Oregon Experiment


Health Economics

  • In 1989 the US state of Oregon initiated a controversial reform of its Medicaid programme by simultaneously increasing the number of people it covered but reducing the number of services that were insured. The services included were to be based on an explicitly prioritized list after extensive consultation with the public (though not much deliberation that involved them). The scheme was introduced in 1994, having gained federal approval from the Health Care Financing Administration.

    A Health Services Commission developed a prioritized list of paired diagnoses and treatment. The process entailed much public consultation and focus groups. Criteria such as the probability of death or disability with and without treatment were used in ranking procedures. The list of approved diagnoses/procedures was subjected to sensitivity analysis and eventually had 745 items (in 1995) of which the top five and five around the cut-off point of 578 are in the box.

    The creation of this list represents one of the world's most significant excursions into explicit ' rationing ' of health care. Despite its many imperfections, and although cost-effectiveness was not an explicit criterion, there would probably be widespread agreement that treatments above the line are more cost-effective than ones below it and that the ones ranked highest are properly so ranked.