Oregon Plan Would Ration Health Care, Cover Every Resident : Medicine: Led by a physician-legislator, the state has embarked on a radical plan to ensure that basic needs are met while dealing with fiscal realities.

It all began in the sterile, unremarkable business of state budget-cutting. The time was May, 1986. Groping to confront a $35.4-million revenue shortfall, Oregon legislative leaders voted to drop 4,300 state residents from the state’s Medicaid program.

Sen. John Kitzhaber was frankly astonished at how easy it was. With a stroke of the pen, legislators had taken insurance coverage away from a sizable number of Oregonians. Few of his fellow legislators would think twice about it as they returned to their law offices and businesses.

But for Kitzhaber, a physician recently elevated to president of the state Senate, it was different. When he arrived back at his post in the emergency room in Roseburg, a small timber town two hours south of the state capital, Kitzhaber saw and treated several people who had lost coverage.

In each case, these patients “had delayed seeking treatment for minor problems because of their concern over how to pay for the care. In each case, the minor problems had evolved into much more serious ones,” he recalled. One patient had a minor infection that turned into pneumonia, requiring hospitalization and the use of costly intravenous antibiotics.

“Legislators never had to confront the victims of the silent rationing or be accountable for the very human consequences,” he said. “It was like high-level bombing, where the crew never sees the faces of the people they are killing.”

At least in Oregon, Kitzhaber resolved, legislators would begin seeing those faces.

Kitzhaber is one of the two or three most powerful politicians in Oregon. Yet he is an improbable figure in the Legislature. He is a liberal who has embraced the politics of fiscal limits that might be expected from a conservative Republican. He presides over legislative meetings in blue jeans and cowboy boots. He drives himself around in a Chevy Blazer.

With his tall, angular physique, ruddy complexion and bushy mustache, he bears a strong resemblance to advertising’s Marlboro Man. And while he does not smoke--he is a doctor, after all--he is an avid outdoorsman whose idea of a good time, friends say, is rafting down the North Umpqua River near Roseburg, riding horseback and creating folk songs.

It seems incongruous that this affable, wry, self-described liberal Democrat is at the center of a national storm over health care. That is because he is the author of Oregon’s radical health initiative that rations services while it extends coverage to every resident in the state.

In the process, he has challenged the Bush Administration and incurred the wrath of such erstwhile allies as the Children’s Defense Fund and Rep. Henry Waxman (D-Calif.), one of the most powerful health care advocates on Capitol Hill.

What is it about Kitzhaber that gets people so worked up?

His supporters say it is his willingness to force people to come to grips with the fundamental contradictions in the country’s health care policies:

How Americans are willing to pay for any kind of health care for people with insurance, yet deny any coverage to more than 35 million without insurance. How millions of dollars are poured into futile efforts to save people in the final days of their lives, yet relatively little attention is focused on simple prenatal and primary care that could prevent disease in the first place. And, even with $800 billion spent across the nation each year on all medical treatment, how there is not enough money to pay for all the health care and biotechnical gymnastics Americans would like to buy.

The Oregon experiment is the most far-reaching health care reform plan in the nation. In the political furor over rising medical costs and cutbacks in services and coverage, states have taken the lead in exploring new ways to address these issues. Hawaii has long operated a universal health plan for its residents, and other states like Minnesota and Vermont have recently approved plans to follow suit.

But no state has combined expansion of coverage with an explicit effort to “ration” health care to participants in Medicaid, the federal-state insurance for the poor and disabled.

Under Oregon’s novel plan, the state ranked 709 health care services in order of priority, estimated the cost of providing those services, and then drew a line on the list. Everything above 587, including prenatal care, surgery for a ruptured spleen and certain types of transplants, would be paid for by the state. Everything below, including treatments for bursitis or the common cold, would not be covered.

Legislators also expanded the Medicaid program to include all people under the federal poverty line (about $11,200 in annual income for a family of three), required employers to offer health insurance for their employees and dependents, and set up a small-business pool to make insurance affordable. The plan mandated wider use of health maintenance organizations and other so-called managed-care programs to cut Medicaid costs and established a commission to oversee the spread of expensive medical technologies.

Oregon officials justify this utilitarian scheme in terms of a trade. While saving money by scaling back what would be considered nonessential services for people already in the Medicaid program, the state would simultaneously take steps to cover 120,000 people who live below the federal poverty level but do not qualify under current rules. An additional 330,000 Oregonians without health insurance would be covered under a requirement that all businesses cover their employees and that a state-run insurance pool for individuals be created.

Kitzhaber and other Oregonians reason that providing some basic level of health care benefits for everybody is better than the current patchwork system. “We’re rationing already,” said Alan C. Bates, an Oregon physician and member of the Health Services Commission that devised the priority list. “Now we’re going to do it out in the open.”

The plan, adopted by the state Legislature in 1989, has yet to go into effect because the state needs the approval of the federal government to waive certain provisions of the Social Security Act governing Medicaid programs. Health and Human Services Secretary Louis Sullivan is expected to act shortly on Oregon’s waiver request, after nearly a year of deliberations.

Although President Bush has said he would like to see more state initiatives to deal with health and welfare issues, the Administration has been slow to consider the Oregon experiment.

Meanwhile, the state plan has drawn fierce criticism from influential legislators, principally Sen. Al Gore (D-Tenn.) and Waxman, the chairman of an important House subcommittee that deals with Medicaid and other health issues. Waxman has tried to block the waiver. In a recent letter to Sullivan, he termed the Oregon proposal offensive and questioned the fairness of “a government rationing proposal that affects only low-income families.” Waxman has also raised concerns about the lack of a guaranteed minimum benefit level for Medicaid recipients in Oregon.

The proposal also has sharply divided the health care community. Daniel Callahan, director of the Hastings Center for Medical Ethics in New York, and David Eddy, a former Duke University professor and an expert on medical practice guidelines, both support the plan as an important, albeit imperfect, first step toward breaking the deadlock on health care reform.

Brookings Institution economist Henry J. Aaron, by contrast, has said the plan should be scrapped because of serious flaws in the way Oregon drew up its priority list--a source of contention in medical journals. The Children’s Defense Fund, a national nonprofit advocacy group that lobbies for increased social programs, says Oregon already has a skimpy Medicaid plan and has no right to ration services any further.

“I have impeccable liberal credentials in the social area,” Kitzhaber said. His anger is directed at Congress and the liberal advocacy groups. “The difference is they don’t have to deal with fiscal limits. They are not accountable for their decisions. They don’t have to be accountable for the human consequences of the current system.

“I’m willing to defend the Oregon program, and it’s got lots of deficiencies. It’s not perfect.”

But the status quo, he argues, has more deficiencies. “If we don’t get the waiver, what you’re basically saying is that we should continue excluding 65,000 women and children from the system.

“They (federal legislators and the Administration) have this convenient little system based on the realities of 1965. It’s 25 years since they passed major, sweeping legislation (on health care) in this country. They require that we provide all medically necessary services for people who are eligible, with no recognition that today what is medically necessary is often just an intervention divorced from its effect in terms of poor health. They have a program in which if you’re over 65 and making $5 million a year, you are entitled to publicly subsidized health care (Medicare), and if you’re a poor woman without kids you have no such entitlement.”

He fumes. “They never defend their system.”