PORTLAND, ORE. — The Obama administration is buying into an ambitious health care initiative in Oregon, announcing Thursday it has tentatively agreed to chip in $1.9 billion over five years to help get the program off the ground.
Oregon hopes to prove states can save billions on Medicaid without sacrificing the quality of health care. Gov. John Kitzhaber's plan would spend on preventive care to keep patients healthy so they don't need expensive hospitalizations.
"If this works, I think other states are going to be looking at this as a way to manage that patient population," said Mr. Kitzhaber, a Democrat and former emergency room physician.
The federal government could save $1.5 trillion over the next 10 years if all 50 states adopted Oregon's approach, the governor has said.
Medicaid, which provides health coverage for low-income Americans, is jointly funded by the state and federal governments. Federal officials have not yet agreed to grant Oregon a waiver from standard Medicaid regulations, which is needed for the program to be implemented and the money to be spent.
The financial commitment from the U.S. Department of Health and Human Services, while tentative, is a clear public endorsement of the concept and an indication that the administration thinks the initiative holds promise to save money. The state anticipates savings of $11 billion to state and federal budgets over the next decade by reducing duplicated treatments and avoidable hospitalizations.
Finding ways to deliver cheaper health care is a critical challenge as baby boomers age and President Obama's health care overhaul extends coverage to millions more Americans, many of whom will join Medicaid in 2014. Under Mr. Obama's Affordable Care Act, the federal government will pay most of the costs for the new patients.
In a statement, Health and Human Services Secretary Kathleen Sebelius said Oregon's plan "mirrors our plan at the national level under the Affordable Care Act."
"This is another example of how we are collaborating successfully with states in their efforts to find innovative health care solutions that work for their communities," Mrs. Sebelius said.
The Oregon plan would create "coordinated care organizations" to manage all mental, physical and dental care for 600,000 low-income patients on the Oregon Health Plan, the state's Medicaid program. It would focus particularly on the sickest patients with the highest costs, especially people with chronic conditions such as diabetes and asthma or with mental health concerns.
The point, proponents say, is to provide money for services that keep people healthy but don't get much funding - such as paying caseworkers to make sure patients go to medical appointments and take their medications. The state legislature overwhelmingly endorsed the idea this year and last.
The changes will initially apply only to Medicaid patients, but Mr. Kitzhaber wants to eventually extend it to government workers and the general public.