OR May Cut ACA Medicaid Expansion Funds to Favor State Budget

April 24, 2017 - The Oregon state legislature is considering a retraction of Medicaid expansion and benefits to address an anticipated $1.8 billion budget shortfall between 2017 and 2019.  The move to cut back Medicaid could potentially leave more than 355,000 people without any healthcare coverage. 

The budget was proposed in January by Joint Ways & Means Committee co-chairs Senator Richard Devlin (D- Tualatin) and Representative Nancy Nathanson (D- Eugene) as a way to reduce the budget deficit without raising revenues through taxation.   Oregon is currently one of four states in the US with no sales tax. 

Senate President Peter Courtney does not expect the budget discussion to end soon.  “"We have until midnight July 10," he recently told The Oregonian. "If we don't balance the budget by then, we have to come back. In my opinion, we're going to be here all summer."

As written, the proposed budget would reduce funding to the Oregon Health Authority (OHA) by 27.5 percent from current levels.  This decrease would trim over $881 million from OHA over the next few years.

The removal of 335,000 individuals from Medicaid would also equate to a $1.2 billion decrease in federal funds.  Federal matching for Medicaid expansion under the Affordable Care Act was already scheduled to drop in 2016 from 100 percent to 95 percent, with the remainder to be made up for by the states. 

The proposed reductions would result in fewer funds for the Community Care Organization (CCOs) program, reduction in dental care and addiction services, closure of parts of Oregon State Hospital, reduced funding for Babies First, School-based Health Centers, Family Planning Services, Tobacco Cessation Programs, County Health Departments and the elimination of health insurance for the 355,000 residents receiving Medicaid coverage as a result of the Affordable Care Act.

Oregon began its own state Medicaid expansion in 1994, well ahead of the 2010 passage of the ACA.   The Oregon Health Plan has been offering coverage to those with incomes up to 100 percent of the poverty level since 1994.  

Data from the Kaiser foundation shows that in the fall of 2013, Oregon’s Medicaid program enrolled 626,356 residents.  By March of 2016, over 450,605 had been added, for a total over one million people, an increase of 72 percent. 

Overall, including private plans subsidized by ACA provisions, Oregon showed a 10.3 percent reduction in uninsured residents across the state from 2013 to 2016.  This put Oregon at number six in the nation for largest reduction of uninsured adults.

The proposed budget cutbacks are particularly troubling to public healthcare advocates concerned about the damage that may occur to Oregon’s successful network of Coordinated Care Organizations (CCOs).   Any reduction of Medicaid expansion programs would directly affect the state’s network of CCOs, who receive funding on a per-member basis. This could present a situation where the programs may no longer afford to continue.

Oregon has been a leader in establishing CCOs, similar to other accountable care organization arrangements, with 16 now operating across the state.  The population health and preventative care based model has shown to be effective in cutting costs, and streamlining healthcare to residents. 

CCOs have led to expanded primary care access and a statewide decrease in emergency room use. These changes, particularly in the Medicaid population, has resulted in total reduction of healthcare costs.

Oregon CCOs also offer extensive adult dental care to Medicaid recipients.  Oregon is one of only 14 states that offers full oral health care through the ACA expansion programs.

The network of CCOs, coupled with the state’s innovative Patient Centered Primary Care Home (PCPCH) initiative, has moved the statewide system to one focused on “patient- and family-centered approach to all aspects of care, wellness, and prevention.”  The six-year-old PCPCH program currently operates in 620 clinics, comprising two-thirds of primary care facilities in the state. 

With the future unclear for federal funding, or continued Medicaid expansion, Oregon could be a bellwether for other state’s across the nation as they grapple with expanding health access and budget limitations.