Oregon Legislature Passes Medicaid Tax On Hospitals and Insurance

Oregon state Capitol by Oregon Legislature.jpg

The Oregon Senate passed a Medicaid tax on hospitals, insurance plans and risk coverage for self-insured employers on Thursday.

The 23-7 vote marked the first major victory for Gov. Kate Brown’s plan to fund the Oregon Health Plan, which faces a $950 million shortfall. She plans to cover the rest through general fund dollars, a tax on employers whose employees are on Medicaid and a $2 tax on tobacco products. Brown said she expects voters to decide on the tobacco tax.

The newly approved taxes are expected to raise an additional $379 million in the next two years through a 6 percent tax on hospitals and a 2 percent tax on insurance plans, said Sen. Elizabeth Steiner Hayward, D-Portland. They also include a 2 percent tax on “stop-loss coverage” that self-insured companies use to cover expensive health claims.

Steiner Hayward said the bill is a necessary step toward funding the Oregon Health Plan, but not sufficient to make up the deficit.

“We will continue to pursue other options” to fund the health plan, she said.

Brown plans to sign the bill into law next week, spokeswoman Lisa Morawski said in an email.

Seven Republican lawmakers voted against the bill. They included Sen. Herman Baertschiger Jr., R-Grants Pass; Sen. Kim Thatcher, R-Keizer; Sen. Cliff Benz, R-Ontario; Sen. Brian Boquist, R-Dallas; Sen. Tim Knopp, R-Bend; Sen. Alan Olsen; and Sen. Dennis Linthicum, R-Klamath Falls.

Linthicum also opposes Brown’s proposed tobacco tax, the other major revenue source that the governor hopes will fund the Oregon Health Plan. He drew sharp criticism  from both sides of the aisle https://www.oregonlive.com/politics/2019/02/oregon-state-senator-critici...  after he linked cigarette taxes to the death of Eric Garner in the hands of police.

Olsen said on Thursday that he opposed the tax in part because of its burden on small business, college students and school districts. Rep. Cedric Hayden, R-Roseburg, introduced amendments exempting small businesses and school districts from paying the tax, but they failed in committee.

Steiner Hayward said Thursday that the taxes that passed the Legislature save small businesses money by reducing their insurance rates. The taxes will help fund the state’s reinsurance program that covers especially expensive claims, which Steiner Hayward said will bring down monthly insurance rates by as much as $100 per month.

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