Oregon House Passes Provider Tax, Oregon Health Authority Budget

Rep. Sal Esquivel, R-Medford, joined all 35 House Democrats to pass the $548 million tax deal to continue funding the Oregon Health Plan, after which the House also passed a $19.9 billion budget for the Oregon Health Authority.

Oregon House Democrats pushed through the Oregon Health Authority budget and a new provider tax in a late Thursday afternoon session on a 36-23 tally, getting just the one Republican vote needed to move the legislation package on to the Oregon Senate.

“Our vote today to guarantee healthcare to Oregonians is in stark contrast to what’s happening in D.C., where they’ve talked about taking it all away,” said Rep. Dan Rayfield, a sophomore Democrat from Corvallis, relishing his new leadership role as the chairman of the human services budget committee.

The Oregon Health Authority budget is worth $19.9 billion for two years, down slightly from the current operating budget. Most of the budget -- $11 billion -- comes from federal sources, while $2.2 billion is from the general fund. Federal funds are down $525 million from the current two-year budget, while general funds will increase about $40.2 million.

The tax package, worth $548 million comes from increased taxes on hospitals and a new 1.5 percent tax on state-regulated health insurance premiums and Medicaid managed care premiums.

The money will keep solvent the state Medicaid program, the Oregon Health Plan, which currently serves just over 1 million Oregon children, disabled people and low-income adults.

The deal also moved $50 million left over from the old, high-risk Oregon Medical Insurance Pool into a Department of Consumer & Business Services fund which will help fund a new, invisible high-risk pool within the individual market that health insurers can draw upon to offset costs for their sickest members, without segregating these people in a separate insurance plan like with OMIP.

The surprise Republican vote came from Rep. Sal Esquivel of Medford, who has long been one of the most conservative members of the House.

Esquivel declined to comment to The Lund Report, but he is retiring at the end of his term after 14 years in the House, and his vote spared a more moderate Republican like Rep. Greg Smith of Heppner from having to cast a vote to increase taxes to save the Medicaid program only to face the wrath of a right-wing challenger.

All tax measures in the Oregon Legislative Assembly require a three-fifths supermajority, or 36 votes in the House and 18 in the Senate. The Democrats are one vote shy of a supermajority in each chamber, requiring them to seek Republican votes to raise taxes.

“Sal has always been reasonable and willing to have a conversation about protecting Oregonians, be they veterans or children,“ said Doug Riggs, a healthcare and social service lobbyist and co-chairman of the Human Services Coalition of Oregon.

Riggs said the passage of House Bill 2391 and House Bill 5026 will pave the way for the passage of the Department of Human Services budget and healthcare policy bills that have been tied up in the budget committee, awaiting insight on revenue levels through June 2019.

“It’s a key means of ensuring we don’t have drastic cuts in human service budgets this session,” he said.

Deal Cut with Lobbyists but Without Public

Together the healthcare deals were hashed out over months in private, with little transparency among, a bipartisan group of legislators, meeting with healthcare industry lobbyists who will benefit from the deal even though superficially their organizations are the ones being taxed. The deal was made public on June 1, at which time its backers moved toward an up-or-down vote.

Republicans, led by Rep. Knute Buehler, R-Bend, and Rep. Cedric Hayden, R-Cottage Grove, tried to stall or derail the tax deal, but were unsuccessful. However, in further closed-door meetings between House Speaker Tina Kotek, D-Portland, and House Minority Leader Mike McLane, R-Prineville, the parties may have reached some other deal, such as spiking some liberal policy bills, which they are not making public.

Rayfield said knowledge of any such deal was “above my pay grade.”

Hayden made one last attempt to pass an alternative to the Democrats’ plan, putting the OMIP money directly into the Oregon Health Plan and shoring up a one-year budget with a tax increase on tobacco and e-cigarettes -- while scrapping the new attempt to salvage the struggling individual health insurance market under Obamacare.

“We continue to funnel more and more dollars into our failed insurance exchange system,” said Buehler.

Rayfield pointed out that even their fellow Republican in the upper chamber, Sen. Jackie Winters of Salem, opposed their late-game tax package, as it went against their months-long discussions with hospital systems and health insurers.

The tax package allows for $1.5 billion in federal dollars to come into Oregon to pay for healthcare, most of which the Medicaid coordinated care organizations will spend at hospitals and their clinics. Insurers will also benefit from the deal because most of those operating in Oregon, including Kaiser Permanente, Providence Health Plan, PacificSource and Moda Health, are attached financially to a major hospital or health system.

The one big exception is Regence BlueCross BlueShield, which stood out as the lonely opponent as a health insurer without a hospital system.

Additionally, the $136 million reinsurance program which insurers can use to offset high-cost claims will lower individual health insurance premiums by 5 percent, according to Department of Consumer & Business Services’ actuarial estimates.

Republicans did have a last-minute assist from the conservative editorial board of the Oregonian, the state’s leading thrice-weekly newspaper, which made the creative argument that the Democrats’ tax package would come down hardest on college students, such as those at Portland State University, many of whom will have to eat that 1.5 percent premium tax on their group health plan if their parents don’t cover them.

Rep. Rob Nosse, D-Portland, quashed this argument: about 7,000 students at Portland State University would pay about $6.50 more a month, which would enable 6,000 of their less privileged peers to continue to receive the Oregon Health Plan rather than go uninsured.

“Clearly the editorial board of the Oregonian had not talked to many people,” Nosse said. “This is a small cost to bear so people in this state can have healthcare.”

Reach Chris Gray at chris@thelundreport.org.

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