Government News
Fewer of Oregon's Poor Eligible for MH Benefits
Psychiatric News
Volume 39 Number 14 page 10-43

Researchers have begun to identify specific outcomes of cost-containment measures that began in 2003 in the Oregon Health Plan (OHP). Most media attention has focused on cuts to outpatient mental health benefits and substance abuse treatment programs and to prescription drug benefits (later restored) for 100,000 people in the OHP who did not meet Medicaid eligibility criteria for mandatory coverage (Psychiatric News, April 4, 2003).

The state's Section 1115 waiver, however, also permitted officials to reduce other benefits and to increase insurance premiums and rates of cost sharing.

Officials also eliminated the state's Medically Needy Program, which helped people pay medical expenses that were high relative to their income (see story below).

"The Impact of Recent Changes in Health Care Coverage for Low-Income People: A First Look at the Research Following Changes in Oregon's Medicaid Program" was prepared by Cindy Mann of the Georgetown University Health Policy Institute and Samantha Artiga of the Kaiser Commission on Medicaid and the Uninsured; it was issued by the commission.

The authors used work from the Oregon Health Research and Evaluation Collaborative (OHREC), which was supported through a Robert Wood Johnson State Coverage Initiatives Grant.


A state must receive a waiver from the federal Centers for Medicare and Medicaid Services (CMS) to make major changes to its Medicaid program.

As a result of the Section 1115 waiver Oregon received in February 2003, OHP beneficiaries were divided into two groups: OHP Plus and OHP Standard.

OHP Plus, which includes pregnant women and children whose family incomes were up to 185 percent of the poverty level and specified groups at less than poverty-level income, is not subject to the new cost-cutting mechanisms, but the state has the power to reduce their benefits in the future.

OHP Plus serves what generally is known as the Medicaid-mandatory population, a group that must be enrolled for the state to participate in the federal Medicaid program.

OHP Standard beneficiaries include low-income parents and adults who are not eligible for Temporary Assistance for Needy Families or General Assistance. That group is what generally is known as the Medicaid-optional population. Members of that group now are charged insurance premiums of $6 to $20 a month and lose coverage if they miss one premium payment.

The new cost is significant because as Mann and Artiga pointed out, many members of OHP Standard population have "very low incomes" and" significant medical needs."

Some of the affected adults have no regular source of income, while others have incomes just above the cash assistance eligibility levels; that is, $444 a month for an individual and $552 a month for a two-person family.

In February 2003 Oregon also began charging copayments of $2 for prescription drugs, $5 for outpatient care, and $250 for hospital care to the Standard beneficiaries. As of June 19, the state was prevented by a court order from charging those copayments, according to the July Psychiatric Services.

In its waiver application, Oregon state officials projected an expansion in coverage to 60,000 people who had not been covered, using savings generated from cost-savings mechanisms.

During the period from January to October 2003, however, the number of OHP Standard beneficiaries dropped from about 100,000 to about 51,000. Seventy-two percent of those who lost coverage became uninsured.

Only about 2,000 people who had been ineligible before the waiver received coverage. Most of them were a target group of pregnant women and children whose family incomes were up to 185 percent of the poverty level.

State officials can cap enrollment in OHP Standard, which they planned to do as of July 1. Enrollees who lose their coverage after that date cannot re-enroll.


OHREC researchers John McConnell, Ph.D., and Neal Wallace, Ph.D., wrote," While the premiums may still appear relatively modest, particularly when considering the cost of most private coverage, they played a significant role in the OHP Standard enrollment declines."

In April 2003, the first month that OHP Standard enrollees were disenrolled for nonpayment of premiums, about 16,000 people lost coverage for that reason. Between May and October 2003, about 31,000 more people lost coverage for nonpayment.

Coverage loss was greatest for those "at the very bottom of the income scale." Enrollment dropped by 44 percent for those with incomes between 85 percent and 100 percent of the poverty level. Fifty-nine percent of people with no income lost their coverage.

