Medicaid funding

Brown, Democrats Ride Strong Wave of Voter Turnout

Oregon Governor Kate Brown overcame a trail of administrative miscues and an aggressive campaign by challenger Knute Buehler to win re-election to a full four-year term. High voter turnout also swept out three Republican House incumbents and gave Democrats supermajorities in both the House and Senate. [Photo Credit: Steve Dykes, AP]

Oregon Governor Kate Brown overcame a trail of administrative miscues and an aggressive campaign by challenger Knute Buehler to win re-election to a full four-year term. High voter turnout also swept out three Republican House incumbents and gave Democrats supermajorities in both the House and Senate. [Photo Credit: Steve Dykes, AP]

Governor Kate Brown turned back a spirited challenge from Republican Knute Buehler and Democrats earned super-majorities in both the Oregon House and Senate by unseating three sitting House GOP members.

Oregonians rejected ballot measures to end the state’s sanctuary status, ban public funding for abortions and block taxation on groceries. Voters approved a measure to allow local governments to use public money with private developers to build affordable housing. In Washington, voters defeated a carbon tax proposal.

In key local races, Kathryn Harrington won as Washington County Chair and Jo Ann Hardesty glided to victory on the Portland City Commission, becoming the first African-American woman to sit on the commission. Oregon City Mayor Dan Holladay won re-election. A majority of local ballot measures passed. A full list of election results can be found here

The Brown-Buehler contest set campaign spending records in Oregon and may be the spark for campaign finance reform in the 2019 legislative session. Despite running an effective campaign, Buehler’s loss further dented the notion that a moderate Republican could defeat a Democrat in a race for governor in Oregon.

There may not have been a blue wave throughout the nation, but strong turnout by Democratic voters contributed to the defeats of incumbent GOP Reps. Julie Parrish (West Linn), Rich Vial (Sherwood) and Jeff Helfrich (Hood River). House Democrats increased their margin of control to 38-22, up from their 35-25 margin in the previous session. It takes 36 votes to reach a House supermajority required to pass revenue-raising measures.

Democrats managed to flip one seat in the Senate where Jeff Golden prevailed in a seat held last session by GOP Senator Alan DeBoer who didn’t seek re-election. That one seat was enough to give Democrats a Senate supermajority of 18-12.

No changes are anticipated in Democratic leadership. Senate President Peter Courtney easily won re-election to a sixth term and has led the Senate since the 2003 session. Speaker Tina Kotek was elected to the Oregon House in 2006 and became Speaker in the 2013 legislative session.

Brown’s seemingly comfortable 5-point lead over Buehler didn’t necessarily reflect the bruising intensity of the gubernatorial campaign and the closeness of the contest, which drew national attention because the race was unexpectedly tight. The race also attracted gobs of out-of-state money as Brown and Buehler combined to spend a record $30 million.

In her post-election comments, Brown said her priorities in the next legislative session will be campaign finance reform, affordable housing and boosting Oregon’s low high school graduation rate, something Buehler poked at during the campaign. During her campaign, Brown announced a plan to incorporate federal clean air and clean water protections into Oregon law.

Other issues that will demand attention in the upcoming session include how to keep paying for Oregon’s Medicaid program, bolstering community mental health resources and improving child welfare programs.

There will be continuing pressure to address the unfunded liability of the Oregon Public Employees Retirement System and realign the state’s corporate tax system. It is unlikely remnants of the culture wars – immigration, abortion, transgender rights – will rear their heads in the legislature during the next two years.

A well-coordinated campaign apparatus consisting of labor, environment and progressive groups contributed to Brown’s re-election and the defeat of several ballot measures. Congresswoman Nancy Pelosi, expected to return as Speaker of the US House, credited a similar coordinated effort with the discipline and financing to regain control of the House and win governorships across the country, including in Trump country. 

Washington Initiative 1631, dubbed the Green New Deal, lost after large industrial corporations poured $31 million into a campaign to defeat it. If passed, I-1631 would have imposed a new carbon fee to fund conservation projects, renewable energy farms and struggling communities. The measure was endorsed by Governor Jay Inslee who called it “well-balanced, thoughtful policy.”

 

 

It’s Taxing Time in Oregon

As Congress works on a federal tax cut measure that could significantly impact Oregon income taxpayers, Oregon voters face a decision in January on how to pay for the state’s Medicaid program. And along the way, Oregonians owe their property taxes, too.

As Congress works on a federal tax cut measure that could significantly impact Oregon income taxpayers, Oregon voters face a decision in January on how to pay for the state’s Medicaid program. And along the way, Oregonians owe their property taxes, too.

It’s official. Oregonians will vote in a special election January 23 to ratify or reject tax proposals approved by the 2017 Oregon legislature to sustain the state’s basic and expanded Medicaid program. From all early appearances, this will be a bare-knuckles fight.

Major parties have already lined up for and against Referendum 101. Health care providers, doctors, organized labor, minority groups and social equity organizations are urging a “yes” vote. Taxpayer groups, the Oregon Family Council, small business representatives and the Oregon Firearms Association oppose the taxes.

