Local hospitals are looking at massive cuts in federal and state funding if proposed reductions in Medicaid reimbursement rates take place.

That probably would increase bills for regular, insured patients as hospitals shift costs, and also result in higher insurance rates, according to hospital representatives.

The cuts - totaling $106 million over two years throughout the state's hospitals - are proposed by the Oregon Department of Human Services.

Like many state agencies, DHS is trying to trim costs because of Oregon's budget shortfall.

The Medicaid cuts would reduce expenditures for the Oregon Health Plan, which serves 400,000 low-income Oregonians.

But by forcing more financial responsibility for Medicaid on hospitals, the cuts would create ripples throughout the medical system, according to the Oregon Association of Hospitals and Health Systems.

Local hospitals could lose as much as half of their current Medicaid payments, said Ken Rutledge, president of the OAHHS.

"To help offset these dramatic funding cuts, hospitals will be forced to shift more costs onto patients with insurance," said Dennis Burke, CEO of Good Shepherd Medical Center. "This raises health insurance costs for business, and ultimately, their employees."

"It's just a vicious cycle," said Kelly Sanders, Good Shepherd spokesman.

The cuts also could lead to job losses, according to the OAHHS.

Good Shepherd hospital would be most affected of hospitals in northeast Oregon, with cuts of $2.4 million.

"It would be a difficult hit to take," Sanders added. "It would put us in a negative position. It would influence our ability to grow and expand with the community."

Jeff Drop, president of St. Anthony Hospital, said the state actually would lose more than double its cuts from the Oregon Health Plan.

Every dollar Oregon spends on the health plan is matched by the federal government with $1.50.

"We should be leveraging the federal dollars available to Oregon, not throwing them away," Drop said.

Instead of reducing Medicaid payments, the hospitals suggested temporarily reducing the number of benefits the Oregon Health Plan provides.

According to the OAHHS, that's what was proposed for tough economic times when the Oregon Health Plan was created.

State police, courts, schools and other agencies also are slashing budgets because of Oregon's budget shortfall.

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