SALEM – A legislative committee on Tuesday endorsed a new prescription for the financially strained Oregon Health Plan.

The proposal – which will trim services and rely more heavily on managed care to more cheaply provide medical care to the needy – was lauded as a milestone that is key in keeping the plan intact.

”This is a platform that will make it work,” said Rep. Alan Bates, D-Ashland, a family doctor and a member of the House Audit and Human Services Reform Committee.

The legislation, cobbled together over the past four months, passed the panel unanimously and is expected to clear the Oregon House Thursday and then later go on to be passed by the Senate and signed into law by the governor.

Rep. Steve March, D-Portland, said the effort helps maintain the spirit of the 10-year-old health plan, which was once hailed as a national model for its approach of limiting services to allow more people to be covered – and reduce the ranks of the uninsured.

There was a notable absence among the committee members Tuesday: Chairman Rep. Ben Westlund, R-Tumalo, who spent the better part of the session spearheading the effort to develop the plan, was absent as he prepares for surgery to remove a tumor discovered last week in his lung.

In a phone interview, he said the bill is a victory for low-income Oregonians who depend on the state for health coverage.

”It’s a much more efficient delivery system that will provide more access to Oregon Health Plan patients for less money, about $150 million less” over the next two years, he said.

But the legislation will not save enough money to keep more than 100,000 people from being jettisoned from the plan – a result of the state’s budget woes.

Rep. Jeff Kruse, R-Sutherlin, one of the chief architects of the revision, said the bill only deals with the structure of the health plan and will make it operate more like a private-sector plan.

The high-profile debate about whether to raise new revenue to keep more people covered is a discussion for a different day, he said.

The legislation would make several changes:

– The state would make more recipients get their coverage through managed care providers;

– Extra screening would be done to ensure people don’t improperly get benefits;

– Some coverage would be reduced or eliminated such as eyeglasses, adult dental care and surgery for hemorrhoids and carpal tunnel syndrome;

– And prescription drug management would shift to doctor-run groups with greater ability to use lower-cost generics.

Because the state cannot afford what is projected to be a $750 million annual price tag – with federal matching dollars the total would be $2 billion – the current plan is to only cover those who qualify under federal Medicaid eligibility guidelines, such as poor children, the disabled and pregnant women.

The people who would be turned out would be the working poor that were added to the health plan during the 1990s.

In addition, those who would stay on the health plan, roughly 350,000 people, could only be covered for office and hospital visits. But the new legislation could change that.

The cost savings in the overhaul would at least allow those same people to also get coverage for prescription drugs and durable medical goods such as wheelchairs.

Scott Gallant, a lobbyist for the Oregon Medical Association, said the plan makes a sensible change by returning more control to 14 independent groups run by doctors and hospitals, which have proved to be more effective at holding costs down than the state.

The state, for instance, does not have the same ability to keep drug costs down by utilizing more generics and carefully tracking prescriptions.

Bend-based Central Oregon Independent Health Services, which administers the plan in 10 counties east of the Cascades, was a model for several of the changes. Most Oregon Health Plan clients already receive their medical care through that business.

Gallant said the structural changes – while subtle to the general public – will go a long way toward getting medical providers to stay in the plan.

But the Legislature’s work is a long way from being finished, he said.

The medical industry remains concerned with the notion of 100,000 or more people losing health care – and believes the state must take steps to at least offer some coverage to them.

Otherwise, the likelihood is that more uninsured people will show up at emergency rooms and not be able to pay – meaning the bills will get shifted to private insurers.

”Other committees are going to need to address the real problem, the 10,000-pound gorilla,” Gallant said. ”Where do you find the money?”

James Sinks can be reached at 503-566-2839 or at jamess@cyberis.net.