his analysis of these events. In later issues, we expect to publish other viewpoints on The Oregon Experiment. J Am Geriatr SOC39:620-621, 1991
to higher taxes. Despite the growing number of persons below the federal poverty level without health insurance, eligibility for Medicaid was made more restrictive during the Reagan Administration. Over the past few years Congress has made some modest changes, increasing coverage for children and extending coverage to some pregnant women. However, over 40% of those under age 65 with incomes below the poverty level still do not receive Medicaid benefits. In 1987 the Oregon legislature, under the leadership of its president, John Kitzhaber, MD, decided to extend Medicaid coverage to all pregnant women below the poverty level. The legislators felt that raising taxes to increase Medicaid revenues was not politically feasible and instead decided to reduce Medicaid expenditures for organ tran~plantation.'-~ Their judgment was that the 2.3 million dollars projected to be spent to provide organ transplants to about 30 individuals would be better used to provide, for example, prenatal coverage for 3,000 women. The decision quickly ran into the problem predictable when denying benefits to individuals. Colby Howard, a 7-year-old victim of leukemia, was denied a bone marrow transplant and died shortly thereafter from his leukemia. This event raised considerable public concern. By contrast, the infants and women whose deaths may have been prevented by the decision are not identifiable as individuals and thus evoke little public recognition. In order to examine more carefully how citizens of Oregon felt about the relative merits of different health care interventions, Kitzhaber and others formed a public interest group called Oregon Health Decision. This group obtained a Robert Wood Johnson grant and, under Kitzhaber's leadership, established a procedure for organizing and conducting meetings of interested persons throughout the state, aimed at setting health care pri~rities.~ Nineteen meetings were held, and 560 people (56% of whom worked in the health care field) filled out a questionnaire that ranked various health 0002-8614/91/$3.50
JAGS-JUNE 1991-VOL. 39, NO. 6
THE OREGON EXPERIMENT
621
care interventions. The results of the questionnaire, endorse, even indirectly, a program that is seen by together with resolutions from the various local meet- some as being discriminatory to the poor. Because of the special importance of Medicaid (and ings, were considered by a state-wide group, appointed by various means, which was termed the Citizens other publicly financed health care programs) to older Health Parliament. This body formally considered the persons and those who provide services to them, this resolutions and information produced by the local issue of the Journal contains the first of two articles meetings and developed a set of principles which de- that will examine the pros and cons of the Oregon fined the purpose of health care, why allocation deci- program. Following these will be an article which will review the major issues surrounding allocation decisions are needed, and how priorities should be set. Following additional input gained by having groups sions related to health care. Our consideration of this of health care providers rank health service priorities, issue is made even more timely since the recent downthe Oregon legislature passed bills creating and estab- turn in the economy will very likely accelerate preslishing an ongoing community-based mechanism for sures to contain health care costs in the face of our determining health care priorities under the Medicaid growing repetoire of technological advances in patient program and offering tax credits for small businesses care. We invite thoughtful comments from our readers to purchase insurance for their employees from a state on this most importint issue. insurance pool. Establishing overall Medicaid benefits REFERENCES and eligibility in the manner pioneered in Oregon 1. Goldsmith MF. Oregon pioneers “more ethical” medicaid coverrequires a waiver from the federal government. Thus age with priority-setting project. JAMA 1989;262:176-177. far, the waiver has not been granted, partly because of 2. Kosterlitz J. Rationing medical care. National Journal 1990 strong opposition from Congressman Henry Waxman (June);1590-1595. (D-Calif), chairman of the US House of Representa- 3. Kitzhaber J. The Oregon health care initiative. Lancet 1989;(2) July 8:106. tives’ committee with jurisdiction over Medicaid. In 4. Crenshaw R, Garland M, Hines B et al. Developing principles addition, the Health Care Financing Administration for prudent health care allocation: the continuing Oregon experand others in the Bush Administration are reluctant to iment. Western J Med 1990;152:441-446.
