With the passage of Senate Bill 889, Oregon becomes the fourth state to set a spending benchmark to rein in the rising costs of health care.
Modeled after a program in Massachusetts, SB 889 creates the Oregon Health Care Cost Growth Benchmark Program. The program will set a state spending growth target that all insurance companies, hospitals and health care providers would have to stay within.
"Health care costs keep growing at a level that’s not sustainable for family budgets, businesses, or the state budget," said Jeremy Vandehey, director of Health Policy and Analytics at the Oregon Health Authority. "In Massachusetts, this policy saved $5.5 billion for consumers between 2013 and 2016. That’s the kind of savings we want to bring to Oregon families and businesses."
Research shows that Oregonians pay more for health care and have higher deductibles than residents in other states. Oregon has the third highest health insurance deductibles in the country and is in the top 10 highest states for family budgets spent on out-of-pocket hospital costs. Oregon has already established a 3.4 percent growth rate for public programs, but there isn’t a similar target for the private market, where almost half of Oregon residents get their health insurance.
"We must do something about the rising cost of health care and the pressure it’s putting on Oregon families," said Representative Rob Nosse (D-Portland). "With health care spending making up nearly 20 percent of the economy, this bill offers us an opportunity to set a target for lower spending and to better understand the drivers of cost increases, so we can do a better job of controlling them."
SB 889 establishes a citizen- and stakeholder-led Implementation Committee selected by Governor Brown and under the supervision of the Oregon Health Policy Board. It will determine the details of the program, including establishing what the benchmark should be and how the measurement of the total cost of care should be designed. The committee will also provide recommendations on how entities with unreasonable cost increases will be held accountable. These accountability measures will have to be adopted by the 2021 Legislature.
"This bill is the result of legislators, hospitals, insurers, consumers and labor coming together to look at the most promising ideas for containing health care costs," said Senator Lee Beyer (D-Springfield). "It will bring everyone to the table to work towards a common goal of holding health care costs down for all Oregonians."
SB 889 passed the Oregon House of Representatives today by a vote of 46 to 12 and passed the Senate unanimously June 13. Rhode Island and Delaware have also adopted health care cost growth benchmark programs. Oregon's first report on total health care spending and analysis of health price increases is expected to be released in fall 2021.