The single-funding proposal has some Republican support for further study
April 12, 2011 -- A bipartisan group of lawmakers are behind an idea that would look into using a sales tax to fund universal healthcare in Oregon.
Democrats took pains to describe the concept as a single-funding proposal rather than a single-payer initiative because it would maintain commercial health insurers similar to managed care organizations operating under a global budget.
Single-payer supporters appear intrigued, but not in full support yet. They asked that a system eliminating health insurance companies also be considered.
If realized, Oregon would be the first state in the country to enact a dedicated funding source to extricate health insurance coverage from employment. Vermont and Rhode Island among several other states, have similar proposals in the works for universal coverage.
Senate Bill 972, called the Oregon Healthcare Ingenuity Plan, directs the Oregon Health Authority to scrutinize the idea and come back to the legislature in 2012. The plan would then be put to a vote on the November 2012 ballot.
The idea involves a broad-based sales tax around 5 to 7 percent that would generate around $11 billion to $12 billion, enough money to provide every Oregonian with an essential benefits package, based on a preliminary analysis by the Office of Health Policy and Research. The net premium revenue for the top Oregon insurers
is around $7 billion per year.
In other words, both individuals and businesses would no longer pay a health insurance premium, replaced instead by a sales tax – excluding groceries, utilities and shelter – paid by individuals based on consumption.
The concept is spearheaded by John DiLorenzo, an attorney and well-known Salem lobbyist.
“We should study this proposal because it will be a great deal for Oregonians,” DiLorenzo told members of the Senate Committee on Health Care Human Services and Rural Health last week. “All one needs is a calculator to come to that conclusion.”
For example, a person currently spending $600 a month on health insurance premiums would have to spend more than $100,000 a year for a 7 percent sales tax to match what he or she would spend on health insurance. And, a young person spending $100 per month would need to spend more than $17,000 for the tax to be a wash.
Other benefits include expected job growth when businesses would no longer need to pay the 15-20 percent of their revenue on health insurance. The state would also receive greater income tax revenue in return.
“Businesses could focus on business,” DiLorenzo said. “Women in abusive relationships could leave them without fear of healthcare for their children. People could pursue work they’re good at rather than employment as a means for an end.”
Detractors might say a sales tax would hurt businesses at the same time. And Oregon voters are notoriously opposed to a sales tax.
The state already has high income and property taxes. But compared to health insurance where the older and sicker pay more, or can’t buy it at all, a sales tax is expected to fare better in public opinion, especially if people understand they would no longer need to pay a health insurance premium, say supporters of the bill.
Ryan Fisher is a lobbyist for the Community Action Partnership of Oregon, which works on issues related to poverty, and co-chairs the Human Services Coalition of Oregon.
“What attracted me most from a low-income perspective is the disconnection between health insurance and employment,” Fisher said. “It’s certainly an idea from the moment I heard it. I just keep thinking about. I think there’s some merit to it.”
Fisher said it’s too early to tell how it might play out among progressive groups. Low-income advocates might lobby for offsets in other taxes such as the earned income tax credit. There are also questions around the benefits package.
“It’s very early,” Fisher said. “This is a 50,000-foot view at this point. What matters is how some of the details are handled.”
Sen. Alan Bates (D-Ashland), who along with his colleagues, Sens. Chip Shields (D-Portland), Laurie Monnes-Anderson (D-Gresham), Jeff Kruse (R-Roseburg) and Frank Morse (R-Albany), is the bill’s sponsor, and voiced some skepticism of how a sales tax might play out among voters.
“The public’s first reaction is going to be sales tax ‘no,’” Bates aid. “We have to get past that and have that discussion and not be fearful of doing that because we have elections coming up.”
The committee will hold a work session on the bill Thursday.
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