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June 10, 1991
"Oregon's Cure for Health Care"
San Jose Mercury News

By Timothy Taylor
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THE STATE of Oregon is contemplating a plan that would guarantee universal access to health care for all state residents, at no additional cost to the state, to taxpayers or to business.

Is it budgetary black magic? Fiscal flimflam? No. It's a matter of facing up to some tough realities, like the idea that everyone can't have everything they might want, and that not all medical care is equally important.

In fall of 1989, an 11-member Health Services Commission was appointed by the governor of Oregon and directed by law to develop "a list of health services ranked by priority from the most important to the least important."

The implication behind this request was clear enough. As in all states, patients can be divided into those with private health insurance, those with public health insurance (through Medicaid or Medicare), and those with no health insurance and limited access to medical care. Based on the commission's priority list, Oregon would contemplate reducing the variety of care offered by Medicaid, and using the money instead to assure universal access to basic health care.

As one would expect, deciding what is "basic" took several years of controversial and emotional public hearings and private discussion. It involved considerations of how important a given health service might be to an individual who needed it, how essential it was to a basic care package, whether it was cost-effective for society, how many people the service affected, how effective treatment was likely to be, and how treatment would affect overall quality of life.

A total of 709 items were on the list, and a selection of the most and least important appear in the table at right. To generalize about them a bit, notice that items at the very top of the list are mainly conditions where treatment can prevent death and lead to full recovery, along with maternity care and some other items.

Some of the items at the bottom of the list are there because they are trivial. But others are conditions where medical treatment is likely to be extremely costly and perhaps not effective. In the judgment of the commission, substantial spending on these conditions should be avoided.

The Oregon experiment is important because it faces up to the fundamental problem with America's system of health care: Too many people have too much health insurance.

Patients with generous health insurance don't much care about limiting their demand for medical services, even if they should happen to have the rare knowledge to diagnose their own medical condition. When doctors know: 1) that the amount they are paid often depends on how many procedures they undertake; 2) that patients are insured and 3) that skipping any procedures may lead to a malpractice suit, they also have little incentive to hold down costs.

The result is predictable: the amount of money spent on medical care grows out of control. The United States devotes about 12 percent of its economy to health expenditures. For comparison, United Nations figures show that Canada devotes 8.3 percent of GNP to health; Japan, 6.8 percent; United Kingdom, 6.1 percent; Germany, 8.2 percent; Sweden, 9 percent; Italy, 6.9 percent. Health in those countries is not measurably worse than in the United States; in fact, it is often better.

With no incentives to control costs, inflation in medical costs runs wild. Since 1979, consumer prices as a whole have risen by 84 percent, but medical care prices have risen by 150 percent.

This surge in medical prices has created differences in treatment between those who have insurance and those who do not. For example, one recent study by researchers at Georgetown and Johns Hopkins universities found that insured patients had more tests taken where the results showed no problems than did the uninsured. Uninsured patients were sicker when admitted to hospitals, but had shorter hospital stays and fewer high-cost, discretionary procedures; and were about twice as likely to die in the hospital.

The next step in Oregon is for the Legislature to examine the list of health-care items, and decide what trade-offs to make. Under the terms of the original legislation, however, the Legislature cannot alter the order of the list.

For the rest of the country, the importance of the Oregon experiment is that it may eventually lead to a system where a minimum level of health care is guaranteed to all U.S. citizens. Anyone who wants more than the basic package will need to buy additional private insurance, which may not come cheap.

Many of the current proposals to offer universal access to medical care pretend that no one has to pay for it. Often, this is the "let business pay for it" school of thought. But just giving more insurance to more people is like pouring gasoline on the rising fire of medical costs. On present trends, U.S. health care spending will already be 15 percent of GNP by the turn of the century.

Other proposals attempt to control costs by brute force. Often, this is the "make those overpaid doctors suffer" school of thought. But while it makes sense to drive a hard bargain with medical care providers, going too far simply discourages the provision of medical care to poor and uninsured people.

No nation, not even one as wealthy as the United States, can guarantee all the medical care that any patient wants. But by defining limits, it could be possible to assure that no child need go without immunizations or annual check-ups, no pregnant woman without prenatal care, no adult without screening for cancer and hypertension, no one without care for emergencies or readily treatable sicknesses.

The United States spends enough on medical care right now, but over 30 million Americans still have no health insurance. The country will only get its money's worth when it goes through the hard work of setting priorities.

The Oregon Health Services Commission ranked 709 condition/ treatment pairs from most important to least important. Here are selections from the top 25 and the bottom 25 on the list.

Most important

  • Pneumonia
  • Foreign body in larynx or trachea
  • Appendicitis
  • Ruptured intestine or spleen
  • Injury to major blood vessels of upper extremity
  • Acute pelvic inflammatory disease
  • Anaphylactic shock from food or drugs
  • Syphilis
  • Pregnancy
  • Low birth weight

Least Important

  • Reduction deformities of the brain
  • Extremely low birth weight and under 23-week gestation
  • Constitutional aplastic anemia
  • Superficial wounds, no infection
  • End-stage HIV disease
  • Uncomplicated hemorrhoids
  • In-vitro fertilization
  • Liver transplant for cirrhosis
  • Cancer where treatment will result in less than 10% chance of 5-year survival
  • Progressive dementia

Source: Oregon Health Services Commission, "Prioritization of Health Services," 1991. Taken from Appendix J.

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