Oregon Gov. John Kitzhaber has signed legislation that could create a public option. (Don Ryan/AP)

The legislation is Senate Bill 1580. Right now, it focuses on delivery reform, changing the way that doctors who serve Oregon Medicaid patients get paid. It pushes them to establish new provider groups -- called “coordinated care organizations” -- to serve some of the state’s most most costly patients. The idea is that by focusing on prevention, reducing emergency room use and paying doctors for the quality of the care they provide, Oregon can curtail rising Medicaid costs.

But that’s only phase one. The hope is, if this does succeed in bringing down health care costs, other Oregonians can also start enrolling in the newly reformed Medicaid program. As Kitzhaber told me late last year, the next step would be to allow public employees into the Medicaid program. That would create something that looks a lot like a public option -- one that might be up and running right around the same time that the health reform law’s insurance exchanges launch in 2014.

Before any of that, however, Oregon needs the federal government’s blessing to move forward with a non-traditional approach to delivering care, in the form of a Medicaid waiver. The Obama administration has generally been supportive of the state’s health care reforms, and that has Kitzhaber confident he’ll be granted the flexibility to move forward.