Oregon Department of Transportation
SALEM — If a trio of Republican lawmakers is successful in referring a major state health care financing law to the ballot, at least $333 million in state revenue could be at stake.
House Bill 2391 specifies how the state collects money to pay for the Oregon Health Plan, the state’s version of Medicaid, through assessments and taxes on health care providers.
It’s expected to raise $605 million in revenue in the next two years, according to revenue impact estimates compiled in mid-June by the nonpartisan Legislative Revenue Office.
But a referral, which would freeze certain parts of the legislation from going into effect, could mean the state would not collect $333 million of expected revenues in the next two years, according to state Rep. Dan Rayfield, D-Corvallis, who cited figures he said he received from the Legislative Fiscal Office.
That amount of money couldn’t be leveraged to get a federal match, causing the state to forgo more money built into its upcoming budget, Rayfield said.
Federal funds pay for most of the Medicaid program for traditional populations as well as people newly qualified for Medicaid under the recent Affordable Care Act expansion.
Three Republican state lawmakers — Rep. Julie Parrish, R-Tualatin/West Linn; Rep. Cedric Hayden, R-Roseburg; and Rep. Sal Esquivel, R-Medford — seek to refer certain parts of the measure to voters. They contest the legislation’s funding mechanism, saying that taxes on insurance premiums and a “true tax” on certain hospital net revenues will be passed to consumers.
If the petitioners gather 58,789 signatures by Oct. 5, those parts of the legislation go to the ballot. They would not go into effect unless upheld by voters in a special election on Jan. 23.
If voters approve the assessments and taxes in question, though, the money could be collected retroactively, Rayfield said.
The parts of the legislation the group wants to refer are:
• A 1.5 percent tax on premium equivalents paid for public employee health plans to the Public Employees Benefit Board, which oversees health benefit plans for some of the state’s public employees.
• A tax on insurers — calculated as 1.5 percent of gross premiums earned.
• A section of the law that says that insurers can increase premiums on policies by 1.5 percent.
• A 1.5 percent tax on managed care organizations — also called coordinated care organizations, or CCOs — the networks of health care providers who serve patients on the Oregon Health Plan.
• A 0.7 percent “true tax” on net revenues of certain hospitals.
Parrish argues the controversy over House Bill 2391 and its possible referral is merely the most recent in a series of issues in state health care policy, including the state’s failed attempt at its own insurance exchange and hiccups in redetermining individual eligibility for the Oregon Health Plan.
Part of the petitioners’ strategy: brand the tax as a “sales tax on health care.” In Oregon, where voters seem to relish the fact that there is no state sales tax, that framing may prove effective.
Rayfield criticized what he called the referral effort’s “manipulative tactics” and accused Parrish and Hayden of playing politics with Medicaid.
He believes the hospital “true tax” will not get passed on to consumers, and says that insurance premium taxes were previously agreed upon by the Legislature to fund an earlier program for children’s health that was made obsolete by the Medicaid expansion. That left “head room” for the state to use that funding mechanism again, Rayfield said.
The Corvallis Democrat also argues that should the referral be successful and the specific aspects of the legislation get voted down, legislators would have to find new revenues or make cuts to the health services that the program covers.
Hayden, a dentist who provides care to patients on Medicaid, contends the state won’t kick people off Medicaid even if the referral is successful, given how much money the program’s expansion has brought into the state.
“Truth is, I’m trying to save us from a big blow-up in Medicaid,” Hayden said. “And I think the referral would force this to come back to the Legislature and come up with a plan that doesn’t put us at risk.”
Instead, he has proposed using the Oregon Health Authority’s reserves and increasing existing assessments rather than the new taxes. Rayfield charged that Hayden’s plan doesn’t add up, and that it lacked bipartisan support in the state Senate.
The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group.