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The Oregon Health Plan: A Process for Reform
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The Oregon Health Plan: A Process for Reform From Beaverton, Oregon. This article contains excerpts from the James D Mills Lecture presented at the 1993 American College of Emergency Physicians Scientific Assembly, Chicago, Illinois, October 12, 1993. A copy of the complete speech can be obtainedfrom the ACEP State Legislative Department.
330
John A Ki~haber
[Kitzhaber JA: The Oregan health plan: A process for reform. Ann EmergMed February 1994;23:330-333] On September 22, 1993, President Clinton outlined a bold proposal to reform America's flawed and failing health care system. The general approach is to guarantee all Americans coverage through a uniform comprehensive package of benefits paid for by a combination of tax dollars and premiums paid by individuals and employers. All Americans except those on Medicare and those working for businesses with more than 5,000 employees will be required to join a regional purchasing alliance. (Businesses with more than 5,000 employees will negotiate directly with health plans to purchase the uniform comprehensive benefit. Individuals on Medicare will not be affected unless their state obtains a federal waiver to enroll Medicare beneficiaries in a regional alliance.) These regional alliances will pool the insurance premiums of thousands of individuals, including most workers, the self-employed, retirees not old enough to qualify for Medicare, and the unemployed. This combined purchasing power will be used to negotiate with health plan providers to obtain a uniform comprehensive benefit package. The health plans will compete with each other on the basis of cost, quality, and patient satisfaction. It is believed that this "managed competition" will help control medical cost inflation. In addition, a National Health Board will set national and regional limits on health care spending, creating, in effect, a centrally determined global budget. The congressional debate over this plan is expected to be long and heated, and the outcome is far from certain. And although there may be much to criticize about the Clinton health care plan, there also is much to recommend it. In many ways it is remarkably similar to the Oregon Health Plan, which will go into effect on February 1, 1994. Both plans seek to achieve universal coverage with a comprehensive benefit package through a public-private partnership that builds on the current employment-based insurance system. Both involve an
ANNALS OF EMERGENCY MEDICINE
23:2 FEBRUARY 1994
OREGON HEALTH PLAN Kitzhaber
employer mandate, and both regulate the insurance industry. Health care reform can be viewed quite simply as a debate over how to answer three questions: "Who is covered?" "What is covered?" and "How is health care to be financed and delivered?" Moreover, these questions must be explicitly answered in a way that is consistent with an agreed-on objective. Letg pause a moment and discuss the term "explicit." The concept of explicit and implicit choice is very important in understanding how the health care crisis developed--and thus is very important in understanding how to craft a solution. Suppose you live in a state where only 50% of poor pregnant women are covered for prenatal care. And suppose the legislature, which must produce a balanced budget with finite revenue, decides to spend $2 million to provide liver transplants for several individuals who have recently received news coverage. The legislature has explicitly decided to fund transplants for a few. At the same time the legislature has implicitly decided not to fund prenatal care for many, This demonstrates that a choice for something is always a choice against something else. Now letg look at the policy that results from this decision. The explicit policy is that all citizens who need liver transplants should have coverage. The implicit policy is that not all pregnant women should have coverage for prenatal care. Put another way, covering transplants for a few becomes more important than covering prenatal care for many The legislature takes credit for "saving lives" by funding transplants but assumes no accountability for the victims of the implicit decision not to expand prenatal care. The way we answer each of the three questions carries with it both explicit and implicit policies. In the current US system, for example, the answer to the question "Who is covered?" is "Some but not all citizens." By answering the question this way, wealthy retired Americans such as former presidents Jimmy Carter and Ronald Reagan are entitled to publicly subsidized health care, whereas poor women without children are entitled to no coverage. The kind of process that can bring about responsible and lasting reform is one in which all the major political stakeholders are equal partners and one that forces them to be accountable for their positions. The Oregon Health Plan represents such a process. Its value and its lesson to the nation lie not in the specifics of the plan but rather in the process through which it was enacted.
