The question the federal government wants to ask Oregon is this: Do you really think you can persuade Oregonians to be sensible about their health?

Oregon’s Governor, Dr. John Kitzhaber (M.D.) has been saying “Yes,” but if he is the only one saying it, we Oregonians are going to lose a whole lot of money and we don’t have a whole lot of money.

So here’s the deal, as described by New York Times reporter Kirk Johnson on April 12.

Under an agreement signed with the Obama administration last year, and just now taking shape, Oregon and the federal government have wagered $1.9 billion that — through a hyper-local focus on Medicaid — the state can show both improved health outcomes for low-income Medicaid populations and a lower rate of spending growth than the rest of the nation. If Oregon fails on either front, the consequences are grave, potentially tens of millions of dollars in penalties a year, bleeding a state budget still wounded from recession.

So we get this right or we are looking at “tens of millions of dollars in penalties a year.”  Can Oregon be sensible about spending money on “health?”  Less, we hope, on “health care.”  Here’s an example that will help to place the question.  Let me note at this point that I served in Oregon government under Governor Kitzhaber.  I say that not to alert you to any possible bias but only to tell you that I have seen him give this pitch any number of times and he is extremely persuasive.

Mr. Kitzhaber, in an interview in his office at the Capitol, said the anecdotal interventionist health care story he imagines is that of a poor 92-year-old woman who develops congestive heart failure in a heat wave because she has no air-conditioner.

“Under the current system, Medicaid will pay for an ambulance and $50,000 in the hospital,” he said. “What it won’t pay for is a $200 window air-conditioner, which is all she needs to stay in her home and out of the acute medical system.”

Everyone agrees that it is prudent to spend the $200 rather than the $50,000.  Not everyone agrees that when you start spending money on preventing things, you have no easy way to stop spending.

Let’s say, for instance, that this woman is not the only senior citizen who would like to have the state buy an air conditioner for her.  Very sensible people will  say that this expenditure is justified by all the money it will save.  I’m not quite that sensible.  I picture the process by which someone will serve as an advocate for this woman.  The very moment the advocate begins to focus on the air conditioner and not on the money the state will save, the whole program begins to teeter on the brink of insolvency.

The bad thing about preventing health crises is that you never really know what the relationship is between what you did (as a state) and what did not happen.  Let me stop and emphasize that again.  It is the value to us of what did not happen that matters most.  The Feds have, of course, aggregate goals for health spending and health savings.  It is meeting those aggregate goals that will determine whether Oregon wins or loses.  I get that.

But the decisions are not made in the aggregate.  Let me illustrate.  In Eugene, home of my alma mater, the University of Oregon, there is a Community Advisory Council.  It is their job to spend money to make things not happen.  How about this?  Stock gift cards at the doctors’ offices and give them to pregnant women who agree to “go tobacco free” and thereby save the state a lot of money on neonatal costs.  You spend the money on the gift cards; you give them out; then you wait for something (the increased cost of treating their babies) not to happen.

How about treating the moss in low-income housing?  How about getting people to walk more and drive less?  No one denies that those are good ideas, but in every case, the state puts out the money and then waits for some event to fail to happen.  Will there be, for instance, a reduction in the money we spend for cardiovascular care for the people who are walking more and driving less?

It might work.  The states are often called “the laboratories of democracy,” especially when a state does something that actually works.  Maybe this will work in Oregon and then everybody else can try it.  That’s not normally the way it goes, but maybe it will be this time.

The advantage is that Oregon is a collegial state.  Not “collectivist,” really; just used to cooperating on things everyone cares about.  We also do a lot of planning and we do a lot of measuring of results.  We’re good at it and we’ve been doing it for a long time.

On the other hand, Oregon is a state bristling with class antagonisms.  We are, in that way, like all the other states.  I once saw a state senator come out of his chair with anger at a meeting of the Senate Education Committee, of which he was a member.  A very sensible sounding bill had been introduced and the committee was having hearings.  “So what you are proposing,” the Senator said, “is for middle class people to tell poor people how they should raise their children?”  The proponents said No, but he had nailed a nasty truth and the bill died shortly afterwards.

Poor people in Oregon like to live their lives the way they want to.  They don’t care all that much about aggregate federal health costs.  They don’t want to be told by some bureaucrat–even a very local bureaucrat–how they should act.  That applies to a host of behaviors that have direct and predictable healthcare costs.

Gov. Kitzhaber is betting that we can get people to do the things that simple self-interest would ordinarily get them to do.  If we can do that, a lot of healthcare costs can be avoided and Oregon stands to be a policy leader yet again: less spending on healthcare and better health outcomes.

I’m a Kitzhaber fan and I am a very proud Oregonian, but I don’t know that we can get this one done.  I agree with  Mark Pauly, of the University of Pennsylvania, who said, “We don’t know whether Americans are ready for coordinated care, but Oregon keeps trying.  God bless them.”

God bless us all.