Hospital Facility Prices Declined as a Result of Oregon's Hospital Payment Cap


Hospital prices for the commercially insured are high and vary widely, prompting states to control hospital price growth. In October 2019, the Oregon state employee plan instituted a cap on hospital payments. Using 2014-2021 data from the Oregon All Payer All Claims database, we performed a difference-in-differences analysis to test the impact of the hospital payment cap on hospital facility prices for enrollees in Oregon’s state employee plan. We found that the cap was not associated with a significant reduction in inpatient facility prices across the post-period but was associated with a significant reduction in the second year. The cap was associated with a 25.4% reduction in outpatient facility prices. We estimate $107.5 million in savings to the state employee plan. We conclude that the hospital payment cap successfully reduced hospital prices for enrollees in the state employee plan over the first two years.

Health Affairs