Priority Setting: A Sensible Approach to Medicaid Policy?

The state of Oregon is attempting a controversial restructuring of its Medicaid program that promises to apply effectiveness research to set priorities for medical care. Will the application of such methods control costs and improve access to necessary care for the poor as intended? This paper argues that the answer may depend more on the system used to deliver care than on the priority list itself. Capitated delivery systems may provide the flexibility to be responsive to individual patient needs, while "rationing" in the fee-for-service system risks denying some necessary services to the poor.