Health Care Reform in the States

by by Susan Moke

The state of Oregon has taken a bold step toward health care reform, and the rest of the nation is eagerly watching its progress. Oregon faces a problem common to all of the states in the Union: Medicaid costs are expanding at a much more rapid rate than are budgets for other discretionary programs. To compound the problem, in 1991, Oregon's Health Services Commission estimated that at least 230,000 of its citizens were underinsured and 450,000 had no health insurance at all. A program of health care reform needed to be devised that would provide high-quality, accessible care to all currently enrolled Medicaid insurees and would also give health care access to the state's uninsured and underinsured citizens.

Although it was doing so in a way not open to public input, Oregon already was rationing health care, as were other states experiencing similar budget imbalances. Funding shortages demanded that many individuals in need of care received none: for example, the state denied coverage to people with incomes above fifty percent of the poverty level. Recognizing that individuals rather than services were being rationed, Oregon's Health Services Commission set about developing a health care reform system based on cost-effective services.

Health care rationing in Oregon before and after the Oregon Plan

The commission developed prioritized lists of condition-and-treatment pairs and then ranked these in three basic categories: essential (treatments that prevent death, such as appendectomy for appendicitis), very important (treatments for nonfatal conditions that would return a patient to a previous state of health, such as hip replacements or cornea transplants), and valuable to certain individuals (treatments for fatal or nonfatal conditions that would not extend or improve the quality of life, such as treatment for the end stages of cancer or AIDS). Condition and-treatment pairs were then ranked according to importance within each of these three basic categories.

Working with budget imperatives, the Oregon state legislature established cutoff lines on the ranked list below which no services would be covered. While this plan has followed John Stuart Mill's dictum of "the greatest good for the greatest number" by allowing Oregon to provide health care access to a larger percentage of citizens, it has raised a number of other questions: If we are to ration health care based on whether it improves quality of life rather than on biologic outcome, what method do we use to evaluate that? Do treatment prioritizations based on quality of life disadvantage the disabled? Are refusals to provide medical care based on cost-effective rankings ethical?

Every state needs to control Medicaid expenditures. Forty-one out of fifty states are attempting to do so by moving Medicaid recipients into managed care. Since its establishment in 1994, the Oregon experiment (and most state Medicaid reform efforts) has come under national scrutiny. The Bowen Center at IUPUI is conducting part of the national evaluation of the Oregon experiment and Medicaid managed care programs that has been funded by the Health Care Financing Administration, which administers Medicaid and Medicare nationally. The Bowen Center is co-directed by Robert Dittus, a professor of medicine and Deborah A. Freund, a professor of public and environmental affairs and vice chancellor for academic affairs and dean of the faculties at IUB. The center's evaluation of the Oregon plan focuses on the quality of care patients receive, their satisfaction with that care, and whether the plan will yield cost savings. "The part of this nationwide effort that the Bowen Center is particularly responsible for is the evaluation of the quality of care," Freund notes. "We were able to secure that contract because of previous work we had done on the PORT Project developing evaluation strategies for quality of care."

The PORT (the Patient Outcome Research Team on Knee Arthritis) Project, on which Freund and Dittus served as the principal investigators and in which Ann Holmes, an assistant professor of public and environmental affairs, participated, developed a method for quality of care evaluations. "When we started our research in 1990," Freund says, "we tried to answer the questions, Who would really benefit from having his or her knee replaced? How did the outcome of that surgery compare to that of patients whose doctors managed knee pain with medication?" The questions were complicated by the fact that in the early 1990s, most knee replacement surgeries were done at academic medical centers. There was no guarantee that such surgeries performed by doctors in general orthopaedic practice would yield comparable results.

Using data from community practice rather than from the faculty practice of academic medical centers, members of the PORT team arrived at some surprising conclusions. Conventional wisdom about knee replacement surgery dictated that people over seventy years of age and those who were obese would not benefit from this treatment. PORT investigators discovered that, overall, death rates were one half of one percent per year, people up to eighty-five years of age had about the same improvement in function as those who were sixty-five, obese patients reported comparable outcomes to those of average weight, and patients would in general be free of knee pain for at least seven years after the surgery. The method the PORT team developed to determine which patients are good candidates for knee replacement surgery can be used to write clinical guidelines to determine which patients are most likely to benefit from knee replacement and other expensive, potentially disabling surgical procedures in a managed care environment.

Indiana is also investigating the thorny question of how to provide quality health care access to all its citizens. Ming Tai-Seale, an assistant professor of public and environmental affairs at IUB, Freund, and Mark Smith, project director of Indiana University's part of the Oregon evaluation, are currently working with the Indiana Commission for the Working Poor, headed by the state commissioner of health, Chris Bailey. As a health economist, Tai-Seale advises the commission on the demographics of the working population in Indiana with the purpose of determining what portion of the working poor are uninsured. She says that "Indiana has a low participation rate in the Medicaid program." According to Tai Seale, about fifty-five percent of the people eligible for Medicaid are not participating in the program, eleven percent of Indiana's full-time working population and thirteen percent of part-time workers are not insured, and another thirty percent of children living under two hundred percent of the federal poverty level are not insured even though many of them are eligible for Medicaid. Indiana is considering a variety of ways to increase these populations' access to health care either by offering subsidized health insurance or through strengthening direct care delivery systems. Tai-Seale's observations of other states' approaches to providing health care access to the working poor lead her to endorse a direct service plan that funds primary care neighborhood clinics.

Smith notes that the Oregon experiment is a major step in the health care reform process because it attempts to define an essential health care package to which each citizen is entitled. Commenting on the process through which the package was determined, Smith explains that the Oregon Health Commission used a series of forty or so town hall meetings to gather input from citizens all over the state. "They very aggressively sought input from a lot of different individuals. This is a model that everyone is looking at. The process by which the Oregon plan was developed harks back to the democratic principles on which our governmental process is based. The Oregon plan follows a democratic model for societal change because it involves providers, the government, and the public." Indiana, with its fierce commitment to democratic ideals and suffering from the same burdens of burgeoning health care costs that plague the state of Oregon, will be watching this experiment closely.