Oregon Gov. John Kitzhaber presented a talk to the Center for American Progress today, outlining the reforms his state is attempting in health care. The state is setting up an exchange in accordance with Obamacare, but also using its Medicaid program and its health benefits for state employees as a launching pad to move providers away from the traditional fee-for-service model. What would replace it is an approach utilizing Coordinated Care Organizations — local, community-based hubs through which multiple providers can stay on the same page about a patient’s care — that emphasize coordination, preventative care, and general community health.

In response to a question from ThinkProgress, Kitzhaber also went into greater detail about how his state’s reforms are functioning in the context of Obamacare, how it would fare under the changes proposed in the House GOP budget passed earlier this year, and how everything depends on shifting health care delivery away from fee-for-service:

KITZHABER: We essentially were designing this thing independent of the Affordable Care Act, but there’s no question that there are huge similarities between the Coordinated Care Organizations and the Affordable Care Act…

The alternative — whether its the Medicaid approach or the Ryan Medicare approach — I think misses the target by a long sea mile. First of all, it’s a global budget. If you have more people coming into the system because of federal policies that increase unemployment, you actually get less money per person. So you penalize people who have lost their jobs and need health care through that capped approach. The per member, per year increase gives you the same amount per person and that grows at a fixed rate.

Secondly, neither of those things deal with the fundamental problem, which is the delivery system. They’re just unique, novel, and perhaps politically palatable ways to pay for the same dysfunctional system. So it doesn’t matter if you have a single-payer system, a vouchers system, or the private commercial insurance system, if you’re paying for the wrong delivery model you’re going to get the same results.

Watch it:

Oregon’s move to coordinated care and delivery system reform is mirrored at the national level by the pilot programs passed under Obamacare, through the law’s reimbursement reforms and its creation of the Independent Payment Advisory Board for Medicare. Like Oregon’s use of Medicaid, Obamacare will use IPAB and Medicare’s immense leverage in the health care market to drive the delivery of health care away from the fee-for-service model.

There’s already evidence that providers and hospitals are reforming in anticipation of this new pressure. However, Vice Presidential Candidate Paul Ryan has routinely dismissed IPAB as “fifteen unelected bureaucrats,” and the budget he wrote with his fellow House Republicans would eliminate these reforms wholesale. Instead, they would simply slash health care spending, likely at severe cost to seniors and other vulnerable Americans, while trusting the private insurance markets to find their own way on delivery system reform. Beyond raw ideology, there’s no clear reason why this approach is preferable to using Medicare’s immense bargaining leverage to help the process along.

Republicans on the House Energy and Commerce Committee will consider legislation repealing a crucial Obamacare consumer protection that requires insurers to spend at least 80 percent of their premium dollars on actual care rather than overhead or profits. The Center on Budget and Policy Priorities explains that the bill, H.R. 1206, amounts to a massive premium hike for more than 13 million Americans:

Nearly 13 million people recently received more than $1 billion in rebates on their health insurance premiums due to a health reform provision known as the “80/20 rule” or the “medical-loss ratio” standard. [...]

Under H.R. 1206, insurers wouldn’t have to count the commissions they pay to agents and brokers as part of their overhead.  Insurers could spend more of the premium on costs that don’t affect patients’ health or medical care, including greater profits, so consumers would be paying more for less value in their health insurance. [...]

The average rebate was $151 per family across all markets; in some states, average rebates by market topped $500 per family. [...] Regardless of how insurers pay the rebates, H.R. 1206 would likely reduce or eliminate how much consumers receive under the 80/20 rule.

This Obamacare provision is called “medical-loss ratio,” which is industry jargon for the ratio between premiums charged by insurance companies and the amount of that money insurers use to pay for actual medical services. By establishing a predefined, base medical-loss ratio of at least four dollars spent on medical care for every dollar spent on overhead or profit, Obamacare forces the insurance industry to streamline their business practices and direct more money toward direct health care services.

In attempting to weaken the medical-loss ratio provision, House Republicans are forcing Americans to subsidize insurance company profits rather than their personal care, thus raising overall costs in the industry while reducing the quality of American health care.

