The Oregon Plan: Health Care Rationing in a Medicaid Population

The Oregon Medicaid program in the 1980’s instituted a type of rationing of health care that determined a finite list of services that were provided to an expanded number of recipients. This was novel in that it openly and overtly admitted that the resources available to pay for services in their state’s Medicaid program were limited, and that they were going to spend those dollars on the services that were determined to be the most cost-effective.

By doing this they attempted to provide a level of health care services to all residents who were below 100% of the federal poverty level, while reducing services for which the individuals currently receiving health care insurance through the state’s Medicaid program. The reduction was accomplished by not paying for services that fell below a cutoff for cost effectiveness of the service.

Essentially all health care services were analyzed and a measurement of the benefit and cost of the services was given a grade. All of the services were put into a list from the most value for cost being #1 on down to the least value for the cost. Then an estimate of the number of persons who would require the services was used to calculate the cost of each service. The number of dollars available for Medicaid was used to determine which of the services would be covered.

The services that were not covered were at times controversial, and at times heartbreaking. Certain transplants and therapy for some cancers brought great anguish to patients in need of these services. Initially the decisions about which services to cover were made based strictly on the best evidence available. As these various emotional issues came up legislation mandating coverage of various conditions eroded the integrity of the list of covered services.