Oregon’s High-Risk, High-Reward Gamble on Medicaid Expansion

In the early 1990s, under the leadership of its physician Governor John Kitzhaber, Oregon created a “first in the nation” state-run managed care plan for Medicaid, the Oregon Health Plan, expanding its covered population by nearly 50 percent. He funded the expansion in part by a controversial priority system for redesigning the benefit package, and instituted population-based payments to health insurers. The Oregon Health Plan succeeded in mainstreaming Medicaid patients into private plans, eliminating the Medicaid stigma, and markedly broadening physician acceptance of Medicaid patients into their practices. Within a decade, however, economic pressures caught up to the OHP, and a recession forced the state to reduce eligibility for the program by almost 50 percent. When Kitzhaber returned to office in 2010, co-incident with the implementation of the Affordable Care Act (ACA), he made the reconstitution of the Oregon Health Plan the centerpiece of his third term as Governor.