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101 petitioners float alternative Medicaid funding plan

Legislators propose broadening the tax base to pay for rising Oregon Health Plan costs.

By Claire Withycombe

Published on January 17, 2018 5:26PM

Capital Bureau

SALEM — Two state lawmakers behind next week’s special election say they’ve found a new way to pay for Medicaid.

State Reps. Julie Parrish, R-Tualatin/West Linn, and Cedric Hayden, R-Fall Creek, petitioned to get the state’s existing Medicaid funding plan on the ballot.

About 1 million Oregonians are on Medicaid, known here as the Oregon Health Plan. The program serves low-income people and other qualifying groups.

The election is Tuesday, Jan. 23. A “no” vote could throw a wrench into the state’s health care budget, but Parrish and Hayden believe they’ve found a way to plug the hole and continue to draw down federal matching funding that pay for most of the program.

But it’s not yet clear whether their plan, unveiled Tuesday, will make up the difference because it has not been scored by nonpartisan legislative analysts.

The current version of the bill they’ve now proposed would expand what’s referred to as the state’s “provider tax.”

Health care providers pay a refundable assessment to the state, which in turn uses the money to collect matching funds from the federal government. Providers get the money back.

Most states use a provider tax to get matching federal funds to pay for their Medicaid programs.

Oregon lawmakers crafted a plan last year that included those types of taxes on hospitals, but also created taxes on managed care organizations and insurers, and a nonrefundable tax on hospitals, which Parrish and Hayden object to.

Instead, the two lawmakers propose taxing a wider range of health care providers, not just hospitals and long-term care facilities.

In addition to taxing hospitals, Parrish and Hayden’s new bill would also tax surgical centers and ambulance companies. Future versions could include even more health care businesses, such as pharmacies, Parrish says.

Parrish argues that taxing more providers could cover the rising costs of Medicaid. That’s a growing concern as the federal government tapers its share of the Medicaid bill.

Although the feds initially picked up all of the tab for patients covered under the Medicaid expansion of income criteria under the Affordable Care Act, by 2020, the state will be responsible for 10 percent of the costs of the expansion population.

Parrish and Hayden’s proposal would also use one-time revenues to temporarily continue a state program that holds certain insurance premiums down, and require the Oregon Health Authority to do monthly reconciliations to confirm that all OHP recipients still reside in Oregon.

The pair have also previously suggested taxing large companies that self-insure, but detractors say that could be subject to a legal challenge.

The lawmakers’ proposal comes as they approach the end of a wonky health care campaign where their critics — including the state’s largest health care organizations and unions — have argued Parrish and Hayden didn’t have a viable back-up plan.

Hayden, a dentist who serves OHP patients, unsuccessfully floated a somewhat similar proposal in the 2017 legislative session. It included a tobacco tax, a tax on vaping, and assumed Medicaid caseloads would drop.

Janet Bauer, a policy analyst for the Oregon Center for Public Policy, which supports Ballot Measure 101, says the long legislative session in February 2019 would be a better time to assess the policies in the new proposal.

Legislators convene for short sessions in even-numbered years, and long sessions in odd-numbered years to develop the state’s two-year budget.

Bauer said she could not comment on specifics of Parrish and Hayden’s proposal without reading the actual bill, but that generally, it would be better to wait another year when legislators have more time to weigh the merits of another funding strategy.

“I think that it’s rolling the dice to suggest that we should overturn a solution that we already have,” Bauer said.

The Yes For Healthcare campaign, which is advocating to keep the current funding plan, dismissed the proposal.

“This is more of the same misleading tactics and should not be trusted,” the campaign said in a statement in response to the proposal. “The only way to protect healthcare funding is Yes on Measure 101.”


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