Health Care Costs and Financing

Increasing premiums and other costs in Oregon's Medicaid program in 2003 led many to drop out

Oregon's Medicaid program was created to be a sustainable program that could weather budgetary storms without having to cut enrollees. However, a study done in Oregon in the wake of a 2003 fiscal crisis shows that the redesign of its Medicaid program was a key factor in the disenrollment rate rising to 77 percent and the number of enrollees falling from 104,000 to 24,000 between February 2003 and November 2005.

In 2003, the Oregon Health Plan was split into two parts. The first part, Oregon Health Plan Plus, to which no changes were made, was for those who fit into the Federal government's mandatory coverage categories for Medicaid, such as low-income pregnant women and disabled adults. The second part, Oregon Health Plan Standard, to which major changes were made, was for those who qualified under Oregon's State-specific rules—in particular, nondisabled adults and couples earning less than the Federal poverty level.

Under the redesigned program, persons enrolled in the standard plan faced higher premiums, greater cost sharing, and strict payment deadlines. Some categories of services such as mental health and substance abuse, dental care, and durable medical equipment were eliminated. Some mandatory point-of-service copayments were added. The premiums nearly doubled for couples, with exemptions eliminated for homeless people and those with zero income. Finally, for those who did not pay premiums on time, a 6-month "lockout" was imposed.

Recent data show a dramatic increase in States' Medicaid enrollees while at the same time three-quarters of the States report a possible Medicaid budget shortfall in fiscal year 2010. The researchers conclude that as policymakers consider various ways to contain costs in these difficult economic times, it is vital that they understand the likely impact of increased cost sharing and other changes on vulnerable Medicaid populations. This study was supported by the Agency for Healthcare Research and Quality (HS16119).

See "Raising premiums and other costs for Oregon health plan enrollees drove many to drop out," by Bill J. Wright, Matthew Carlson, Heidi Allen, and others in Health Affairs 29(12), pp. 2311-2316, 2010.

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