Kitzhaber's Rx for state
In eyeing a new run for governor, he thinks on a revolutionary scale
By David Steves
The Register-Guard, Eugene, Oregon
Saturday, December 17, 2005
The last time John Kitzhaber put Oregon on the map as a health care pioneer, it was by working within the decades-old system that delivers medical care. This time, the former doctor and governor wants to bulldoze what he sees as an antiquated system and replace it with a 21st-century model that would deliver universal health care to every Oregonian.
It’s a big enough idea to have Kitzhaber publicly contemplating a return to the governor’s office, where he says he could see it to fruition. That effort probably would involve ballot-measure or legislative campaigns. It also would be likely to involve the enlistment of Oregon’s congressional delegation and the White House to let Oregon out of the 20th-century rules of federal Medicare and Medicaid spending and to end tax exemption for employer-provided health insurance.
Kitzhaber on Friday said he plans to meet next week with Gov. Ted Kulongoski to discuss his health care ambitions and his interest in challenging Kulongoski in next May’s Democratic primary. The ex-governor said Friday he also has met with state teachers union officials, business leaders and others as he contemplates a political comeback.
Regardless of whether he runs for governor - something he plans to decide on next month - Kitzhaber said he wants to champion reforms. That could mean a ballot measure in 2006 or 2008 or a push for legislation in 2007 through the Legislature, he said.
In an hourlong interview Friday to discuss his ideas for reforming the health care system, Kitzhaber said he wants to start a national movement toward universal health care by designing a system for Oregon that would provide basic care to everyone.
After leaving office in January 2003 and getting involved with national health care research and education programs, Kitzhaber has observed rapidly gathering storm clouds. Health care costs are rising. Employers and governments are dropping coverage for workers, driving a growing number of uninsured people to emergency departments with chronic health problems that get shifted back onto insurance premium costs. The Medicare program, a federal entitlement that can’t be easily cut, is about to be swamped by aging, ailing baby boomers, resulting in trillions of dollars in national debt.
“I think it’s just terrifying,” Kitzhaber said. “That’s the situation, and clearly, something needs to be done. And I think it needs to be done very, very soon because this is really coming down right now.”
Kitzhaber once called Oregon “ungovernable” as he prepared to leave the state’s highest office. But Friday he exuded optimism as he described the enthusiastic reception he’s received while meeting with national audiences and in-state advisers from business, labor and the health care industry.
“People are looking for a place to engage in this debate,” he said.
Kitzhaber described a two-pronged goal: to actually bring universal health care to Oregon, and to force the debate at the national level - in Congress and perhaps even the 2008 presidential campaigns.
A rationing system
Kitzhaber made a mark in health care reform with the Oregon Health Plan, which he designed as Senate president in the 1980s and shepherded along while governor in 1995-2003. The health plan expanded the number of people who qualified for Medicaid by getting the federal government’s blessing to modestly limit care and to use the savings to let low-income people who didn’t fit into a Medicaid-eligible category - they weren’t elderly, blind, or pregnant women, for instance - get coverage.
This time, Kitzhaber says he wants to go much farther. Instead of dealing with those “working poor” who fall through the cracks, he envisions a basic coverage plan for all Oregonians - those who currently get coverage through work, those who aren’t insured, and those who qualify for government coverage such as Medicare.
How would Oregon pay for universal health care? Kitzhaber said his idea is to continue using the public dollars already going into Oregon’s system of delivering medical care, without raising taxes.
One element would be to persuade the federal government to remove its strings for how Medicaid and Medicare dollars are spent and put them into the universal health care pot.
Added to that would be the tax dollars that currently go uncollected on the money that employers pay for workers’ medical insurance premiums. The idea here - which Kitzhaber has yet to fully flesh out - is that employer-provided health care is a form of tax-exempt compensation to workers, a practice that began during the wage-control era of World War II and was added to the tax code in 1954.
With universal coverage, employers would not need to buy insurance for their workers. So, employers could use that money instead to pay wages, which would remove the tax exclusion currently available under state and federal law. Kitzhaber calls the current tax exemption a subsidy paid by all U.S. residents amounting to $200 billion a year.
With that combination, Oregon would have about $6.3 billion a year to pay for universal health care.
Per capita, that $6.3 billion would break down to about $2,000 per Oregonian. That’s not enough to cover everyone’s basic needs, Kitzhaber said, given the inefficiency of Oregon’s current medical care delivery system - doctors’ practices, private and government-sponsored health insurance, hospitals and clinics.
But if the state replaced that system with one designed from scratch, guided by the principle of maximizing Oregonians’ health in the most cost-effective way, it would be enough, he said. He said Italy achieves better health outcomes than does the United States at a cost of about $2,000 per person.
