Despite their voiced frustration over the growing ranks of the uninsured, providers and insurers in Oregon last week deftly trounced a ballot initiative that would have provided comprehensive healthcare coverage to every state resident, regardless of ability to pay.
The Oregon initiative, known as Measure 23, was defeated in the polls by a whopping 79% to 21% amid strong opposition by politically powerful insurance, hospital and physician groups.
The measure would have created the nation's first single, state-run health plan covering 100% of all medically necessary care, including prescription drugs and alternative therapies, with no deductibles or copayments. The new system would have been financed through the redirection of current local, state and federal healthcare expenditures as well as a new 8% income tax and a new payroll tax of up to 11.5%, in lieu of insurance premiums.
Oregon has a history of being a healthcare trendsetter. In 1989, the state Legislature enacted a groundbreaking medical plan that covers residents who earn too little to afford private insurance and too much to qualify for Medicaid, nearly doubling the number of eligible recipients. Funding shortages are offset by eliminating coverage for lower-priority healthcare services rather than by tightening eligibility requirements.
Then in 1996, voters approved the nation's only law allowing physician-assisted suicide. And in 1998, Oregon joined a handful of other states in legalizing the medicinal use of marijuana.
Opponents of Measure 23, while generally agreeing with the initiative's sentiment, argued that the measure would have led to runaway healthcare spending and doomed the state's already faltering economy. The new system would have cost $19 billion per year-or three times the state's entire annual budget-and imposed up to $10.8 billion in new taxes in its first year, 2005.
"Universal access is a serious issue that deserves serious consideration ... but had this turkey passed, the solution would have been far worse than the problem," said James Kronenberg, associate executive director of the Oregon Medical Association.
The measure's backers, however, contend insurers and providers had more self-serving reasons to crush what would have proved to be a viable solution to Oregon's growing uninsured population, which now tops 340,000.
"People will do whatever they can to resist change when their own paychecks may be at stake," said Daniel Isaacson, co-founder and campaign manager of Health Care for All Oregon, which sponsored Measure 23.
Supporters' shoestring campaign budget of $35,000 paled next to the $1.3 million that the opposition-funded primarily by insurers and other business groups-spent on a media blitz to kill the initiative, added Isaacson, a 22-year-old graduate of the University of Oregon. "If we had each had an equal $525,000 campaign budget, the outcome may very well have been different," he said.
Indeed, it's easy to see why insurers felt threatened by the initiative. Proponents boasted that savings would be achieved in part by "drastically reducing the 25% of healthcare expenditures that are currently spent for insurance companies' advertising, paperwork, shareholder profits, CEO salaries, etc.," according to the initiative's Web site.
And while Oregonians would not have been required to discontinue their private or group insurance, experts said, most probably would have done so because they would have been paying for the universal system anyway.
"In theory, it would have spelled death for the health insurance industry," said Cathy Lavin, spokeswoman for Regence Blue Cross and Blue Shield of Oregon, which covers 1.2 million members in the state.
The measure also would have wreaked further havoc on the state's economy, which at 6.8% has one of the highest jobless rates in the country, said David Fiskum, a lobbyist for the opposition campaign, Oregonians Against Unhealthy Taxes.
The 11.5% payroll tax would have crippled many small businesses, including independent physician practices, and would have caused large employers to flee the state, resulting in huge job losses, he said. "As attractive as the measure may have been at first blush, voters realized that it wasn't a healthcare-improvement initiative so much as a tax-increase initiative," Fiskum said.
The state's insurers proved the biggest contributors to the opposition campaign, with Regence, ODS Health Plans, PacifiCare Health Systems, Kaiser Permanente and Pacific Source Health Plans each donating roughly $50,000, according to recent financial disclosures.
The Health Insurance Association of America, Washington, also contributed several thousand dollars to kill Measure 23 and encouraged its members, even those outside Oregon, to help finance the drive against it. The HIAA was a key player in defeating then-First Lady Hillary Rodham Clinton's universal healthcare proposal in 1994.
"Oregonians' refusal to become single-payer guinea pigs repudiates those advocates who would take away people's right to choose their own health insurance," HIAA President Donald Young, M.D., said.
Although they also opposed the measure, hospitals and physicians donated much less money to the cause: The Oregon Association of Hospitals and Health Systems chipped in $10,000, while the 6,500-doctor OMA did not contribute anything because it "wasn't in the financial position" to do so, Kronenberg said. But both groups spoke out against the measure, partly for fear that the system would create an untenable reimbursement environment.
Currently, providers negotiate payment rates with several insurers and often shift costs among them, accepting lower payments from one if they can win higher payments from another. But under the single-payer system, all reimbursement rates would have been determined by a 15-member governing board.
"It's a scary proposition to have 15 people making all the decisions about the financial needs of providers," said hospital association President Kenneth Rutledge. "When costs began to rise, their first strategy to make ends meet would have been to crack down on rates."
Kronenberg agreed. "There are only two ways to reduce (healthcare) costs-reduce the number of recipients or reduce compensation to those who provide the care," he said, adding that a growing number of Canadian doctors have been moving to Oregon to escape the low rates set by their country's universal healthcare system.
Providers also deemed the initiative far too lavish-and too costly-in that it covered any treatment provided by a licensed practitioner, including acupuncture, aromatherapy, massage therapy and marriage counseling.
"Oregon has a reputation for licensing anybody who can breathe and calls himself a healthcare practitioner," Kronenberg said, adding that the state's quality of care could suffer if alternative-care providers were put on par with medical doctors in making decisions about patient care.
At the same time, the measure imposed no specific limits or consumer cost-sharing provisions to discourage excessive use and offered no safeguards to prevent people with pre-existing conditions who live in other states from obtaining benefits simply by moving to Oregon. "Unlimited access to unlimited services creates unlimited demand," Rutledge said. "It's a recipe for financial disaster."
Isaacson, however, said he was undaunted by the measure's defeat and would try again in 2004. The fact that the initiative made it to the ballot at all indicates that Oregonians are frustrated with the state's healthcare system and are seeking alternatives.
Both Rutledge and Kronenberg said their organizations would consider other universal coverage proposals if they were constructed differently, covered more-basic services and included greater cost-containment mechanisms.
Oregonians aren't alone in their frustration with rising premiums and reduced access, said Rachel DeGolia, operations director of the Universal Health Care Action Network, Cleveland.
This year, at least 10 states, including Illinois, Michigan and Missouri, have introduced bills calling for universal healthcare. Most of those measures have died in committees because of tight budgets. At the same time, Illinois, California, Rhode Island, Maine, Massachusetts and other states have established commissions to study how a universal healthcare system could be established.
"There's a lot of grass-roots activity percolating all over the country," DeGolia said. "The folks in Oregon made tremendous progress in educating the public on what these efforts are really about."