FEBRUARY 1994 23:2 ANNALS OF EMERGENCY MEDICINE
First and foremost, the Oregon Health Plan was developed in the context of a broad consensus on the objective. Knowing the objective of reform--knowing what you want reform to accomplish--is the critical first step in effecting change. In Oregon, we believe that the objective of the health care system is not merely to give people access to health care but rather to keep people healthy. In other words, health care is but one of several means to achieve health. Infant mortality, for example, reflects more than simply a lack of prenatal care. It also reflects environmental problems, housing problems, teenage pregnancies, and the enormous problem of substance abuse. We cannot achieve the objective of health if, for example, we spend money on the medical complications of substance abuse, yet ignore the social conditions that lead to addiction in the first place. Thus, we need a health policy rather than merely a strategy to purchase health care--an integrated approach in which resource allocations for health care are balanced with allocations in related areas that also affect health. Second, the Oregon Health Plan represents a process through which to answer the three questions in a way that is consistent with the policy objective of health. This process began in 1989 and continues to evolve. To the question "Who is covered?" Oregon answered "everyone" because access to some level of health care is necessary to achieve our objective of health. Universal coverage in Oregon was accomplished with Senate Bill 27, which extended Medicaid eligibility to 100% of those at the federal level of poverty, and with Senate Bill 935, which mandated comparable employment-based coverage for workers and their dependents with family incomes above the federal poverty level. Thus, to the question of "How is health care to be financed?" Oregon answered, "Through a public/private partnership." Society, through general tax revenues, is responsible for those without the ability to pay, whereas those with incomes above the federal poverty level will receive workplace-based coverage with the costs split between the employer and the employee. To ensure that an affordable insurance product would be available to employers with 25 or fewer employees, Oregon enacted significant small-group insurance reforms, including guaranteed issue, guaranteed reissue, prohibition of pre-existing condition exclusions, and price controls on small-group insurance premiums. By moving toward universal coverage, the debate was shifted from "Who is covered?" to "What is covered?" To answer this crucial question, a Health Services Corn-
331
OREGON HEALTH PLAN Kitzhaber
mission was created, consisting of five primary care physicians, a public health nurse, a social worker, and four consumers. The commission was charged with prioritizing health services from the most important to the least important in terms of the health produced--and judged by a consideration of clinical effectiveness and social values. To carry out its charge, the Commission prioritized medical "condition/treatment pairs" gleaned from the CPT-4 codes and ICD-9 codes.* Examples are appendectomy for acute appendicitis, antibiotics for bacterial pneumonia, and bone marrow transplant for leukemia. The first priority list consisted of 709 condition/treatment pairs divided into 17 categories. The categories are prioritized based on the commission's interpretation of the social values generated from the public involvement process. Within each category, the ranking of the condition/treatment pairs reflects the benefit likely to result from each procedure and the duration of the benefit. Services in the highest category were those for patients with acute fatal conditions for whom treatment prevents death and returns the individual to his or her previous state of health (eg, an appendectomy for appendicitis). Because of the high value placed on prevention by those participating in the community outreach process, the categories of maternity care (including prenatal, natal, and postpartum care) and of preventive care for children ranked very high. Also ranked high as a direct result of the outreach process were dental care and hospice care. At the bottom of the list were categories of services for minor conditions, futile care, and services that had little or no effect on health status. Because the legislature was prohibited statutorily from altering the order of the priorities as established by the Health Services Commission, it was required to start at the top of the list and determine how much could be funded from available revenues and what additional revenues would be needed to fund an acceptable "basic" package. In this way, the question "What is covered?" was linked directly to the reality of fiscal limits. As a result of this accountable and explicit process, the 1991 Oregon legislature reached consensus on the definition of "basic care" by appropriating $33 million in new revenue, which funded all condition/treatment pairs through item 587 on the list of 709 items. * Physicians' Current Procedural Terminology and International Classification of Disease, 9th Revision.
