Jan. 12, 2021

Contact: Philip Schmidt, 503-383-6079, philip.schmidt@dhsoha.state.or.us

Committee to address rising health care costs issues new recommendations to Legislature

Today, a committee led by policy experts, citizens and stakeholders took steps that will help put Oregon on a path to keep health care costs in check. The Implementation Committee for Oregon’s Sustainable Health Care Cost Growth Target Program adopted recommendations to the Legislature to inform actionable strategies to make it easier to understand what is driving up costs and how to address this problem.

The Committee envisions a process to ensure that health care costs are contained in the public and private sector with accountability mechanisms for health care entities. Oregon is only the second state in the nation to pass health care cost growth target legislation and the fourth to adopt such a program.

“While we have improved quality and access to health care in Oregon and expanded affordable insurance coverage to 94% of Oregonians, including all children, rising health care costs present a significant hurdle for far too many,” said Governor Kate Brown. “Per capita health care costs in Oregon are growing faster than the national average, and too many families who have insurance can’t use it due to out-of-pocket costs. This has real and disproportionate impacts on Oregonians who already face health inequities. I’d like to thank the members of the committee for their efforts to promote transparency, collaboration and meaningful accountability in addressing costs and sustainability in Oregon’s health care system. The cost growth target they have set will save more than $11 billion in commercial and Medicaid costs in the next eight years, while also promoting quality and equity. I remain committed to implementing this program, which passed with broad bipartisan support, as a critical element of Oregon’s future health transformation efforts.”

“Today’s recommendations are deeply important to our shared goal of containing health care costs for families and businesses in Oregon," said Patrick Allen, Oregon Health Authority Director. “These recommendations will shine a light on parts of our healthcare entire system that are most expensive and create tools to bring costs down. If we cannot get health care costs under control, our entire system and our efforts to transform the system are threatened. Now we have a plan to keep this aspect of transformation on track."

A full report detailing the Committee’s recommendations will be submitted to the Legislature next week.

The committee actions included:

• Setting Oregon’s health care cost growth target at 3.4% for the first five years (2021-2025). The 3.4% target is based on historical economic data including Oregon’s gross state product and median wage;
• Agreeing to collect data for 2018-2020 to understand health care cost growth in Oregon prior to the target and to understand the impacts of COVID-19;
• Adopting data use strategy goals and principles;
• Adopting principles for accelerating advanced value-based payment models across payers
• Establishing a plan to monitor for unintended consequences of the cost growth target, such as barriers to access;
• Recommending to the Legislature that payers and provider organizations who exceed the cost growth target for “unreasonable” reasons in CY 2022 or beyond will be required to submit a Performance Improvement Plan and may be subject to financial penalties; and
• Recommending that the Implementation Committee oversees program implementation in 2021, followed by a permanent successor committee for ongoing governance in 2022.

“For too long, families and individuals have struggled with rising premiums, high out-of-pocket costs and health care costs that prevent them from getting the care and coverage they need,” said Sen. Lee Beyer, member of the Senate Health Care Committee. “Today we take the next step in changing that reality for all Oregonians. I look forward to working with my colleagues in the Legislature to do our part in implementing these recommendations.”

“The facts are plain: We have an inequitable health care system that is far too expensive,” said Rep. Rob Nosse, Co-Chair of Ways and Means Human Services Subcommittee. “We cannot address equity and access to care without addressing costs. I’m grateful for the work of the Implementation Committee and look forward to putting their recommendations in place.”

“I am deeply appreciative of the hard work that all the Committee members undertook this year,” said Jack Friedman, Chair of the Implementation Committee. “This is a tough conversation but one that we had to have. Our committee members came with ideas, with openness to dialogue and with the spirit of collaboration that we so prize in Oregon. I’m pleased to report that we have a strong plan to present to the Legislature, which we believe will help our state achieve the goal of controlling health care cost growth."”

The Implementation Committee operated from the understanding that Oregonians pay more for health care and have higher deductibles than residents in other states. And while Oregon has already established a 3.4% growth rate for public programs, there has been agreement that Oregon must limit cost growth in the private market, where almost half of Oregon residents get their health insurance.

“Today’s meeting reminded me yet again that Oregonians have a track record of deeply meaningful work on issues relating to healthcare,” said Kevin Ewanchyna, M.D., Vice Chair of the Implementation Committee. “I thank each member and our various partners for the seriousness with which they took on this work and for their dedication to a process that has led to an important set of recommendations.”

Under the supervision of the Oregon Health Policy Board, this citizen- and stakeholder-led implementation committee was established by Senate Bill 889, which passed during the 2019 Legislative Session. In addition to setting an annual target for costs, the committee is providing recommendations for the Legislature to adopt in 2021 on how entities with unreasonable cost increases will be held accountable.

The Sustainable Health Care Cost Growth Target is modeled after a program in Massachusetts that has saved $5.5 billion for consumers between 2013 and 2016. Rhode Island, Delaware and Connecticut have also adopted similar programs.

More information about the initiative can be found at: https://www.oregon.gov/oha/HPA/HP/Pages/Sustainable-Health-Care-Cost-Growth-Target.aspx.