This Legislative Session a lot of attention has been focused on Public Employees Retirement System reform, limiting tax deductions, public safety spending, transportation projects and education funding.

This is certainly understandable. The lingering effects of the recession have forced us to make tough decisions about these big-ticket budget items. We must remember, however, that no discussion of Oregon’s long-term budget outlook is complete without talking about health care reform.

Oregon has been a leader in this area. We are far ahead of most states when it comes to implementing a Health Insurance Exchange. We have also established a new and innovative health care delivery model to serve Oregonians who qualify for Medicaid: our network of Community Care Organizations.

While these reforms are incredibly important, our job is not done. We must remain focused on health care transformation because it is the key not only to substantial cost-savings for our state, but also to opportunities to boost the business environment, keep people out of prison, enhance public safety and improve the lives of Oregonians in countless other ways.

At a growth rate of 7.6 percent annually, health care currently represents one of the fastest growing sectors in Oregon’s economy. In 2010, 12 percent ($3.3 million) of the total health spending in the state went toward the Oregon Health Plan (Oregon’s Medicaid Program). Oregon currently is leading the nation with our innovative Medicaid transformation, made possible by the Center for Medicare and Medicaid waiver signed in January of this year.

We must thoughtfully implement reforms already under way to ensure we fully realize potential cost-savings and health care delivery improvements. As part of the waiver, the state has agreed to bend the cost curve and reduce the increase in medical inflation in OHP by 2 percentage points within two years. To aid in this endeavor, the federal government has agreed to invest an additional $1.9 billion over five years into the program and is allowing Oregon to use Medicaid dollars more flexibly to develop a more integrated, coordinated, high-quality system for OHP recipients that achieves better health outcomes.

If we are successful in reducing the growth of spending in OHP, we can save $11 billion over the next decade. If the lessons learned from reform in OHP can be spread to the wider health care sector, the savings will multiply exponentially. These savings will help stabilize or decrease insurance premiums paid by the state, creating savings that can be used to hire more teachers and stimulate the economy.

Compare this with the $400 million over two years that the most recently debated PERS reform proposal is estimated to save, and one can see just how much potential lies in cost savings in the health care sector.

Looking at dollars saved through health care transformation, however, does not truly capture the wide-reaching downstream effects that health reform can achieve for Oregon. A healthier population means healthier students, who have better attendance at school, are better able to engage in learning and more likely to graduate high school. It means a healthier work force, which translates into more productive employees and a competitive edge for the state.

For similar reasons, I believe a vital next step for health reform in Oregon is a comprehensive transformation of our mental health system. I see an upfront investment in mental health and addiction services as critical to long-term cost-savings and to the well-being of our great state.

Improved access to mental health care and better integration of physical and behavioral health services will ensure that people with mental health care needs are identified earlier and can get help before reaching crisis. In addition to being the right thing to do for those who struggle with mental health and substance abuse issues, I believe these changes will save health care costs associated with long-term hospitalization, make Oregon a safer place to live, reduce homelessness and decrease stress on our prison system.

We have all worked hard to improve Oregon’s health care system and we have made amazing progress, but the job is far from done. I urge all Oregonians to make a continued commitment to leading the nation with health care innovation that will improve the lives of Oregonians while making significant contributions to the economic wellbeing of the state.

State Sen. Elizabeth Steiner Hayward (D-Northwest Portland/Beaverton) represents District 17.

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