Earlier this year ECONorthwest, one of the Pacific Northwest’s most respected economic consulting firms, conducted modeling to determine the implications of applying key elements of Oregon’s Coordinated Care Organization model nationally. The finding suggests a potential ten-year total fund savings of almost $1 trillion. See overview here.
This work assumed a two percent reduction in the average annual per capita growth in the Medicaid from 5.1% to 3.1% per member per month; and a $24 billion federal investment in the first few years of implementation to help states transition to a more efficient, cost-effective, and outcome-based delivery model. The modeling did not attempt to delineate how states should transform their Medicaid systems—recognizing that approaches would vary—but all would be measured against the lower spending targets and clear access, quality and outcome measures.
The findings project a net ten-year cumulative total funds savings of approximately $740 billion, split between the federal and state governments. If long term care expenses were included in this care model, the savings would be far greater—not to mention the implications of extending it to Medicare and the commercial market.
The modeling also looked at the implication of bringing Medicaid eligibility for all those states that did not expand the program under the ACA up to 138% of the federal poverty level under a new “CCO-like” care model.
Finally, in additional to modeling on a nation basis, ECONorthwest also applied these assumptions to two specific states: a “Blue” expansion state (Colorado) and a “Red” non-expansion state (Alabama).
The intent of this modeling work was not to suggest that the CCO model is the answer to the divisive debate over the U.S. health care system, but rather to create a dialogue around this model, which has demonstrated its potential to achieve cost savings while ensuring broad access to health coverage, while improving quality and outcomes.
See comprehensive evaluation of Oregon’s CCO model over first five year waiver period here.