Oregon Gov. John Kitzhaber: ‘No one thinks fee for service is working’

Oregon Gov. John Kitzhaber has a plan to save Medicaid. (Robbie McClaran)

Oregon Gov. John Kitzhaber (D) has a plan to save Medicaid. (Robbie McClaran)

Oregon is at work on an ambitious Medicaid experiment one that, if it works, could save the federal government $10 billion over the course of a decade. The idea — which you can read more about here — is to change the way doctors and hospitals get paid, incentivizing them to provide more cost-efficient care.

I spent a week in Oregon learning what these reforms looked like on the ground -- both in the state's largest city, Portland, and also in tiny towns across the cascade mountains. Last week, I caught up with Oregon Gov. John Kitzhaber (D) at the National Governor's Association, where he keynoted the governors-only two-hour lunch to tell other governors about what his state has been up to.

"It was very positive," Kitzhaber said of the reception he got from the other governors, after outlining the Oregon Medicaid reforms. "We'll be able to get a sense of what the traffic is like on the Web sites I mentioned [that explain the Medicaid plan in detail], see if their policy people are looking at it."

Kitzhaber got a sense that governors in both political parties were generally frustrated with the Medicaid program. It keeps eating up more of their already-squeezed budgets. "No one thinks fee for service is working," he said.

The plan Kitzhaber is implementing in Oregon has split the state up into 15 regions, each with a fixed budget. Unlike fee-for-service medicine, where more volume adds up to more profits, the hope here is that a capped budget will put downward pressure on health care spending.

Will Kitzhaber's plan soon show up in other states? "There was a lot of interest about the waiver," he said, mentioning that he fielded questions from governors of Arkansas, Montana, Nevada and Washington.

"I'd like to find a few governors, both Democrats and Republicans, who could really collaborate on something like this," Kitzhaber said.

I asked him what the governors' Medicaid message would be for President Obama when they meet with him Monday afternoon. "I think most of us want to make sure there's enough flexibility with the expansion," he said. "The governors are willing to partner with the administration. [Florida Gov. Rick Scott's] decision, that gives them cover to do so."

Scott, a Republican and outspoken critic of the federal plan, last week announced plans to expand Medicaid coverage to roughly 1.3 million people under the new health care law.

Also on Wonkblog

Wonkbook: The sequester stops being polite and starts getting specific