332
The Oregon Health Plan also includes a "liability shield" for providers--a statutory distinction between actual medical malpractice, and not providing a service that society has determined not to fund. This will help reduce defensive medicine and will allow society, not the courts, to determine the level of care it wishes to guarantee to all of its citizens. In addition, this provision is essential if we hope to develop practice standards and to use them without increasing our liability exposure. Perhaps most important, however, it will allow health care providers to continue to be patient advocates within the context of the resources that society has made available. The Oregon process resulted in the enactment of comprehensive health care reforms--not through confrontation, not by excluding the medical community, and not by ducking hard choices, but rather by involving the public, the legislature, and all of the major political stakeholders in the reform effort. As a result, the Oregon Health Plan was adopted with huge bipartisan majorities and with the support of business, labor, physicians, hospitals, Blue Cross, and many consumer groups. The administration has promised to provide all Americans coverage for a "comprehensive" package of benefits--one comparable to that offered by the Fortune 500 companies but nobody has defined exactly what that means or outlined a process through which it can be clarified. And unless we define "comprehensive" as "everything for anyone who might possibly benefit"which is mutually incompatible with reducing the deficit--then some difficult choices will have to be made. Of course, the Clinton administration is reluctant to take this step because when we define what constitutes basic care, we also must define what is not basic, and I can tell you from personal experience that this issue can be very controversial. Yet to avoid it is to continue the futile debate over how to pay for "something" for "someone," which is like debating the budget for a banquet for which there is no defined menu. The responsibility will fall on physicians to reconcile the enormous difference between limited resources and the unlimited expectations raised by the president. Providers will be put in the position of limiting access, of making individual rationing decisions---either implicitly or explicitly in an environment where there is no socially (or legally) sanctioned framework in which to say "no." Although Congress and the president will escape any
ANNALS OF EMERGENCY MEDICINE 2 3 : 2 FEBRUARY 1994
OREGON HEALTH PLAN
Kitzhaber
accountability for the human consequences of their budgetary decisions by shifting the difficult choices and the accountability to physicians. It may be controversial and politically unpopular to reduce benefits, but if by "benefit" we mean something that maintains, restores, or improves health, then much of what we currently spend our health care budget on would not qualify as benefits and therefore could be eliminated without "rationing" health care and without adversely affecting health. Only physicians can bring this kind of information to the debate, and it is our responsibility to do so. Physicians must stop reacting and start leading. Unless we become a part of the solution, we will surely become victims of the solution.
FEBRUARY 1994 23:2 ANNALS OF EMERGENCY MEDICINE
Reprint no. 47/1/53109 Address for reprints: American College of EmergencyPhysicians State Legislative Department PO Box 619911 Dallas, Texas 75261-9911
333
The Oregon Health Plan: A Process for Reform From Beaverton, Oregon. This article contains excerpts from the James D Mills Lecture presented at the 1993 American College of Emergency Physicians Scientific Assembly, Chicago, Illinois, October 12, 1993. A copy of the complete speech can be obtainedfrom the ACEP State Legislative Department.
330
John A Ki~haber
[Kitzhaber JA: The Oregan health plan: A process for reform. Ann EmergMed February 1994;23:330-333] On September 22, 1993, President Clinton outlined a bold proposal to reform America's flawed and failing health care system. The general approach is to guarantee all Americans coverage through a uniform comprehensive package of benefits paid for by a combination of tax dollars and premiums paid by individuals and employers. All Americans except those on Medicare and those working for businesses with more than 5,000 employees will be required to join a regional purchasing alliance. (Businesses with more than 5,000 employees will negotiate directly with health plans to purchase the uniform comprehensive benefit. Individuals on Medicare will not be affected unless their state obtains a federal waiver to enroll Medicare beneficiaries in a regional alliance.) These regional alliances will pool the insurance premiums of thousands of individuals, including most workers, the self-employed, retirees not old enough to qualify for Medicare, and the unemployed. This combined purchasing power will be used to negotiate with health plan providers to obtain a uniform comprehensive benefit package. The health plans will compete with each other on the basis of cost, quality, and patient satisfaction. It is believed that this "managed competition" will help control medical cost inflation. In addition, a National Health Board will set national and regional limits on health care spending, creating, in effect, a centrally determined global budget. The congressional debate over this plan is expected to be long and heated, and the outcome is far from certain. And although there may be much to criticize about the Clinton health care plan, there also is much to recommend it. In many ways it is remarkably similar to the Oregon Health Plan, which will go into effect on February 1, 1994. Both plans seek to achieve universal coverage with a comprehensive benefit package through a public-private partnership that builds on the current employment-based insurance system. Both involve an
