Oregon’s Poor Will Suffer From State Budget Crisis
On March 1 Oregon state officials eliminated prescription drug benefits, outpatient mental health benefits, and substance abuse treatment programs for 100,000 persons who are eligible for the Oregon Health Plan (OHP) but who do not meet income eligibility criteria to be part of the “mandatory” population guaranteed coverage through the Medicaid program.
The likelihood of the cuts had been discussed since November, but Oregon residents voted in January against a tax increase that would have prevented the cuts from taking place.
Legislators later announced that prescription drug benefits would be restored to those enrolled in OHP Standard until July 1. Neither outpatient mental health benefits nor substance abuse treatment benefits, however, were restored.
According to John McCulley, executive secretary of the Oregon Psychiatric Association (OPA), “We face a huge challenge to restore either benefit.”
Other mental health and substance abuse treatment cuts have been taking place since January (see box on page 18). The state faces an estimated $2.5 billion budget shortfall for Fiscal 2003 through 2005.
Hundreds of people with disabilities rallied on the steps of the capitol in Salem, after the announcement of the temporary restoration of prescription drug benefits to describe the damage that had been done.
Justin Taylor, who takes medication for bipolar disorder, told of people who had committed suicide after learning that their medications would be cut, according to the March 6 Oregonian.
A story in the March 7 Oregonian reported that state officials had investigated five suicides of clients of community mental health centers thought to be linked to service cuts. Three remain under investigation, and two were dismissed.
Patients who were cut from the rolls had to wait 14 days or more for reinstatement. The computers of both the state government and First Health, the company that manages the interface with pharmacies, had to be reprogrammed when prescription drug benefits were restored.
Michael Reaves, M.D., medical director of the Lane County Mental Health in Eugene, said that doctors had moved quickly to enroll patients in free or low-cost programs run by pharmaceutical companies (see box at the bottom of page 18 for limitations of those programs).
Approximately 3,000 people with OHP Standard benefits lost funding for methadone on March 1. “It’s a reasonable estimate that 80 percent of them will relapse,” Pollack said.
The state spent between $3 million and $4 million last year on methadone. The costs of an illegal substance such as heroin could climb as high as $300 million for the same population. Criminal activity is often the source of funds for that drug.
He pointed out that medical costs for that group would also increase without methadone.
On February 1 the state cut one-quarter of the inpatient alcohol treatment beds, including the state’s only inpatient treatment facility for Native Americans.
In March it cut funding for 70 percent of the 500 outpatient counseling clients at a center in Portland.
Pollack said that the dollars cut understate the impact on treatment because many treatment centers have closed down, rendering access impossible, even if a person is eligible for substance abuse benefits or can pay for them.
Impact of Cuts Compounded
Threats to the mental health system are being exacerbated by cuts in other health and social services areas.
On March 3 the Oregonian reported that hospitals were preparing for the onslaught of uninsured, low-income patients, who had been eliminated from the rolls of the Oregon Health Plan.
And Medicaid already had been underpaying Oregon hospitals for a decade, according to a study by the Lewin Group commissioned by the Oregon Association of Hospitals and Health Systems.
The state announced plans to reduce reimbursement rates to urban hospitals by another $31 million a year, which would raise the hospitals’ losses on care of health plan patients to $162 million a year.
Charity care at Oregon hospitals increased 39 percent last year to $108 million, while losses due to “bad debt” increased 17 percent, to a total of $158 million.
The Oregon Health and Science University announced a second set of job cuts because of declining reimbursements for uninsured hospital patients, according to a separate story in the Oregonian on March 3.
In Fiscal 2002 the university’s hospital received $2 million less than it cost to treat patients for whom it receives government reimbursement. The hospital projects it will lose $24 million on those patients in 2003. An early projection for 2004 forecasts a loss of $45 million.
According to the March 3 New York Times, Oregon prisons have released some people early. Prosecutions of people arrested for theft and drug crimes are being delayed or voided because of underfunding in the legal system.
How Could It Happen?
Reaves warned, “The changes that have taken place in Oregon could happen anywhere in the United States. Two years ago, I could not have conceived of them occurring. Now they are a reality” (see box).
Oregon, however, has been subjected to a particularly damaging convergence of economic and political factors.
Outgoing Gov. John Kitzhaber (D) pronounced the state “ungovernable,” according to an article in the January 12 Oregonian, which traces the factors that led to the current crisis.
The state was hit hard by the recession of the 1980s. The timber industry crashed, but the Portland area boomed with high-tech microchip and other “new economy” businesses, until those enterprises also began to falter.
Rapid growth during the boom years led to an increase in property taxes. In 1990 residents passed Measure 5, a citizen initiative that limited property taxes for schools and had the effect of forcing them to rely on the state legislature for funding.
Oregon’s economy was shattered by the bust of the high-tech ventures and had already been weakened by the decline of the timber industry.
Per capita income now is 31st in the country. The state vies with Washington state for top ranking in terms of its unemployment rate.
Concurrent with these economic changes has been an increasing polarization between rural and urban sections of the state and between political parties.
“The centrist voices are harder to hear in both political parties,” said David Frohnmayer, the last “moderate” Republican chosen by his party to run for governor, according to the Oregonian.
Kitzhaber concurred, according to the story.
“Money and special interests have moved in to fill the vacuum left by a disengaged and disenchanted electorate. The result is a state fragmented by ideology and partisanship, unable to take effective action on any front. . . .”
Reaves said, “Many of us are trying to envision how we can help a reorganized system rise from the ashes of this major conflagration.”
Numerous stories about Oregon’s Medicaid program and budget crisis appear at www.oregonian.com. ▪
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Published online: 4 April 2003
Published in print: April 4, 2003
Notes
Outpatient mental health services, prescription drug benefits, and substance abuse treatment are casualties in Oregon’s effort to balance its budget. Part of a special report that continues on pages 18 to 20.
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