As part of an eventual statewide set of health insurance reform measures, the State of Oregon has proposed implementing a demonstration program, with Federal cofunding, that would change the State's existing Medicaid program in three fundamental ways. It would: 1) expand coverage to include all persons with incomes up to 100 percent of the Federal poverty level; 2) enroll all covered persons in some form of managed care, such as with a health maintenance organization or a "gatekeeper" primary care physician; and 3) determine acute and primary health care benefits according to a ranked list of services, with actual benefits dependent on the level of program funding. Concern about the effects of Oregon's Medicaid proposal on program recipients, and the potential ramifications of the proposal for the ongoing national health care debate, prompted Congress to ask the Office of Technology Assessment to examine the proposal in detail. The goals of this study are to describe and analyze the specifics of the proposed program and to discuss its most likely implications for the Federal Government, the State of Oregon, and Medicaid beneficiaries. The role of this report is not to critique the existing Medicaid program in detail. Rather, it is to examine the proposed program and especially its relevance to issues of particular interest to the Federal Government: the impact of the program on Medicaid beneficiaries, in whom the Federal Government has a fiduciary interest; and the potential usefulness of Oregon's program if applied in other States.