Oregon AFL-CIO Takes Aim at Hospitals

Hospitals take fire in a fight over expanding the Oregon Health Plan

April 7, 2009 -- In a sign of how much is at stake over a hospital provider tax, Oregon AFL-CIO and a coalition of labor groups, doctors and nurses launched a statewide radio ad campaign aimed  at hospitals called Save the Oregon Health Plan.

The group supports a 4 percent tax on the state’s 25 urban hospitals, which would raise more than $200 million. But nearly every hospital in the state, except OHSU, opposes such a tax burden.

Instead hospitals favor a 1 percent claims tax that would include union trusts, self-insured companies, commercial insurers and Medicaid managed care plans. 

In an advertisement heard on AM620 KPOJ, the group accuses hospitals of opposing reform while spending millions of dollars on executive salaries and fighting labor disputes. On the group’s Web site, there is a much tamer radio ad posted.

“Hospitals are not paying their fair share to support the Oregon Health Plan. And that’s the bottom line,” said Katherine Pfeiffer, who works for Pac/West, the lobbying firm that represents the campaign. She declined to say how much money was being spent on the advertisements.

The ad campaign marks the first and only media buy in the high-stakes battle over the provider tax. 

What you should know

In 2007, Oregon hospitals earned nearly $500 million in net income, 85 percent of which came from 25 urban DRG hospitals, the only hospitals that would pay the 4 percent tax proposal recommended by Governor Ted Kulongoski. 
Kevin Earls, spokesman for the Oregon Association of Hospitals and Health Systems, characterized the position of the industry as “first thing’s first.”
“There’s been a bit of a frenzy around how much more we can do to add people to the health plan, a goal that everyone shares,” Earls said. “But in that frenzy, we’ve lost sight of the much bigger question: What about the thousands of people who are already on the Oregon Health Plan. How are we going to cover them at a time when the state is facing a $5 billion revenue shortfall?”
For its part, the hospital association came out with an alternative proposal, which includes a .063 percent hospital revenue tax to maintain current OHP enrollment, which hospitals now pay. Behind the scenes, the percentages are being jostled against separate negotiations with health plans over their part of the tax.
“Everybody tells me there are 36 votes for the provider tax,” said Tom Burns, an aide to Rep. Mitch Greenlick (D-Portland), “Whether it’s a 2 percent or 4 percent tax on hospitals we don’t know. The votes are there to get $600 million. How we will get to $600 million is still being worked on.”
Signaling that hospitals are concerned about the public relations fallout, Hospital Association President Andy Davidson offered the following advice in an email sent to his members on March 11.
If you hear your legislators, your community health care advocates or one of your colleagues suggesting that we are standing in the way of reform, remind them of the sweat equity we’ve brought to the game and ask them what they are willing to do to support our efforts,” Davidson wrote. “We should all be proud to be a part of an association that is operating with very high-minded intentions.  I know I am.”

No protection against pass-through

Even if lawmakers muster the will to tax the hospital industry, there’s little chance lawmakers can prevent hospitals from passing on the additional costs to commercial insurers and the uninsured.
Hospitals will not absorb those losses, Earls said, leaving one obvious conclusion. “We don’t support any tax program that requires us to cost shift on to businesses or other individuals. I don’t think anyone would tell you they have the votes to pass a healthcare tax that depends on cost shifting to the private sector. Why would the legislature do that?”
Pfeiffer said hospitals are going to cost shift anyway. “If people aren’t covered by the Oregon Health Plan, they are going to pick that up on charity care. The situation would be made worse if we don’t pass the provider assessment.”

Take Action

See the hospital by hospital cost impact analysis by the state to a proposed provider tax.
See the hospital association’s own analysis and alternative proposal here.
Call your legislator by dialing 503-986-1187 within Salem and 1-800-332-2313 outside Salem.



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