OHA report: Oregon Health Care Costs Rose 49% between 2013 and 2019

Posted on July 19, 2022

OHA report: Oregon health care costs rose 49% between 2013 and 2019, driven by rising drug costs; Cost growth in Medicare and commercial markets outpace Medicaid increases

PORTLAND, Ore. – According to a new Oregon Health Authority (OHA) report, health care costs grew 49% per person across insurance markets between 2013-2019 in Oregon, outpacing national health care cost growth during the same time period. By market, Medicare costs per person grew 58%, commercial market costs per person grew 45%, and Medicaid costs per person grew the slowest at 32%. The full report is available here.

Rising prescription drug costs and the cost of professional services were the primary factors driving health care cost increases.

Between 2013-2019, Oregon’s health care costs grew faster than income—while per person health care costs grew 49%, per person income grew 31.5% and average wages grew 21.6%.

The report shows that for people in Oregon with commercial, employer-sponsored insurance, the cost of the average annual deductible and insurance premiums combined in 2019 was 10.1% of median income.

OHA Director Patrick Allen said, “The effects of rising health costs have a direct impact on the well-being of people, families and our communities. When health care costs grow faster than income and the cost of living, they squeeze the budgets of families and businesses and reduce access to care. It’s important for Oregonians to understand how health costs are growing – and why – so we can take steps in our state to contain them.”

The report documents cost growth across six major service categories and identifies which types of services are responsible for most of the cost growth in each market. Between 2013 and 2019, per person pharmacy costs grew the most (116%). Inpatient services have the highest per person costs and grew by 22% over the six years.

  • In the commercial market, professional services contributed the most to overall cost growth between 2013 and 2019. Pharmacy, emergency department, professional services and outpatient services grew by more than 60% from 2013 to 2019, with pharmacy costs growing the most at 93%.
  • In the Medicare market, pharmacy costs grew by 185% from 2013 to 2019, far outpacing any other service category in any of the three markets. Pharmacy costs were the main driver of Medicare cost growth in this time period, increasing from $794 to $2,261 per person.
  • In the Medicaid market, professional services and pharmacy contributed the most to overall cost growth between 2013 and 2019. The Medicaid market saw less growth across service categories compared to the commercial market. Service categories in the Medicaid market also had lower per person costs, with the exception of inpatient services.

Between 2012-2017, Oregon held costs under its section 1115 Medicaid waiver agreement with the federal government to a rate of growth of 3.4%, which authorized Oregon to deliver care to nearly 1 million Oregon Health Plan members through coordinated care organizations (CCOs). The cost categories measured under Oregon’s 1115 waiver are a subset of the costs included in the 2013-2019 health cost growth report. Oregon’s 1115 waiver focuses on limiting cost inflation for core Medicaid benefits paid by federal and state governments. The calculation of cost growth under the waiver does not include categories such as increases in payments to hospitals for uncompensated care, graduate medical education, emergency care for non-citizens, the cost of behavioral health prescription medication and other costs. (State health officials released a fact sheet that outlines different types of health cost calculations.)

Read the full report here.

These data show that Oregon’s CCO model helped slow cost growth in the Medicaid sector. While Medicaid costs per person grew by 32%, between 2013-2019, Medicare costs per person grew 58%, nearly double.

The Health Care Cost Growth Report will be presented at today’s meeting of the Sustainable Health Care Cost Growth Target Advisory Committee from 2:00 PM to 5:00 PM. Full details including how to join the meeting are here.

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