Feeling the Sting of a Cut

Oregon pares back its health plan to keep it alive
by | August 2004

In an effort to save Oregon's beleaguered health plan, state officials in June announced a halt to enrollment in the plan's standard benefit package.

Begun in 1994 with a federal waiver, Oregon's health plan limits medical services to Medicaid recipients based on a ranking of services and offers a similar standard-benefits package to other low-income adults. Although the plan was initially hailed as a model of state-run indigent health care, underfunding and federal restrictions on the state's ability to cut medical services from the list have left the program on the brink of collapse.

The enrollment freeze, which took effect in July, is part of a plan to reduce the number of standard-care recipients from the current 50,700 to under 25,000 by July 2005. While some of that reduction can be accomplished through natural attrition, Cindy Becker, deputy director of the Oregon Department of Human Services, says the state will likely initiate more aggressive "disenrollment strategies"--such as reducing income eligibility for existing members. Currently, residents whose incomes are 100 percent of the federal poverty level are eligible for the standard plan. "That level," Becker says, "will be reduced by at least half."

But the state may have to make even deeper cuts if federal lawmakers do not approve a hospital tax legislators passed last year. Without that revenue, Oregon's standard benefit package could only support about 15,000. In that case, Becker says, the state would accelerate its efforts to cut income eligibility, perhaps pegging it as low as 30 percent of the federal poverty rate.

Zach Patton | Executive Editor | zpatton@governing.com