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,
The state's Section 1115 waiver, however, also permitted officials to
reduce other benefits and to increase insurance premiums and rates of cost
Officials also eliminated the state's Medically Needy Program, which helped
people pay medical expenses that were high relative to their income (see story
"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
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
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
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
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
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
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
"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>.▪