The package of basic benefits would be provided to everyone with an income under the federal poverty level, now set at $10,000 for a family of three. In essence, Oregon would expand eligibility to the working poor while reducing benefits to those on welfare, thus keeping costs in line.
Using a carrot-and-stick approach, the plan pushes private employers into providing health insurance for their employees and their dependents. The plan sets a 1994 deadline for all employers to provide at least the same coverage as the state offers the poor, and tax credits are given as a reward for participation. The mandatory feature would be scrapped, however, if most employers provide coverage voluntarily.
If the Kitzhaber plan works as intended, almost all Oregonians will be covered by some form of insurance within five years, although self-employed persons above the poverty level might fall between the cracks.
Kitzhaber sees the nation's current system as producing a "cost shift" in which care for the uninsured and the poor is subsidized through ever-increasing insurance premiums paid by employers to cover their workers. The system, he says, "encourages utilization and builds up expectations beyond our ability to pay for them."
Oregon bought Kitzhaber's theory, but there is still plenty of skepticism about implementation. For starters, Oregon cannot establish the priority system for Medicaid without receiving a waiver from the federal government, which shares the cost of the program with the states. This could be a major issue before Congress in the coming months. This waiver, incidentally, is also critical to the fiscal viability of the Health Access proposal in California.
Imagine, too, the political infighting over the priority list for benefits and each year's level of support for the entire program. That could prove as controversial as setting the right penalties for each crime or distributing education funds equitably, both traditional headaches for state lawmakers. For example, podiatrists, optometrists and chiropractors are bound to lobby the Legislature and the priority-setting Health Services Commission for inclusion in the basic program.
Funding of abortions will also be debated at every turn, although Oregon is one state where pro-choice forces traditionally have held the upper hand.
Perhaps the biggest potential problem is the impact on health insurance programs for workers already covered by their employers. Will their benefits gradually be eroded until they match the basic package provided the poor by the state? Kitzhaber recognizes that reform will fail if it reduces benefits for middle-class citizens whose taxes support medical programs for the poor.
Oregon's relatively peaceful debate over health insurance contrasts with this year's combat over the issue in Sacramento. Even passage of Speaker Brown's bill, supported by medical organizations, would leave millions of Californians without health insurance. Nor will Brown's measure satisfy Health Access, which is already soliciting funds for its initiative campaign.
If the health-care issue is put to voters next year, Oregon's early experience with the Kitzhaber rationing system could be a central issue in the California debate.