The stakes are high. As reported by the Portland Business Journal, if the taxes are rejected by voters, the State of Oregon stands to lose between $840 million and $1.3 billion in state and federal funds, depending how courts interpret the wording of the referendum. That would plunge Oregon lawmakers back into a deep budget hole with few escape ladders in the short 2018 legislative session that begins in February.

Defenders of the taxes on health insurance and hospitals say that is the only viable economic way to maintain Medicaid spending levels and avoid forcing more people out of coverage and into emergency rooms for care. Supporters of the referendum say there are other ways to maintain Medicaid without resorting to what Rep. Julie Parrish, R-West Linn, calls a “sales tax on health care.”

The challenge of voting on tax measures is that subtleties are usually lost in the shuffle. Calling anything in Oregon a “sales tax” is usually a kiss of death. [The City of Ontario, perched on Oregon’s far eastern border, enacted a 1 percent sales tax, which is also being referred to voters next May.] Trying to explain the exigencies of a pair of taxes to attract federal matching funds is a hard message to squeeze onto a bumpersticker.

The decision by legislative Democrats to force a special election in January before the short legislative session has created its own political reverberations. Referendum backers have called it a rigged political scheme. Democrats counter that it makes sense to know the outcome before the February session so lawmakers can pursue other options. That argument could come back to haunt Democrats who privately say they really aren’t any viable options to sustain Medicaid at its current spending levels.

Little wonder Senator Richard Devlin, co-chair of the Joint Ways and Means Committee, accepted a paying job as a gubernatorial appointee to the Northwest Power Council. Senate Republican Leader Ted Ferrioli is probably glad he is the other appointee and can skip the 2018 legislative session. Senate President Peter Courtney may appoint himself to replace Devlin, at least temporarily, in the 2018 session – and any special sessions that are needed to deal with the financial shortfall if the health care taxes are rejected.

The aftermath of Referendum 101 may be the headliner issue in the 2018 session, but the issue sucking all the oxygen out the room remains how to strike a grand bargain that involves spending restraint and additional state general fund tax revenue. Political leaders have by and large punted this bigger-scale issue until the 2019 legislative session, after the 2018 elections. Governor Brown is seeking re-election to a full four-year term and legislative Democrats want to cement super-majorities in both the House and Senate so they can pass tax measures with or without GOP votes.

This stalemate is a political hangover from the 2016 election when pro-business interests overwhelmed union-backed forces and defeated an initiative to raise corporate taxes. While the opportunity seemed to exist to bring the parties to a table to start negotiating some kind of compromise, the opportunity was never seized. Brown shied away from any discussion of cuts to the Public Employees Retirement System, which gave little incentive to business groups to sit down to discuss raising their taxes.

The upshot is that Oregonians can expect to hear a lot about taxes between now and Christmas. The GOP-led federal tax cut appears on a path to be considered by then, at the behest of Trump who refers to the tax cuts as a Christmas present to Americans. The uncertainty of whether the tax cuts will be real and durable for middle-class taxpayers could overlap into their voting views on Referendum 101. Confusion and taxes is never a good mixture.

And for good measure, Oregon property owners must pony up their 2017 property taxes next week and make end-of-year decisions that can impact their state and federal income taxes.

Saxton Exit Adds Drama to Medicaid Funding, CCOs

With funding for the Oregon Health Plan facing a referral to voters, the resignation of Lynne Saxton as head of the Oregon Health Authority creates more anxiety for health care stakeholders, including the fate of Coordinated Care Organizations.

With funding for the Oregon Health Plan facing a referral to voters, the resignation of Lynne Saxton as head of the Oregon Health Authority creates more anxiety for health care stakeholders, including the fate of Coordinated Care Organizations.

The departure of Lynne Saxton as head of the Oregon Health Authority adds more drama to the fate of the Oregon Health Plan, the state’s Medicaid program.

Legislatively approved funding for the Oregon Health Plan faces a potential referral by three GOP Oregon House members who claim the funding plan contained in House Bill 2391 amounts to a sales tax on health care. If the referral makes it to the ballot and voters approve it, Oregon lawmakers could face a budget hole greater than $300 million over the next two years.

Saxton’s departure could have implications for the coordinated care organizations created in conjunction with Oregon Health Plan funding to act as transformational models for bending the health care cost curve and integrating physical, mental and dental health services.

“With the most prominent visionaries of the CCO development process long removed from office (including Governor Kitzhaber), Saxton was a tether to the old guard at OHA that built the CCO model,” writes DJ Wilson, organizer of the State of Reform effort, in a blog post this week.

Wilson, who advises on health care policy, says Oregon health care leaders are already antsy because of congressional actions that threatened to slash Medicaid funding and the looming Oregon Health Plan funding referral. “Saxton’s removal exacerbates to their anxiety.”

He links the anxiety to what Wilson says is a widespread view that Governor Brown doesn’t consider health care policy one of her top priorities. He quoted one unnamed stakeholder as wondering “who the advocate will be at the state to take the transformation model into the procurement next year, into the legislative session, and make sure the CCO model continues. We may just be heading back to managed care.”