David Pollack, M.D., medical director of the Office of Mental Health and Addiction Services of the Oregon Department of Human Services, said," Remember that mental health and substance abuse benefits were eliminated for the Standard population in March. Many people were in the program for those benefits and were probably unwilling to pay premiums when they lost access."

The rate of new enrollments also reflected the increase in premium charges. Ten months after implementation of the changes, the rate of new enrollments for the lowest income group was slightly above half the level it was prior to the recent waiver changes.

Selby Jacobs, M.D., chair of APA's Committee on Public Funding for Psychiatric Services, said, "It is disturbing when Medicaid benefits and access are diminished for anyone who needs help. But it is particularly distressing when changes to the program result in disproportionate harm to those with the lowest income."


OHREC researchers Matthew Carlson, Ph.D., and colleagues conducted a survey between December 2003 and March 2004 using a random sample of OHP Plus and OHP Standard beneficiaries who were enrolled as of February 2003, before the changes occurred.

Between February 2003 and the time of the survey, 45 percent of the OHP Standard respondents and 12.3 percent of the OHP Plus respondents reported losing coverage.

The respondents were questioned about three access issues, including unmet mental health need.

Researchers compared answers to the access questions for those OHP Standard beneficiaries who remained enrolled continuously with those who lost coverage at some time.

Seventy-eight percent of the beneficiaries who had lost coverage reported unmet mental health care need, compared with 53 percent with continuous coverage who reported such a need.

The extent of the difference between the two groups is surprising because outpatient mental health and substance abuse treatment benefits had been cut for OHP Standard beneficiaries as of March 1.

Carlson speculated that as many as half of the beneficiaries receive treatment for depression and anxiety in primary care settings, so they would not have been affected by the loss of mental health benefits.

David Pollack, M.D., medical director of the Office of Mental Health and Addiction Services in the Oregon Department of Human Services, said that some of the managed care companies that contract with the state continued to provide mental health and substance abuse treatment because they realized other costs would go up if they did not.

He also noted that Oregon was moving "very quickly" to implement models of treating depression in primary care settings.

The full extent of the impact of cuts in substance abuse treatment also is yet to be determined.

Pollack said that approximately 3,000 people in the OHP Standard population lost funding for methadone treatment when substance abuse treatment was eliminated on March 1.

"So far," he said, "it appears that quite a few of those individuals are continuing with treatment, using money from family members or other resources because they know how important methadone is to their wellbeing. But we don't regard their efforts as a permanent solution to the problem of access to treatment."

An OHREC study by Robert Lowe, M.D., M.P.H., and colleagues analyzed data from the emergency room (ER) operated by Oregon Health and Science University.

He compared ER use for March-May 2003, after the changes, to use during the same months of the previous year.

Patient visits for alcohol use rose by 26 percent and for chemical dependency by 46 percent.


Pollack said that as of August 1 Oregon will restore mental health and substance abuse treatment to the OHP Standard population. "Providers, advocates, and consumers made very persuasive arguments to the state legislature that the cuts were clearly inadvisable and in the long term would lead to greater costs in the form of hospitalization, incarceration, and lost productivity," he said.

The victory, however, is tempered considerably by the fact that the number of OHP Standard beneficiaries will be cut.

Pollack said the state plans to reduce enrollment to about 25,000 from the current total of about 50,000.

He thinks a reduction of that magnitude is unlikely to occur through attrition and speculated that state officials would lower the income level that determines eligibility for OHP Standard, thus rendering some current beneficiaries ineligible.

"Even though benefits will be restored," Pollack said," the program itself will serve about one-quarter of the people who were enrolled only 18 months ago."

Research and reports of the Oregon Health Research and Evaluation Collaborative are posted online at<www.ohppr.state.or.us/OHREC%20welcome2_files/OHREC%20Research%20Briefs.htm>." The Impact of Recent Changes in Health Care Coverage for Low-Income People" is posted at<www.kff.org/medicaid/7100a.cfm>.

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