Legislators Meet Behind Closed Doors to Settle Tax

Whichever way it gets diced, legislators are confident they can raise taxes to expand the Oregon Health Plan

April 9, 2009 -- The battle is heating up over a proposed tax that would require hospitals and health insurers to pay for an expansion of the Oregon Health Plan.

The governor and a group of Democratic lawmakers want to raise $600,000 to generate $1 billion in combined federal matching dollars to insure another 80,000 adults and 100,000 children.  

The governor's proposal would levy a 4 percent revenue tax on urban hospitals, along with a 1.5 percent tax on commercial insurers and Medicaid managed care plans. After mounting pressure from industry officials, who prefer a claims tax, legislators turned the decision over to four of their Democratic colleagues – Rep. Mitch Greenlick (D-Portland), House Majority Leader Mary Nolan (D-Portland), Senate Majority Whip Alan Bates (D-Ashland) and Sen. Betsy Johnson (D-Scappoose). They’ve been meeting behind closed doors for several weeks with representatives from the Senate President’s and House Speaker’s office.
Only hospital executives have been inside the room with lawmakers, not insurers, said Doug Barber, who lobbies on behalf of Oregon's insurance agents. Lawmakers seem to favor a 3.9 percent tax on hospitals, and a 1.5 percent tax on insurers and Medicaid plans, he told agents attending the Portland Association of Health Underwriters conference on April 9. 
"Businesses aren't happy with that proposal because it will increase the cost shift," said Barber, indicating there was an "outside chance" the tax proposal would be referred to the ballot, and encouraged lawmakers "to think twice" before making such a move.
Rep. Ron Maurer (R-Grants Pass) has introduced a bill calling for a referendum on the provider tax, however he's unlikely to garner enough votes since Democrats control both the Oregon House and Senate.
The provider tax will  become a reality by May 1, predicted Tom Burns, an aide to Rep. Greenlick who drafted Oregon's massive health reform bill known as House Bill 2009. "Leadership is adamant that this be approved by then because legislators need to start working on the budget after that."
Burns conceded that no Republicans have signed onto the measure.   
The alternative tax proposal recommended by hospital and insurance executives would cover fewer people -- 60,000 children and 49,500 adults. Urban hospitals would pay 0.63 percent of net patient revenues, while a 1 percent tax would be assessed on insurance claims from managed care plans, Taft-Hartley union trusts and self-insured companies such as NIKE through their third-party administrators. “The unions and self-insured companies aren’t happy; there’s a fight going on,” Burns said.
It’s still unknown whether the claims tax would generate federal matching funds. That decision rests with the Centers for Medicaid and Medicare Services. “As far as CMS is concerned, it takes them three to six months to give an opinion,” Burns said. “One option being discussed would levy the premium tax on hospitals and insurers, but include, in the legislation, the ability to tax self-insureds and trusts. Then, if we got CMS approval, we’d move ahead with the claims tax.” 
Felisa Hagins with SEIU Local 49 called the claims tax a “direct pass through to patients. It’s a tax on the sick. Hospitals should pay the most because they get the money back."
See our related stories about the hospital provider tax here and here.

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