Kitzhaber Gives Brief Glimpse of Health Reform Goals

Bruce Goldberg and John Kitzhaber will lead the effort to reform Oregon's health care system in 2011. Kitzhaber gave the Oregon Health Policy Board some guidance last week.On Tuesday, November 16, Oregon Governor-elect John Kitzhaber made an unannounced appearance in the final minutes of the Oregon Health Policy Board's meeting to discuss his immediate agenda for health care reform.

The message, in a nutshell, was that he is supportive of the work of the Oregon Health Authority and its governing body, the OHPB, but he wants to do things in a different order and faster.

Kitzhaber has long said he doesn't think federal health care reform went far enough, calling it "health insurance reform." He wants Oregon to focus on reforming the delivery system to bring down the cost of health care.

He told the OHPB last week that the current system will bankrupt the state, as well as the country, if lawmakers do not make drastic changes to reduce the cost of providing health care. Kitzhaber intimated that some of Oregon's high health care costs come from the "fragmentation and inefficiency in the Medicaid program," and addressing it "is a must for balancing the budget."

"There's no way we can justify, I think morally or politically, a 15 percent increase in the Medicaid budget," he said.

Kitzhaber told the OHPB he wants the Board to consider eventually merging three populations – government employees who receive health benefits under the Public Employee Benefit Board, government employees who receive benefits under the Oregon Educators  Benefit Board and hard-to-insure citizens who received benefits under the last-resort Oregon Medical Insurance Pool – into one risk pool designed to cut costs.

The framework is similar to the proposed Insurance Exchange. Small employers would be able to buy benefits through the exchange, and the regional delivery system would be reformed to serve the Exchange population in a more efficient way.

For this to happen, Kitzhaber said, he wants the Oregon Health Authority to work this session to establish standards to promote regional accountability, including health outcomes and costs. He also told the OHPB he wants to look at integrating mental health, physical health and long-term care, and "give Medicaid managed care plans the ability to manage a larger part of the health care dollar in exchange for some delivery system changes that drive efficiency and quality."
Currently, 84 percent of OHP patients are enrolled in a managed care plan, and many of them also receive mental health or long-term care. Kitzhaber called the system fragmented and inefficient, and said he wanted MCOs to have "more of the health care dollar."

Both proposals would reduce the state's liability for medical expenditures. Buried in the Oregon Health Authority's latest cut list is a proposal to consolidate the number of Medicaid managed care plans and mental health organizations, a move that is estimated to save the state $29 million. Kitzhaber didn't mention whether he favored consolidation of MCOs.

Kitzhaber said he wants Oregon to be a model for health care reform in the nation. "The administration is looking for a state or several states that can demonstrate that the federal health care legislation wasn't just a big increase in federal spending but... provides a pathway to substantial fundamental health care reform," he said. "I think Oregon is in a great position to do that."

Bruce Goldberg, the Director of the Department of Human Services and Director-designee of the Oregon Health Authority, told Kitzhaber, "We're ready to help."

Download a PDF of the transcript.