ANNALS OF EMERGENCY MEDICINE
23:2 FEBRUARY 1994
OREGON HEALTH PLAN Kitzhaber
employer mandate, and both regulate the insurance industry. Health care reform can be viewed quite simply as a debate over how to answer three questions: "Who is covered?" "What is covered?" and "How is health care to be financed and delivered?" Moreover, these questions must be explicitly answered in a way that is consistent with an agreed-on objective. Letg pause a moment and discuss the term "explicit." The concept of explicit and implicit choice is very important in understanding how the health care crisis developed--and thus is very important in understanding how to craft a solution. Suppose you live in a state where only 50% of poor pregnant women are covered for prenatal care. And suppose the legislature, which must produce a balanced budget with finite revenue, decides to spend $2 million to provide liver transplants for several individuals who have recently received news coverage. The legislature has explicitly decided to fund transplants for a few. At the same time the legislature has implicitly decided not to fund prenatal care for many, This demonstrates that a choice for something is always a choice against something else. Now letg look at the policy that results from this decision. The explicit policy is that all citizens who need liver transplants should have coverage. The implicit policy is that not all pregnant women should have coverage for prenatal care. Put another way, covering transplants for a few becomes more important than covering prenatal care for many The legislature takes credit for "saving lives" by funding transplants but assumes no accountability for the victims of the implicit decision not to expand prenatal care. The way we answer each of the three questions carries with it both explicit and implicit policies. In the current US system, for example, the answer to the question "Who is covered?" is "Some but not all citizens." By answering the question this way, wealthy retired Americans such as former presidents Jimmy Carter and Ronald Reagan are entitled to publicly subsidized health care, whereas poor women without children are entitled to no coverage. The kind of process that can bring about responsible and lasting reform is one in which all the major political stakeholders are equal partners and one that forces them to be accountable for their positions. The Oregon Health Plan represents such a process. Its value and its lesson to the nation lie not in the specifics of the plan but rather in the process through which it was enacted.
FEBRUARY 1994 23:2 ANNALS OF EMERGENCY MEDICINE
First and foremost, the Oregon Health Plan was developed in the context of a broad consensus on the objective. Knowing the objective of reform--knowing what you want reform to accomplish--is the critical first step in effecting change. In Oregon, we believe that the objective of the health care system is not merely to give people access to health care but rather to keep people healthy. In other words, health care is but one of several means to achieve health. Infant mortality, for example, reflects more than simply a lack of prenatal care. It also reflects environmental problems, housing problems, teenage pregnancies, and the enormous problem of substance abuse. We cannot achieve the objective of health if, for example, we spend money on the medical complications of substance abuse, yet ignore the social conditions that lead to addiction in the first place. Thus, we need a health policy rather than merely a strategy to purchase health care--an integrated approach in which resource allocations for health care are balanced with allocations in related areas that also affect health. Second, the Oregon Health Plan represents a process through which to answer the three questions in a way that is consistent with the policy objective of health. This process began in 1989 and continues to evolve. To the question "Who is covered?" Oregon answered "everyone" because access to some level of health care is necessary to achieve our objective of health. Universal coverage in Oregon was accomplished with Senate Bill 27, which extended Medicaid eligibility to 100% of those at the federal level of poverty, and with Senate Bill 935, which mandated comparable employment-based coverage for workers and their dependents with family incomes above the federal poverty level. Thus, to the question of "How is health care to be financed?" Oregon answered, "Through a public/private partnership." Society, through general tax revenues, is responsible for those without the ability to pay, whereas those with incomes above the federal poverty level will receive workplace-based coverage with the costs split between the employer and the employee. To ensure that an affordable insurance product would be available to employers with 25 or fewer employees, Oregon enacted significant small-group insurance reforms, including guaranteed issue, guaranteed reissue, prohibition of pre-existing condition exclusions, and price controls on small-group insurance premiums. By moving toward universal coverage, the debate was shifted from "Who is covered?" to "What is covered?" To answer this crucial question, a Health Services Corn-
331
OREGON HEALTH PLAN Kitzhaber
