Authors
Affordability is an important policy objective, not just for the State, but for providers and hospitals, often large employers themselves, alike. For affordability initiatives to be effective, they must accurately identify the factors driving cost growth while carefully weighing the impact of policy decisions on patient access.
Unfortunately, the Cost Growth Target Program appears to do neither.
Cost Growth Target Program misses the big picture
The Cost Growth Target report concludes that hospital prices continue to be a major contributor to spending growth. By focusing primarily on prices rather than the factors driving the cost of delivering care, the analysis risks mistaking the outcome for the cause. The report identifies where spending growth has occurred, but falls short in explaining why that growth has occurred.
What the Cost Growth Target Program characterizes as higher hospital prices is often the product of broader economic and structural pressures affecting the health care system, including workforce shortages, pharmaceutical inflation, supply costs, increasing patient acuity, lack of access, regulatory requirements and chronic Medicare and Medicaid underpayment.
One of the most significant omissions from the Cost Growth Target analysis is the limited attention given to Medicare and Medicaid, where these two payers do not cover the cost of health care. While the report identifies hospital prices as a major contributor to spending growth, it does not meaningfully examine how reimbursement from government programs that falls below the cost of care influences those pricing dynamics.
Hospitals throughout Oregon care for large populations of Medicare beneficiaries and Oregon Health Plan members. At Asante, approximately 75% of our patients are covered by Medicare or Medicaid. These programs are essential to the communities we serve and central to our Mission as a health system. However, reimbursement from both Medicare and Medicaid routinely falls below the cost of providing care.
As a result, discussions regarding commercial spending growth cannot be separated from the broader reimbursement environment in which hospitals operate. Non-profit hospitals must continue to provide care regardless of a patient’s insurance status, and the financial losses associated with Medicare, Medicaid and uncompensated care do not disappear simply because they are reflected in a different payer category.
By failing to meaningfully evaluate how government underpayment influences provider finances, the Cost Growth Target Program omits one of the most significant factors shaping health care spending and, in doing so, risks drawing conclusions from an incomplete and potentially misleading analysis.
Workforce shortages and access challenges are important cost drivers
Asante is also concerned that the Cost Growth Target framework does not adequately evaluate the relationship between workforce shortages, access barriers and health care spending growth.
Like many areas serving rural and underserved patients, southern Oregon continues to experience shortages of physicians and advanced practice providers in primary care and across multiple specialties. These workforce shortages affect both access to care and have direct implications for health care costs.
This will be compounded in future years when federal policy leads to a substantial loss of insurance for Oregon residents – with increasing numbers of patients accessing the health system for emergency care.
At the same time, workforce shortages increase provider expenses. Health systems throughout Oregon are competing nationally for a limited supply of physicians, advanced practice providers and other clinical professionals. Recruitment incentives, contract staffing and other workforce stabilization efforts all contribute to rising costs.
If Oregon wishes to meaningfully address health care spending growth, workforce supply and access to care must be part of the conversation.
Concerns regarding target setting
Asante shares concerns raised repeatedly by stakeholders regarding transparency within the Cost Growth Target program, as well as whether the current target appropriately reflects the economic environment facing Oregon’s health care system.
The program has now documented spending growth above the target for multiple consecutive years. This should prompt policymakers to ask whether the benchmark itself reasonably reflects current market conditions and the realities facing providers, patients, employers and payers throughout the state.
The gap between the target and actual performance suggests that broader economic forces may be influencing health care spending to a greater degree than the current framework recognizes. Workforce shortages, pharmaceutical cost increases, demographic changes, inflationary pressures, and persistent Medicare and Medicaid reimbursement shortfalls have all materially affected the cost of delivering care during the reporting period.
These concerns were raised by numerous participants in the Cost Growth Target Workgroup convened to develop recommendations for the 2026-2030 target period, including Asante. Following extensive discussion and stakeholder engagement, the workgroup’s majority recommendation was to establish a 5.5 percent target. Notably, many workgroup participants viewed that recommendation as a compromise designed to balance affordability goals with the economic realities facing Oregon’s health care system.
OHA ultimately declined to adopt the workgroup’s recommendation and instead established a 3.75 percent target for the 2026-2030 measurement period. Although the target applies prospectively, the most recent Cost Growth Target report found statewide spending growth of approximately 6.7 percent in 2024, a result that aligned more closely with the workgroup’s recommendation than with the benchmark ultimately adopted by OHA. This outcome raises legitimate questions about whether the current target appropriately reflects the economic realities facing Oregon’s health care system.
The concern is not merely academic. The same agency charged with establishing the benchmark is also responsible for evaluating compliance and imposing financial penalties on entities that exceed the target. For that reason, it is essential that benchmarks be grounded in transparent methodologies, market realities, and a comprehensive understanding of the factors driving health care spending.
When the benchmark diverges significantly from observed conditions and the recommendations of the workgroup convened to advise on its development, confidence in the fairness and effectiveness of the program is undermined.
Final caution
A substantial amount of the Cost Growth Target discussion centered around two presentations by out-of-state academic researchers. We urge caution before relying on the September 1 presentations on medical pharmacy and physician-administered drug spending to set Oregon-specific policy.
By their own terms, these analyses rest largely on national and multi-state data rather than Oregon market conditions, and they document where drug spending occurs without assessing how the programs and payment arrangements they examine, including 340B, affect patients’ access to care.
That omission matters in Oregon, where rural and safety-net providers operate amid workforce shortages, an aging population, high Medicaid and Medicare enrollment, and thin margins, and where 340B savings help offset chronic Medicaid and Medicare underpayment and sustain services that would otherwise be difficult to provide.
The Oregon Health Policy Board should prioritize input from Oregon hospitals and clinicians who experience these challenges every day and understand how proposed policies will affect access to care in their communities, rather than relying more heavily on analyses generated outside the state.
Spending data divorced from that context risk obscuring the financial realities that make care possible in many communities.
We encourage the Oregon Health Policy Board and policymakers to weigh these national findings against Oregon-specific evidence, local provider expertise and on-the-ground experience, and a fuller analysis of access to care impacts before drawing conclusions, so that affordability measures do not inadvertently undermine access for the Oregonians who depend on these providers.
