Key Element Of Gov. Kate Brown's Medicaid Funding Plan Is Dead

SALEM – A key piece of Gov. Kate Brown's long-term Medicaid funding plan won’t pass this legislative session, blowing a $120 million hole in the governor’s "four-pillar" approach to funding the Oregon Health Plan.

As the Oregon Senate descended into chaos this week, with Republicans fleeing the Capitol to deny a vote on a $2 billion tax for schools, business advocates and lawmakers on both sides of the aisle said a smaller but significant health care tax on large businesses was unlikely to pass this session.

A spokeswoman for Brown confirmed that House Bill 2269, dubbed the Employer Responsibility Act, is off of the table as the legislative session enters its final weeks. The bill would have required large employers that don’t pay for health care for their employees to start contributing either by paying for medical services directly or by contributing to a health care fund that would be used for the Oregon Health Plan or commercial insurance.

“The Governor is still very interested in the concept of the Employer Responsibility Act, and may refine it for consideration in next year’s Legislative Session,” Brown spokeswoman Lisa Morawski said in an emailed statement.

According to the Oregon Health Authority, about 90,000 Oregonians working for large employers were enrolled in the plan in the third quarter of 2017.

The behind-the-scenes death of HB 2269 knocks one pillar off of Brown’s long-term plan to stabilize the program administering Medicaid benefits for roughly 1 million low-income Oregonians.

Only two pieces of Brown’s funding plan have been approved with the legislative passage of taxes on hospitals and insurance premiums. The third pillar -- a series of taxes on cigarettes and e-cigarettes -- would raise about $350 million more. The tobacco taxes are awaiting a vote in the House Committee on Revenue, amid industry opposition and whispers of a possible referral to voters.

Brown eyed the employer health care assessment as the final piece of her Medicaid funding plan. But she acknowledged last week that revenue projections had swelled for a little-discussed second piece of HB 2269 – a health care access fund that businesses with more than 50 employees and inadequate health care benefits would pay into to lower costs for workers enrolled in marketplace plans. The fund was written into the bill as an amendment after its referral to the House Committee on Health Care, appearing to incorporate elements from a related bill that would have taxed businesses with employers enrolled in public assistance programs.

A Legislative Fiscal Office analysis found the fund would have raised about $330 million to $400 million per biennium, raising the total revenue impact to roughly $500 million when combined with the $120 million projected to prop up the Oregon Health Plan — dwarfing the amount that would have helped bolster the Oregon Health Plan.

Several Democrats speaking off the record said they were caught off guard by the size of the health care access fund, which they considered an afterthought when the bill was first brought up. One lawmaker who declined to comment on the record said the bill's structure gave it the appearance of a slush fund, despite its intent to lower health care costs.

Republicans in the minority were eager to pounce on news of the bill's likely defeat, amid a flurry of tax bills that they've tried to stop by resorting to public relations campaigns and parliamentary maneuvers.

"The governor has publicly said basically what I was saying a month ago: It's not ready for prime time," Rep. Cedric Hayden, R-Roseburg, vice chair of the House Committee on Health Care, told The Lund Report. "It's clear to me this wasn't a bill that was ready this session. It was a precursor bill ... (Democrats) will want to return to it in the future."

Brown's comments casting doubt on the bill followed the passage of the $2 billion tax package to fund public schools by the House and came days after the influential business group Oregon Business and Industry announced it would take a neutral stance on the package instead of opposing it.

The group's position and the timing of Brown's comments on HB 2269 led some business advocates to wonder whether a quid pro quo deal had been reached behind the scenes, with Oregon Business and Industry remaining neutral on the larger tax plan and Democratic leaders quietly dropping the health care tax.

In an emailed statement, Oregon Business and Industry President and CEO Sandra McDonough told The Lund Report the organization “has joined other business representatives to oppose HB 2269 because we feel it would be unnecessarily costly burden to Oregon employers. It is our understanding, based on agreements, that this bill will not move forward.”

Lou Ogden, a Republican and longtime former Tualatin mayor who founded the nonprofit Unified Business Oregon after losing a race for Oregon Bureau of Labor and Industries commissioner last year, said he had heard of negotiations as recently as last week to lower HB 2269's business tax burden by about two-thirds.

Democrats noted that budget writers have identified general fund dollars to keep Oregon Health Plan benefits unchanged over the next biennium. Brown had called her four-pillar plan a longer-term effort to stabilize the Oregon Health Plan for six years.

Morawski, Brown’s spokeswoman, confirmed that additional general fund dollars would replace the projected tax revenue to keep the Oregon Health Plan fully funded.

Opponents of the tax say its failure this session is likely to set up a new battle next year if Brown and Democrats push for Medicaid funding as a priority in next year's short session, where Democrats' supermajorities in both the House and Senate will remain unchallenged.

"You know what? There's another session,” Ogden said. “It'll be back one way or another."

Have a tip about the health-care industry or legislation? You can reach Elon Glucklich at [email protected].


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