Lawmakers in the Oregon House voted Thursday to pass a $550 million health care tax plan they said was necessary to prevent cuts to the state’s Medicaid program.
The legislation, which now goes to the Senate, includes a tax increase on hospitals and new taxes on health insurance plans. Gov. Kate Brown supports the bill, and said last week it’s among her three top priorities for lawmakers to approve before going home by July 10.
The Democrat-majority chamber also turned down an effort by Republicans to authorize only one year of funding, instead of the normal two, for the state health authority because it hasn’t been able to verify tens of thousands of Oregonians’ eligibility for Medicaid. The scope of that problem, including wild escalations in costs to address it, was brought to light Wednesday by The Oregonian/OregonLive.
The health provider bill was the first major tax plan to receive a floor vote this session, as lawmakers attempt to close a $1.4 billion shortfall in the next two-year budget to maintain current programs and services.
Much of that deficit comes from the Oregon Health Authority, and Democratic budget writers warned in April that they would have to throw more than 350,000 low-income Oregonians off Medicaid if they could not raise more than $500 million. Republicans pushed back against the claim, saying the state could preserve the low-income health plan with a smaller tax.
The 36-23 vote on House Bill 2391 reflected the partisan divide, with a lone Republican, Rep. Sal Esquivel of Medford, joining all House Democrats present in voting “yes.” Democrats needed at least one Republican vote to achieve the three-fifths supermajority necessary to raise taxes.
Rep. Julie Parrish, R-West Linn, said the new 1.5 percent tax on health plans including those for some state employees would contribute to higher university tuition and K-12 education costs. “It is just shameful who we’re asking to pick up the tab, while large corporate interests don’t have to pay their fair share,” Parrish said, referring to self-insured companies that she said would not pay the tax.
Rep. Dan Rayfield, D-Corvallis, carried the bill on the House floor Thursday. He said it had “broad consensus” from the health care industry and others involved in negotiating the plan. Rep. Rob Nosse, D-Portland, said the insurance tax could be passed on to students, but it would only amount to a few dollars a month. “There’s really no alternative,” Nosse said.
Oregon needs more money to pay for Medicaid because the federal government plans to cover a smaller share of the costs of the state’s health care program for the poor. Much of that decrease was anticipated under the Affordable Care Act, which initially paid for 100 percent of states’ Medicaid expansions but then asked states to begin picking up part of the cost. The federal government is also paying less for other Oregonians on Medicaid because the state is doing well financially.
The tax plan would extend and increase an existing tax on large hospitals’ revenues. It would also allow for a new tax on small rural hospitals and a payment to the state from Oregon Health and Science University. It also includes a new 1.5 percent tax on certain health plans and coordinated care organizations, which provide health care to Oregonians on Medicaid.
Lawmakers also voted Thursday evening to pass a $2.2 billion general and lottery fund budget for the Oregon Health Authority. House Bill 5026, which passed on a 37-22 vote, was the first major general fund budget to pass in the House. An $8.2 billion plan to fund K-12 schools passed out of the Senate last week, but it has yet to get a floor vote in the House.
Last month, House Republicans called for the Legislature to pass a one-year budget for the health authority after Secretary of State Dennis Richardson raised concerns the health authority was dispensing millions of dollars to Medicaid clients without annual eligibility checks. Republicans said the one-year budget would allow time for the agency to finish vetting its Medicaid rolls.
Rayfield said he has been having “very difficult conversations with the Oregon Health Authority” for the past several months and promised to hold the health authority accountable. The Democrat also cited the fast-growing cost of the state’s Medicaid eligibility computer system detailed in a story by The Oregonian/OregonLive this week.
“I’m not satisfied where we are, madam Speaker,” Rayfield told House Speaker Tina Kotek, D-Portland.
— Hillary Borrud