Why Does Oregon Suck So Much at Spending Medicaid Dollars?

Oregon has a well-deserved reputation as a progressive state, so it should come as no surprise that the state spends a lot of money on healthcare for its citizens. The surprise is how increasingly wasteful and incompetent it is at that spending.

The state released an audit that found the Oregon Health Authority spent $88 million on ineligible Medicaid recipients between the months of March and September. That in addition to revelations earlier in November that OHA made $186 million in improper, wasteful, or overgenerous payments to individuals and healthcare providers.

The report released Wednesday adds damning details to the performance of an agency caught up in repeated scandals and leadership shake-ups over its lack of transparency and poor stewardship of taxpayer dollars. The latest audit focuses on the state’s payouts to ineligible Medicaid recipients, a legacy of OHA’s past IT boondoggles.

Wednesday’s audit comes a little more than a month before Oregon voters will decide whether to approve a $673 million tax on healthcare providers to fund OHA’s Medicaid program.

“The amount of wasteful and incompetent spending at OHA has been staggering and has gone on for at least the past four years,” said Oregon Secretary of State Dennis Richardson, whose office conducted the audit.

Medicaid—the mostly federally-funded, state-managed healthcare program for the poor—comes with specific eligibility requirements (for income, residency, etc.). Following passage of the Affordable Care Act (Obamacare), Oregon had planned to verify Medicaid recipients’ eligibility through something called Cover Oregon, the state’s Obamacare exchange.

However, after spending roughly $300 million the state abandoned Cover Oregon in favor of the federal Healthcare.gov exchange. In addition to the wasted tax dollars, the state was without a systematic method of verifying Medicaid eligibility. Over the next three years, annual eligibility determinations were only conducted sporadically, leaving a long backlog of verifications.

Oregon spent another $116 million on Oregon Eligible (ONE) system—four times what it initially estimated—to fix the problem. ONE was supposed to eliminate the backlog by February, but did not complete the task until the end of August.

Wednesday’s audit determined the delay caused the state to pay out the additional $88 million to ineligible recipients. The audit also uncovered glaring inadequacies in OHA’s ability or even willingness to identify and prevent improper payments.

Declining to audit Coordinated Care Organizations (CCO)—which pass payments between the state and Medicaid providers—resulted in $74 million in overpayments to individuals who were eligible for both Medicaid and Medicare.

OHA reportedly took months to respond to audit requests that should have taken minutes, and often provided incomplete or erroneous information. Lower-level OHA staff were told not to communicate with auditors’ requests directly, but instead pass information through managers.

Auditors also report OHA managers sitting in on their interviews with lower-level staff, something they said might have led staff to be less forthcoming.

During the course of the audit, Lynne Saxton, OHA’s Director, was forced to resign over an unrelated scandal. Her replacement, Patrick Allen, has so far proven more forthcoming about the agency’s shortcomings, revealing in a letter to Gov. Kate Brown that OHA had dispensed at least a further $112 million in improper payments on a grab- bag of programs, including $1.5 million in federal funds for abortions.

The audit comes at a time when an increasing number of national and state-level Democratic lawmakers are endorsing a single-payer healthcare system, in part because they will believe it will save money and reduce inefficiencies in our current healthcare system.

If progressive Oregon is any guide, government bureaucrats are about as good at managing a healthcare system as they are at pretty much everything else.