That could be ironic because Saxton resigned in connection with a running battle with FamilyCare, one of 16 CCOs operating throughout Oregon. Jeff Heatherington, CEO of FamilyCare, once accused OHA of acting like a “bully.”

An even more fundamental problem is OHA, according to Wilson. “Since 2013, OHA has had four leaders, two interim and two permanent. Pat Allen is now the fifth.” Allen was named acting OHA director after serving since 2011 as director of the Department of Consumer & Business Services. Wilson says Allen is respected as an effective agency manager, but some health care stakeholders are unsure of his knowledge about CCOs and Medicaid.

Brown told Allen his “highest priority from day one should be restoring trust with the public, legislators, stakeholders and, most important, the clients OHA serves.” In a statement, Brown said, “I have asked Pat to bring his expertise to the Oregon Health Authority and lead the agency into a forward looking and responsible steward of taxpayer dollars.”

Allen responded to Wilson’s questioning by saying, “I’m committed, as is the governor, to the CCO model as the only realistic way to deliver Oregonians improved health through quality care we can afford.”

Straightening out OHA could take time and energy. Dating back to the Cover Oregon fiasco, OHA’s bureaucracy and culture have been criticized. Rep. Mitch Greenlick, in a recent interview, questioned the agency’s dedication “to making sure the most eligible people have access to care” as opposed to “dotting all their I’s and crossing all their t’s.” In the previous session, Rep. Greenlick was the leading legislative voice on the future of CCOs and will continue that conversation in next year's short February session.

Medicaid Bill Clears; Tax and Transportation Bills in Limbo

Oregon lawmakers have passed a Medicaid funding measure, but appear stuck on a corporate tax increase and a transportation funding package with only three weeks left before the deadline to adjourn. Things are starting to get wild in Salem.

Oregon lawmakers have passed a Medicaid funding measure, but appear stuck on a corporate tax increase and a transportation funding package with only three weeks left before the deadline to adjourn. Things are starting to get wild in Salem.

Oregon lawmakers have cleared a bill to raise $550 million to prevent cuts in the state’s Medicaid program, but have no clear path on a corporation tax increase or funding for a major transportation package. Time is running out as the legislature faces a July 10 deadline to adjourn.

The House and Senate approved legislation that increases an existing hospital tax and adds a new tax to health insurance plans to pay for Oregon’s Medicaid program that covers more than 1 million Oregonians, 40 percent of them children from low-income households. Reduced federal funding for Medicaid was a contributing factor to Oregon’s projected $1.4 billion hole in the 2017-2019 biennium, which begins July 1.

House passage of the Medicaid funding measure came after Democrats defeated a Republican alternative with a smaller tax increase that would have funded the program for one year at current spending levels, but allow time to confirm the eligibility of Medicaid enrollees before funding the second year of the biennium.

After some backroom negotiations, Rep. Sal Esquivel, R-Medford, provided the necessary 36th House vote for a three-fifths supermajority to pass the Democratic Medicaid funding measure in the House. The Senate voted for the Medicaid funding bill by a 20-10 margin.

Lack of consensus on a general revenue increase sparked a variety of actions so far this week:

  • House Democrats voted along party lines to stall a vote on an $8.2 billion K-12 school budget until June 27. The Senate has already approved the public school budget, but House Democratic leaders believe delaying a vote in the lower chamber could be leverage to swing a deal on a revenue measure. One House Democrat called the maneuver a “Hail Mary pass."
  • The Oregon Education Association took the first steps to place two corporate tax measures on the November 2018 ballot that would seek to generate $1.75 billion annually for K-12 and higher education. One measure would impose a corporate gross receipts tax. The second measure would make it easier for the legislature to raise corporate taxes to pay for education.
  • The joint committee looking at a revenue measure entertained a passel of amendments to a compromise reached by Senator Mark Hass and Speaker Tina Kotek to raise $900 million in the next biennium. The compromise would initially increase the current corporate income tax rate, then phase in a commercial activities tax based on sales in Oregon, which would function like a gross receipts tax, but contains different rates for different kinds and sizes of corporations. At least one House Republican has signaled his potential support for this approach – if it can pass in the Senate. For now, Senate Republicans are reportedly locked up in opposition.

Frustrated by inaction on the joint committee’s bill, House Revenue Chair Phil Barnhart, presumably with Kotek’s approval, said he will pursue a separate revenue-raising bill, possibly one that makes it harder to qualify for lower rates on pass-through income. Even though this measure would generate only $200 million – far less than the $900 million in the compromise corporate tax bill, it has the procedural advantage of requiring only a simple majority, not a three-fifths majority to pass. House Democrats may force a floor vote on a larger corporate tax hike before the postponed voting next week on the K-12 school budget to put Republicans on the record. If it fails, they then can pass the smaller measure.

Also looming in the legislative bill stack is a cost-saving measure estimated to trim the projected budget deficit by $270 million.