September 1992 XIV/1


Last month the federal government rejected the Oregon Plan, an innovative proposal to revise the Medicaid Program in the state of Oregon. The Plan proposes to increase the number of people covered by Medicaid by limiting the medical and surgical procedures available to Medicaid patients. Thus patients eligible for Medicaid Insurance would receive basic care, but advanced care, such as organ transplants would not be available. As the first step in defining "basic" health care, 709 common medical and surgical procedures were evaluated according to their projected benefits and cost. Secondly, the state legislature allocated funds to cover the procedures that were considered to be basic. In the original plan, procedures 1-587 were covered, but that number could be reduced or expanded in the future depending upon the funds allocated. Procedures unavailable to Medicaid patients would often be available to those with private insurance.

The Plan also proposes to increase the number of people and families covered under private health insurance by requiring all businesses to offer health insurance to their employees. The aforementioned system of evaluating medical and surgical procedures would in time be applied to those in private insurance programs and in Medicare. Of course, those in private insurance programs could contract for more extensive coverage, if they or their employers paid extra premiums. At first glance, the Oregon Plan seems to solve some of the more pressing problems involved in providing adequate access to health care in the United States. It increases the number of people covered by Medicaid, and it defines a "basic" set of health care procedures which should be available to all. However, officials of the Department of Health and Human Services (HHS) rejected the Oregon Plan. This essay will explain briefly why the Oregon Plan was rejected by the federal government, and then point out some lessons which the formulation and rejection of this plan offer for the future.


The Oregon Plan would have reduced the medical benefits that each state is required to provide for poor pregnant women and their children. Sam Rosenbaum points out that the United States Congress has mandated that states which participate in the Medicaid program must provide all necessary health care for persons receiving payments under the Aid to Families with Dependent Children Program (AFDC), virtually all of whom are women and children. (1) Participating states must also provide all health care required for aged, blind and disabled recipients of Supplemental Security Income (SSI). In addition, laws enacted in recent years, mandate health care for all pregnant women, infants, children under age six with family incomes below 133% of the federal poverty level, as well as for children ages six to nineteen with family incomes below 100% of the federal poverty level. As a result of the amendments to the original Medicaid legislation, the states' authority to cover less than all medically necessary health services for certain groups of people has been eliminated.

When refusing to approve the Oregon Plan for the aforementioned reasons, Secretary Louis Sullivan of HHS also stated that the plan would discriminate against disabled people. Because "quality of life" is part of the rating evaluation formula, he maintained that the Plan would be contrary to the Americans with Disabilities Act which requires that medical treatment must not be withheld solely because of present or predictable disabilities. Citing the list of medical procedures, he declared that "babies weighing more than 500 grams would be eligible for extensive life support while babies weighing less than 500 grams would not receive treatment because of their predicted 'quality of life' if they survived." Other people wishing to reject the Plan cited the discrimination which would result in the care of babies born with eminently treatable disabilities such as spina bifida. Babies covered by private insurance would receive treatment while those covered only by Medicaid might not receive treatment because the procedure might not be considered "basic care," due to reduced funding by the Oregon legislature.


Though it seems to contradict some of the recent federal laws, the Oregon Plan has focused national attention on important problems which confront the people of the United States as we seek to reform the provision of health care.

1. First and foremost, the Plan reveals dramatically some of the shortcomings of the present "system" of health care in the United States. Even if the Plan were given a waiver from federal law there would still be many problems in providing adequate access to health care for all citizens of Oregon. Location of health care professionals and health care facilities have a telling effect upon the provision of adequate access to health care. No mention is made in the Plan of these structural needs. An even more important problem revealed by the Plan is the method of funding health care. The Plan helps us realize that adequate access will not be achieved by "robbing Peter to pay Paul." Will sufficient funds be available if waste is eliminated and health care costs reduced? Perhaps, but the Plan doesn't address the issues of waste and medical care inflation. A comprehensive health care program must devote more thought to incorporating market factors which are the most effective way of controlling costs. The Oregon Plan seems to assume that the present method of funding health care is sound and that all it needs is touching up at the edges. For example, there is no consideration of a "single party payor" which would eliminate some of the administrative costs for health care. In sum, the Plan seems to prolong the assumption that private health insurance, financed by employer and administrated by private health insurance companies, is an essential and beneficial element of health care. These assumptions must be questioned if a true renewal in health care is to be developed.

2. The Plan shows the difficulty of defining "basic health care procedures." Almost every one of the many plans to renew U.S. health care state that "basic health care should be provided for all." But none of the other plans have sought to define and describe the meaning of the term "basic care." The Oregon Plan seeks to do so and in the process demonstrates that determining the procedures which constitute "basic health care" is a complex process. Not only the cost of the procedure must be considered but also the extent and duration of the benefit, given the condition of the patient. Moreover, a better understanding of the role "quality of life" plays in determining basic health care must be developed. Secretary Sullivan's point concerning extensive life support for babies above and below 500 grams is well taken. On the other hand, does it make sense to offer extensive life support to any baby weighing less than 500 grams? Declaring that basic health care can be defined implies that definite financial limits must be set for national health care expenditures. To date, the U.S. health care system has been conducted as though unlimited funds are available, at least for those with private or public insurance. Devoting an excessive portion of the Gross National Product to health care makes it impossible to devote adequate funds to other significant needs, such as education, housing, improvement of The environment and replacement of the "infrastructure.

3. The Plan demonstrates the anguish caused by explicit rationing of health care. At present, health care in the United States is rationed implicitly, the system being unable to care for people without insurance. About 15% of our population, that is about 35-40 million people, do not have adequate access to health care. As a result, they experience ill health more often than the rest of the population, making it more difficult for them to work, go to school, and lead fulfilling lives, than it is for the rest of the population. Moreover, people without adequate access to health care die at earlier ages from diseases and illnesses which could be controlled or even healed were health care provided. Through explicit rationing of health care, decisions will be made which will shorten the life of some people now receiving adequate access to care. The problem called to the forefront by explicit rationing was expressed eloquently by a friend of mine: "Rationing health care for older, debilitated people approaching death is a worthwhile idea, but leave my Mom out of it!"


An overwhelming number of people in the United States agree that the provision of health care needs radical change. Though it is innovative, the Oregon Plan is not radical enough. Insofar as many issues in health care are concerned, such as financing and delivery of health care, the Oregon Plan seems to endorse the status quo. But the Plan does illustrate that radical renewal of our health care system might be considered as the thirteenth labor of Hercules.

Kevin O'Rourke, OP


1. Sara Rosenbaum, "Mothers and Children Last: The Oregon Medicaid Experiment," American Journal of Law and Medicine XVII:1 & 2, 97-126 (1992).

© Kevin O'Rourke, O.P.