Oregon Health Plan’s Future is Suddenly Uncertain

Does the Oregon Health Plan have a price on its head? If the incoming administration’s pick for Secretary of Health and Human Services is approved, the OHP may have the boot of Rep. Tom Price on its neck. The Georgia congressman has hated Obamacare since the beginning. He may come to Oregon looking for a refund of the $1.9 billion the feds granted the state in 2012.

Oregon’s reputation for health care reform is unmatched. We chose an emergency room physician as our governor four times. During John Kitzhaber’s eight-year hiatus from the governor’s mansion, he continued thinking deeply about health care issues, building on the reforms he first championed when he was a state senator.

When Barack Obama was swept into the White House in 2009, many expected Kitzhaber to be tapped as some sort of health care czar. Obama had different ideas, and so did the former and future governor.

Where the Bush presidency used so-called policy czars to muscle changes on Capitol Hill, Obama preferred using states as incubators for innovation. The best and highest use of the federal government, Obama reasoned, was to define the metrics for success and provide resources for experimentation. States would then naturally learn from one another.

Once it was clear that Obama would make a priority of health care reform, Kitzhaber launched his campaign for a third term as governor. As a seasoned politician steeped in health care reform, his stature put Oregon at the front of the line. Oregon received nearly $2 billion from the feds to design Coordinated Care Organizations across the state.

Kitzhaber in 2012 called it the “final building block to creating a better model of care, and Oregon is ready to demonstrate how local communities can lead the nation in keeping people healthier over the long term in a more effective way.”

Obama’s White House coined a term for these innovation prizes given to states. “Race to the top” represented a deliberate rebuke to blind pursuit of economic efficiency. Who wants to be at the bottom so badly that they’ll race to get there?

But now that race may be canceled in the middle of the event, rained out by a new president who has his own affinity for czars. Will Oregon have to repay any of its Obamacare innovation funding? It’s too soon to know what will happen. But Oregon had better be ready for the worst.

Kitzhaber has returned to private life, for which he may be feel suddenly grateful. What comes next for the neediest among us could be heart-rending for the first responders.

It’s time to return to first principles. That may help move the conversation forward. Embedded in Obama’s “race to the top” model is a fundamental truth: Not every social problem can be solved by unfettered economics. Capitalism has its limits, and health care is where many of us meet them.

Capitalism posits that supply and demand self-regulate when pricing interference is removed. If supply is limited, the price will rise and demand will fall until a natural equilibrium is reached. But that “invisible hand” achieves no such balance when the demand is for a life-saving drug or dialysis treatments. Life itself is not a commodity in that way. Demand for it is limitless, so pricing must be controlled in other ways.

Price controls are inevitable. So are supply limits. “Death panels” notwithstanding, government cannot provide every drug and every procedure to every patient. Adam Smith’s “invisible hand” fails here, too. Decisions must be made. The best we can hope is for rationing to be rational.

The Oregon Health Plan’s first and most profound innovation was to limit procedures with low success rates or for patients with other complications — including old age.

Rationing is being debated because universal access to health care is not. President Reagan and House Speaker Tip O’Neil settled that issue when they crafted the Emergency Medical Treatment and Active Labor Act (EMTALA) in 1986. Hospitals that accept any federal funds are not allowed to turn away patients.

As local civic leader Terry MacDonald once told me, “Until Americans are willing to step over the dead and dying on their sidewalks, we will always have some version of universal health care.” People go to the emergency room to get the care they need, which may be where physician Kitzhaber first thought, “There’s gotta be a better way.”

Don Kahle (fridays@dksez.com) writes a weekly column for The Register-Guard and blogs at www.dksez.com.