Oregon health care costs grew pre-pandemic before declining slightly

According to a report released last week by the Oregon Health Authority, health care spending in Oregon increased 3.6% per person between 2018 and 2019 then decreased from 2019 to 2020 due to the changes brought about by the Covid-19 Pandemic.

The 2022 Annual Cost Growth Trends Report is a result of the Sustainable Health Care Cost Growth Target Program that was established by the Legislature in 2019. This program was created to ensure costs do not outpace wage growth, inflation, and other economic indicators. The state then set a growth rate of 3.4% for Oregon's health care costs, which is the same as the Medicaid growth rate.

The report also shows that the costs of the commercial market have grown faster than Medicaid and Medicare before the pandemic, but they are down the least from 2019 to 2020. This decline is likely due to disruptions of care as both hospitals and patients halted non-emergency and elective procedures because of Covid.

Highlights from the Report

Costs in the commercial sector increased by 4.5% between 2018 and 2019 before falling by 1.6% between 2019 and 2020. Medicaid grew at the lowest rate of cost between 2018 and 2019, 3.3%. This means that it met the 3.4% cost growth target set by the state. Health care and insurance expenditures will account for 23% in 2020 of household spending. In 2020, the health care expenditure in Oregon will increase to $30 billion from $27 billion.

Felisa Hagin, Political Director for SEIU Local 49 which represents 15,000 Oregon Health Care Workers, stated that even though pandemic years are highly unusual in the health sector, this report "lays an important foundation and begins to identify where excessive costs growth is occurring."

Hagins stated in a press release that the answer was clear. Every commercial provider and insurer had exceeded the benchmark of 3.4% growth, adding to the financial burdens already faced by patients. The commercial market as a whole saw double-digit increases in expenditure.

It is also noteworthy that Medicaid providers, insurers and payors have managed to remain below the benchmark. Medicaid providers and payers have lived under the target and contained their costs for years, despite the fact that there may be many specific reasons due to the unique nature in which health care was used in 2020-2021. We hope future years will see more providers and payors, especially in the commercial sector, demonstrate a similar effort in order to contain cost growth.