Tax Deemed Key to Expanded Coverage
May 29, 2009
Author: CFM Staff
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An average 3 percent hospital tax and a 1 percent tax on health insurance premiums were deemed the key to an ambitious program that will attract $1 billion in federal matching funds used to expand health coverage to 140,000 Oregonians, including 80,000 uninsured children. The taxes are expected to generate between $300 and $400 million over the next biennium.
A heavily amended House Bill 2216 was approved by House Revenue on a 6-4 party-line vote and sent to Joint Ways and Means where it will connect with House Bill 2009, the session's major health care measure. Ways and Means scheduled work sessions on both bills and was expected to pass them out late Friday afternoon.
State officials touting the pair of bills said they will catapult Oregon to the forefront of national reform efforts.
Republicans sounded less giddy. They expressed concern the tax on health insurance premiums will cause more businesses to drop coverage and expanded coverage will drive up the price of medical services even more.
Tim Nesbitt, deputy staff director to Governor Kulongoski, painted a brighter picture. He said in addition to expanding health coverage, hospitals would get reimbursed at higher rates and have more "paying patients." That, in turn, Nesbitt said, will stem cost-shifting that contributes as much as 10 percent of the cost of private health insurance premiums. The proposal will stimulate job growth in the health care sector, he added.
Only 25 of Oregon's largest hospitals will be subject to the hospital tax, and representatives of the Oregon Hospital Association testified in support of HB 2116. Conspicuous by their absence were health insurance companies, which apparently continued to negotiate terms of the deal as late as Thursday morning when the 44-page amendment to HB 2216 was unveiled.
Coincidentally, a medical journal released its initial findings on a similar universal access plan in effect in Massachusetts. The report said some public health plan participants faced delays in receiving medical services and overall prices for health care had risen.
State officials said Oregon has learned from the Massachusetts experience and injected cost controls into its expanded access plan. However, Rep. Vicki Berger, R-Salem, said she couldn't find any mention of cost controls in the amendment to HB 2116. "I don't understand how a 1 percent tax on health insurance premiums amounts to cost controls."
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