mission was created, consisting of five primary care physicians, a public health nurse, a social worker, and four consumers. The commission was charged with prioritizing health services from the most important to the least important in terms of the health produced--and judged by a consideration of clinical effectiveness and social values. To carry out its charge, the Commission prioritized medical "condition/treatment pairs" gleaned from the CPT-4 codes and ICD-9 codes.* Examples are appendectomy for acute appendicitis, antibiotics for bacterial pneumonia, and bone marrow transplant for leukemia. The first priority list consisted of 709 condition/treatment pairs divided into 17 categories. The categories are prioritized based on the commission's interpretation of the social values generated from the public involvement process. Within each category, the ranking of the condition/treatment pairs reflects the benefit likely to result from each procedure and the duration of the benefit. Services in the highest category were those for patients with acute fatal conditions for whom treatment prevents death and returns the individual to his or her previous state of health (eg, an appendectomy for appendicitis). Because of the high value placed on prevention by those participating in the community outreach process, the categories of maternity care (including prenatal, natal, and postpartum care) and of preventive care for children ranked very high. Also ranked high as a direct result of the outreach process were dental care and hospice care. At the bottom of the list were categories of services for minor conditions, futile care, and services that had little or no effect on health status. Because the legislature was prohibited statutorily from altering the order of the priorities as established by the Health Services Commission, it was required to start at the top of the list and determine how much could be funded from available revenues and what additional revenues would be needed to fund an acceptable "basic" package. In this way, the question "What is covered?" was linked directly to the reality of fiscal limits. As a result of this accountable and explicit process, the 1991 Oregon legislature reached consensus on the definition of "basic care" by appropriating $33 million in new revenue, which funded all condition/treatment pairs through item 587 on the list of 709 items. * Physicians' Current Procedural Terminology and International Classification of Disease, 9th Revision.
332
The Oregon Health Plan also includes a "liability shield" for providers--a statutory distinction between actual medical malpractice, and not providing a service that society has determined not to fund. This will help reduce defensive medicine and will allow society, not the courts, to determine the level of care it wishes to guarantee to all of its citizens. In addition, this provision is essential if we hope to develop practice standards and to use them without increasing our liability exposure. Perhaps most important, however, it will allow health care providers to continue to be patient advocates within the context of the resources that society has made available. The Oregon process resulted in the enactment of comprehensive health care reforms--not through confrontation, not by excluding the medical community, and not by ducking hard choices, but rather by involving the public, the legislature, and all of the major political stakeholders in the reform effort. As a result, the Oregon Health Plan was adopted with huge bipartisan majorities and with the support of business, labor, physicians, hospitals, Blue Cross, and many consumer groups. The administration has promised to provide all Americans coverage for a "comprehensive" package of benefits--one comparable to that offered by the Fortune 500 companies but nobody has defined exactly what that means or outlined a process through which it can be clarified. And unless we define "comprehensive" as "everything for anyone who might possibly benefit"which is mutually incompatible with reducing the deficit--then some difficult choices will have to be made. Of course, the Clinton administration is reluctant to take this step because when we define what constitutes basic care, we also must define what is not basic, and I can tell you from personal experience that this issue can be very controversial. Yet to avoid it is to continue the futile debate over how to pay for "something" for "someone," which is like debating the budget for a banquet for which there is no defined menu. The responsibility will fall on physicians to reconcile the enormous difference between limited resources and the unlimited expectations raised by the president. Providers will be put in the position of limiting access, of making individual rationing decisions---either implicitly or explicitly in an environment where there is no socially (or legally) sanctioned framework in which to say "no." Although Congress and the president will escape any
ANNALS OF EMERGENCY MEDICINE 2 3 : 2 FEBRUARY 1994
OREGON HEALTH PLAN
Kitzhaber
accountability for the human consequences of their budgetary decisions by shifting the difficult choices and the accountability to physicians. It may be controversial and politically unpopular to reduce benefits, but if by "benefit" we mean something that maintains, restores, or improves health, then much of what we currently spend our health care budget on would not qualify as benefits and therefore could be eliminated without "rationing" health care and without adversely affecting health. Only physicians can bring this kind of information to the debate, and it is our responsibility to do so. Physicians must stop reacting and start leading. Unless we become a part of the solution, we will surely become victims of the solution.
FEBRUARY 1994 23:2 ANNALS OF EMERGENCY MEDICINE
Reprint no. 47/1/53109 Address for reprints: American College of EmergencyPhysicians State Legislative Department PO Box 619911 Dallas, Texas 75261-9911
333