A new analysis from researchers at Providence, R.I.-based Brown University’s Center for Advancing Health Policy through Research found Oregon’s 2019 hospital payment cap, limiting what the state employee health plan pays hospitals to no more than 200% of Medicare, resulted in substantial savings that did not harm hospital operations.
The full analysis, obtained by Becker’s, pulled data from the National Academy for State Health Policy’s Hospital Cost Tool, the American Hospital Association Annual Survey, and CMS Hospital Compare, covering 2014 to 2023.
Here are five things to know:
1. The cap saved the state money, with little hospital financial impact. Oregon saw around $50 million per year in savings from the policy, but hospitals saw no statistically significant changes in net patient revenue, patient care expenses or operating margins. Revenue declined on average by $2.6 million per hospital, patient care expenses increased by $4.6 million and operating margins increased by 0.01%.
2. Hospital operations remained stable. The analysis reported no evidence of service line closures, staffing cuts, clinician compensation reductions or shifts in payer mix tied to the policy.
“Our findings suggest that the hospitals exposed to the cap may have the capacity to withstand payment cuts for their state employee business,” the analysis said. “They may simply experience reduced income for activities that enhance their market power, reputation, and underlying costs, such as acquiring new technologies, expanding service lines and increasing executive compensation.”
3. Patient experience improved on several measures. Five of 11 patient experience metrics, including communication from physicians and nurses, explanations of medications, help when needed and nighttime quietness, improved modestly.
“Although all but one other measure showed directional improvement, none of these changes was statistically significant,” the analysis said.
4. Hospitals may have been insulated by the cap’s narrow scope. Oregon’s cap affected a relatively small share of hospital volume, with state employees accounting for around 15% of commercially insured patients. Researchers found no evidence that hospitals made substantial changes to operations in response.
5. More states are exploring hospital price caps. “Our results have important implications for unfolding state reforms to reduce hospital prices,” the analysis said. “During the 2025 legislative session, several states — including Colorado, Indiana, Montana, Nevada, New York, Vermont, and Washington — introduced bills to cap hospital prices for specific services, patient populations, or types of hospitals. These bills are projected to generate substantial savings for purchasers and patients through lower premiums and out-of-pocket spending.”
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