As negotiations continue on the budget bill President Donald Trump wants Congress to pass, Medicaid is squarely in the crosshairs. The Congressional Budget Office estimates Medicaid could lose up to $880 billion over the next 10 years, and that millions of low-income Americans would lose their health coverage.

The Democratic Party has understandably reacted with outrage. But its “no cuts or reforms to Medicaid, period” mantra creates a false choice between cuts and defending the status quo. On one hand, any action that reduces funding for Medicaid, without also making structural changes to the program, will in fact cause millions to lose coverage. That is unacceptable — and will increase costs in the long run for most Americans. People without insurance tend to access care through emergency rooms, where federal law requires they be seen and treated. That uncompensated cost is reflected in higher premiums for those who have health insurance.

On the other hand, a “no cuts or reforms” position doesn’t ensure the long-term viability of Medicaid, which, like the rest of the U.S. health-care system is financially unsustainable. While it’s right to oppose Trump’s slash-and-burn approach, Democrats shouldn’t be defending a system that produces some of the worst outcomes in the world among high-income nations.

The party needs to come up with a better solution, which would both improve the program and save money. We did it in Oregon. Since 2012, my state has provided Medicaid through community-based coordinated care organizations (CCOs). Faced with rising costs, inefficiencies in care delivery and inequities in outcomes, we looked for ways to focus on health rather than disease, and to reward techniques that worked.

We established a “Transformation Center” to help foster new and better ways to deliver care. We wanted to better manage chronic conditions and keep people out of the emergency room. Dental care and mental health services were considered essential because untreated problems in those areas often show up in ERs. We knew we had to measure performance, including outcomes and patient satisfaction.

And, significantly, we changed the financial incentives. CCOs operate on a budget indexed to a growth rate below medical inflation.

They are required to maintain enrollment and benefits, and also to meet metrics around quality, outcomes and patient satisfaction. This realigns the incentives to focus on health rather than disease, by emphasizing prevention, primary care, and reducing waste and inefficiency. We rebuilt our Medicaid system from the bottom up.

Today, CCOs serve most of the state’s 1.4 million Medicaid recipients, and between 2011 and 2021, operated within the per-member, per-year growth rate, met the required quality and outcome standards — and realized a net cumulative savings of approximately $3.7 billion. That’s not a $3.7 billion “cut” to Medicaid; it’s the result of making the program more efficient and effective to better serve the needs of those who depend on it.

Think of our medical system as a house, built decades ago, and think of Americans as the family that has lived in that house for generations. The way the house was designed made sense when it was built. But over time, the family changed — and so did its needs. The structure of the house, though, remained the same and it’s now too expensive for the family to maintain. At some point, the house must be redesigned so that it meets the evolving needs of the family.

That’s where we are today. The basic structure of Medicaid — and the rest of our health-care system — was put in place some 60 years ago, and hasn’t materially changed since then. Expansions in coverage, such as the Affordable Care Act, which I support, use public subsidies to make health care more affordable for individuals — which is not the same as reducing the cost of care. This simply gives more people access to the same inefficient and unsustainable system, which siphons billions of dollars away from health care to enrich private-equity investors and the shareholders of giant pharmaceutical and insurance companies.

By linking financial incentives to better health outcomes, Oregon has significantly reduced the cost of Medicaid — without cutting enrollment or benefits, without sacrificing quality, and without stigmatizing those members of our community who depend on the program. Democrats should be working to extend the key elements of this model across Medicaid — and the rest of our health-care system as well.

Defending the status quo is neither a long-term winning strategy for Medicaid, nor does it address the legitimate frustration millions of Americans have with our health-care system. The current debate over Medicaid gives Democrats an opportunity to do both. By offering a responsible alternative to the Trump meat-ax approach, we can ensure vital Medicaid services are financially sustainable while also beginning to restore confidence in this important public program.

John Kitzhaber, a former emergency physician, was a three-term Democratic governor of Oregon and author of the Medicaid model discussed in this essay.