A landmark 2017 Oregon law that limited how much hospitals can bill state employees’ health care plans has saved the state around $50 million annually without harming providers’ ability to operate, according to a new report.
Researchers with Brown University’s Center for Advancing Health Policy made their findings in a study released earlier this month in the policy research journal Health Affairs. They analyzed the first-in-the-nation measure’s effects on financial, staffing and patient experience data from 22 Oregon hospitals impacted by the policy from 2014 to 2023.
The law prevents large, metropolitan-area hospitals from charging the state more than double what it would bill Medicare enrollees for the same service, though it does not apply to small hospitals with less than 50 beds or those in rural communities.
Analysts found that an estimated $50 million in annual savings generated a 9.5% reduction in out-of-pocket payments for enrollees, which include state government employees and Oregon’s public educators. But the new research also homed in on the effects of those savings when it came to hospitals and their ability to operate.
Since the law went into effect in 2019, the study found that hospital revenue in Oregon reduced by about $2.6 million on average while patient satisfaction scores slightly rose and profitability margins themselves remained steady. Additionally, there were more patients who reported that staff provided timely care with adequate explanation of their medication options.
The new analysis suggests that clamping down on the “highest, most excessive prices” that hospitals charge can still allow hospitals to make a profit, according to Roslyn Murray, the lead author of the study and an assistant professor of health services, policy and practice in Brown’s School of Public Health.
“What this may mean is that prices greater than the cap represent provider rents — such as extra charges based on hospitals’ market power or name recognition — and hospitals may be able to receive lower prices with reduced profitability and still cover their costs and keep running smoothly,” Murray said in a statement. “It also suggests excessively high and increasing prices being paid to hospitals do not represent things that people value.”
But a leading hospital industry group in Oregon sharply disagreed with the study findings. The results of the Brown University study come as multiple high-profile hospital closures and layoffs have occurred throughout the state, including the recent shuttering of the 73-bed Vibra Speciality Hospital of Portland and the 49-bed Asante Ashland Community Hospital.
Oregon’s hospital safety ratings by another industry watchdog group have also been on a significant decline since 2020, with the state ranking 31st in the nation as recently as spring 2025.
Becky Hultberg, president and chief executive officer of the Hospital Association of Oregon, said in a statement that Oregon hospitals are facing significant challenges when it comes to their ability to provide care, arguing that the 2017 law’s rate caps are part of a “cascading series of well-intentioned but disconnected policy choices.”
“This research is disconnected from reality and tone deaf, coming at a time when half of Oregon’s hospitals are consistently operating in the red,” Hulltberg said in a statement. “This month alone, two Oregon hospitals announced the closure of inpatient beds. Oregon’s health care system is in crisis.”
Debates over price capping legislation echo broader tensions between consumer advocates and health care providers in Oregon, who have often sparred over how best to ensure access and transparency without allowing red-tape and regulations to stymie the industry’s growth.
In August, for instance, the 9th Circuit Court of Appeals reinstated a paused 2018 Oregon law meant to ensure transparency behind rising prescription drug prices after a pharmaceutical industry group claimed it infringed on its property and free speech rights. The court rejected the plaintiff’s request for a hearing with a broader panel of judges in October.
In the meantime, several states have considered adopting a price capping model similar to Oregon’s. In Colorado, Indiana, Montana and New York, lawmakers have considered legislation to limit the price of certain hospital services while targeting certain populations. Washington Gov. Bob Ferguson in May signed into law a Medicare-aligned cap for the state’s employees.
“We’re seeing massive increases in premiums each year as a way to try to address the rising costs of health care,” Murray said. “This is a way that states can try to manage some of those rising cost pressures, which are primarily coming from high hospital prices.”