For the first time in six years, the city of Atlanta will see its health care costs and city employees’ premiums go down instead of up, to the tune of $3.2 million in savings. As the Atlanta Journal-Constitution reports, the city’s contributions to health plans for more than 19,000 residents were initially expected to increase by $4.3 million, but new projections show that health costs will actually drop thanks to a new emphasis on preventative care, negotiations between the city and insurance providers, and massive savings in Medicare Advantage plans:

“The things we can control, we’re trying to control,” said Yvonne Cowser Yancy, the city’s human resources commissioner. [...]

Yancy said the city is trying to be more proactive in controlling costs. It’s encouraging employees to sign up and visit primary care physicians rather than call an ambulance or use the emergency room for treatment.

The city plans to spend about $1.7 million on wellness initiatives over the next three years, including adding four new employee fitness centers, making personal fitness trainers available and offering Tai Chi and Zumba classes. Last year saw a slowdown in Atlanta’s rate of growth in claims for medical treatment, a key factor in setting insurance rates. [...]

One of the biggest savings was a 42 percent cost cut for retired employees over 65 who are eligible for Medicare Advantage. Yancy said switching to United HealthCare, a larger provider with bigger economies of scale, helped the city reap that benefit.

Reducing payments in Medicare Advantage is exactly the kind of cost-cutting measure that President Obama’s health reform law encourages. The Medicare Advantage program, which allows beneficiaries to enroll into a private plan rather than the traditional fee-for-service Medicare program, has a history of over-paying insurance providers. While Atlanta was able to reduce its Medicare Advantage costs by switching to a cheaper health insurance provider, Obamacare attacks the actual root of the problem. Beginning in 2014, Obamacare diverts $716 billion from Medicare by eliminating useless subsidies to insurance companies and providers under Medicare Advantage. Although the GOP has tried its best to convince the country that Obama’s cuts to Medicare Advantage are weakening the Medicare program, they are actually intended to stem the tide of excess payments — and help ensure that cities like Atlanta won’t have to scrounge for deals with private insurance providers in order to save on Medicare Advantage costs.

And overall, Atlanta’s cost-saving experience highlights the fundamental roles that preventative care, wellness initiatives, and primary care physicians play in curbing medical costs. Obamacare attempts to lower health costs by producing a healthier population, and that’s why the health reform law mandates free preventative health services and funds community health centers staffed by primary care providers. Obamacare encourages actual “health care,” rather than “sick care,” and Atlanta’s recent savings demonstrate the wisdom of this approach to the country’s medical problems.

After Republican attorneys general in seven states tried to block the Obamacare provision requiring contraceptive coverage in employer-provided insurance plans, a federal judge struck down their lawsuit in July. But that won’t convince the Republican officials to give up the fight. Michigan Attorney General Bill Schuette (R) announced yesterday that he is seeking to appeal the U.S. District Court’s decision.

In a statement announcing his decision to appeal, Schuette alleges that Obamacare’s contraceptive provision violates Catholics’ constitutional right to religious liberty by forcing them to pay for contraception against their beliefs:

Religious liberty is America’s first freedom. Any rule, regulation or law that forces faith-based institutions to provide services that violate their free exercise of religion is a flat-out violation of the First Amendment. I will continue to uphold my duty and protect the constitutional rights of the citizens of Michigan.

However, Scheutte’s argument about “religious liberty” falls flat. In fact, the birth control regulation already includes an exemption for places of worship, as well as a widely supported workaround that allows Catholic-affiliated institutions — such as hospitals, charities, and universities — to refer employees to an outside insurer for contraception coverage if they object to covering the service directly. In his defense of the health reform law’s birth control provision, President Obama has reiterated his commitment to religious freedom while pointing out that “it’s not fair” for Catholic institutions to deny their employees birth control when there is already a compromise in place that prevents Catholic organizations from directly paying for contraception that they oppose.

The seven Republican officials — in addition to Schuette, the lawsuit was filed by the attorneys general in Florida, Nebraska, Ohio, Oklahoma, South Carolina, and Texas — do not represent the only legal challenge to the health reform law. Dozens of Catholic institutions also filed a joint lawsuit against the Obamacare contraception provision at the beginning of the summer, despite the fact that many of them already included contraceptive services in their insurance plans before the Obamacare provision took effect on August 1.