Designing a new system
Kitzhaber said his new system would deliver basic health care to all Oregonians - from private-sector employees to retirees, children, and the poor.
That step would involve scrapping everything about the current system - employer-provided medical coverage rooted in the 1940s, and 1960s-era Medicaid and Medicare programs. He said he’d model a new system on other public services, such as education, police and fire - services that all citizens are entitled to, regardless of where they live, their incomes, or other factors.
Using the education system as an analogy, Kitzhaber envisions a basic level of care that everyone would be eligible for. Just as those with the resources can seek out more specialized education through private schooling, so could individuals buy insurance for things not covered by the universal health care program, he said.
Continuing coverage for those currently receiving it and adding it for the 609,000 Oregonians who lack insurance would be costly.
But Kitzhaber said he thinks it could be done using existing public health care dollars and increasing the efficiency of hospitals, doctors and clinics.
For instance, if all Oregonians were entitled to medical coverage, it would be easier to ensure that people with high blood pressure get moderately priced instruction and monitoring to reduce and control the condition, rather than leaving it untended until they suffer strokes and require expensive care, he said.
Any such reforms would need federal approval. But Kitzhaber said he has no interest in pursuing them by running for the U.S. Senate - something he was urged to do in 2002, but rejected. He said he would prefer to launch such a system at the state level, then push it nationally.
“I could be a U.S. senator today and I couldn’t do anything about this, unless my state or some state actually blew in something that we had to deal with,” he said. “It doesn’t start there. That’s where it ends, but it’s got to start outside.”
Public or private role?
Kitzhaber doesn’t rule out that another governor might be able to champion his reforms, or that he could do so himself from outside government.
Up to now, Kitzhaber has been able to pursue his ideas as a private citizen, thanks to his expertise and stature in health care policy circles, as well as his involvement with health policy groups. He holds various posts at academic and medical organizations where he is developing his ideas.
Kitzhaber said he began to consider running for governor earlier this year.
Republican lawmakers who remember Kitzhaber as a governor who was quick to veto their bills and reluctant to compromise said it’s difficult to imagine him succeeding in a bid.
“You’ll have to do a lot more convincing for me to believe that he is really serious about being chief executive and dealing with the whole universe of challenges facing Oregon,” said Senate Republican Leader Ted Ferrioli of John Day, citing land use, employment issues and housing. “I think it’s inappropriate for him to even consider a run for the governorship if he’s just trying to use it as a bully pulpit to frame health care issues.”
But independent Portland-based pollster Adam Davis said Kitzhaber’s re-emergence is well timed, given his credibility on health care and the voters’ demands for change.
Health care “is the sleeping giant of issues right now. The whole cluster of health care quality and health care costs is really very much on the minds of Oregonians and is an issue that we see showing up over and over again as a big blinking dot on the radar screen,” he said. “It’s interesting that you have a guy like Kitzhaber. He just happens to be the guy who’s most qualified to talk on this issue. I think he would have credibility on it.”
Kitzhaber said running for governor could hurt his health care reform cause.
“You politicize the issue if you run,” he said.
Kitzhaber said if he does run, health care would be his big campaign issue. But he said other concerns, such as education and the economy, would be on his agenda. But reforming Oregon’s health care system is critical, he said.
“Health care is impacting our ability to grow our economy,” he said. “It’s impacting our ability to invest in education.”
He said his critics will prevail if they can seize on certain details and fuel voters’ skepticism about taxes, spending and the loss of a system that serves some people - those with good medical coverage - very well.
Kitzhaber said his message “has to be about empowerment - that we don’t have to wait for the future … that we can step up and actually take care of ourselves.”
HEALTH CARE CRISIS
Numbers that point to what many, including former Gov. John Kitzhaber, see as an impending crisis in health care.
Oregon Health Plan coverage:
2002: 475,000 people (including 109,000 on OHP Standard)
2005: 409,000 (including 25,000 on OHP Standard)
Oregonians without health insurance
1996: 11 percent
2002: 14 percent
2004: 17 percent
Bankruptcy:
50 percent of U.S. households declaring bankruptcy cite medical causes; 76 percent had medical insurance at onset of illness.
Insurance premiums:
Average annual cost: $10,800
Employees’ average share: $2,713
Employees’ increase from 2004: 9.2 percent
Employees’ wage increase from 2004: 2.7 percent
Employees’ premium increases since 2000: 73 percent
Decline in employer-provided medical coverage:
1990-2000: Employers providing coverage declines by 2 percent a year.
Since 2000: Employers providing coverage declines by 4 percent a year.
Federal safety-net health care spending:
2001: $546 per uninsured person
2004: $498 per uninsured person
— Sources: Oregon Office of Health Policy & Research; Harvard law professor Elizabeth Warren; Kaiser Family Foundation; Portland Business Journal; Foundation for Medical Excellence