hospital tax

Lawmakers Take Big First Step in a Busy Health Care Session

Health care issues will play a dominant role in the 2019 Oregon legislative session. One of the most significant health care bills that will help close the budget gap for Oregon Medicaid’s program moved through two committees last week. And a bill to start an analysis of state-sponsored health insurance for all Oregonians was introduced with 40 legislative cosponsors.

Health care issues will play a dominant role in the 2019 Oregon legislative session. One of the most significant health care bills that will help close the budget gap for Oregon Medicaid’s program moved through two committees last week. And a bill to start an analysis of state-sponsored health insurance for all Oregonians was introduced with 40 legislative cosponsors.

Oregon lawmakers took the first step last week to secure funding for the Oregon Health Plan and the state’s reinsurance program that helps pay for expensive health care claims. The revenue plan outlined in HB 2010, which passed out of the Joint Ways and Means Committee last Friday, will generate more than $400 million toward the anticipated hole in the state’s Medicaid budget.

The funding plan, which health care industry officials negotiated and support, extends a 6 percent hospital tax and a 2 percent tax on insurance plans. The plan introduces a 2 percent tax on “stop loss coverage” for large, self-insured companies. The insurance tax is expected to generate $320 million and the hospital tax $98 million.

Unlike in previous legislative sessions, this funding plan will extend for six years, not just a single biennium.

Other components of Governor Brown’s Medicaid funding package not included in HB 2010, but which will eventually face debate in the Capitol, include a $2 per pack increase on the state’s tobacco tax, a tax on employers with employees covered by Medicaid and a state General Fund contribution. Many observers believe the $95 million projected from the tobacco tax could be in jeopardy because it will likely be referred to voters to approve.

Republicans on the House Health Care Committee, which heard the bill earlier last week, offered amendments to exempt K-12 school district, college students and small businesses from Medicaid-related taxes. Chair Mitch Greenlick counseled against the amendments, which he said could upset a delicately balanced funding plan agreement. The amendments were defeated and two Republicans on the policy committee voted for final passage of the measure, sending it to a Friday hearing in the Joint Ways and Means Committee. 

Patching the Medicaid funding gap is one of several major funding proposals the 2019 Oregon legislature will face. Brown has called on lawmakers to unearth $2 billion in additional tax revenue to boost public education funding. The governor and Democratic legislative leaders also are committed to adopt some form of a cap and trade system that will impose costs on manufacturers and the transportation sector as a means to curb greenhouse gas emissions.

The Medicaid funding package is flanked by another health care initiative – the Health Care for All Oregon plan. Under Senate Bill 770, a board would be created to fill in details of what a plan would look like that replaces private and state employee insurance coverage, as well as estimate what such a plan would cost to implement.

Senator James Manning, D-Eugene, chief sponsor of the measure, says, “This is the first step. It’s not going to happen overnight. This bill provides an opportunity to get a fiscal analysis and develop a work group to drill down into the nuts and bolts of how we get there.”

With secure funding, the state Medicaid program, which serves more than 1 million Oregonians, will press for additional reforms carried out by coordinated care organizations (CCOs) throughout the state. Lori Coyner, who has resumed her job as the Medicaid director that she left in 2017, will be responsible for overseeing $5 billion in spending, holding annual cost increases to 3.4 percent and managing what is nicknamed CCO 2.0 over the next five years.

In an interview with the Lund Report, Coyner said her priorities include streamlining business processes, improving health equity, building stronger ties with tribes and addressing social determinants of health such as education, housing and transportation. This might involve spending dollars on non-medical costs, such as home air filters for families with asthmatic children. There also are efforts to tie affordable housing with social services. 

“Another big priority is looking at the behavioral health system,” Coyner added. “We are hoping to get a new behavioral health director and work closely with [CCOs] to advance integration for members with mental health challenges and addiction issues. We made big strides in CCO 1.0 in that area, but there is a lot more that can be done.”

 

Oregon Health Plan Goes from Secure to Shaky

 Congressional inaction to continue funding for the Children’s Health Insurance Program is just the latest financial challenge facing Oregon policymakers and putting Oregon’s health plans on shakier ground.

 Congressional inaction to continue funding for the Children’s Health Insurance Program is just the latest financial challenge facing Oregon policymakers and putting Oregon’s health plans on shakier ground.

When the 2017 Oregon legislature adjourned in early July, the state’s health care exchanges and Medicaid program seemed secure for at least another biennium. A lot has changed since then, and the stakes continue to grow.

The funding package to sustain the Oregon Health Plan faces a likely referral vote in January. Congress allowed federal funding for the Children’s Health Insurance Plan (CHIP) to lapse as it debated, but failed to repeal and replace the Affordable Care Act. The Trump administration continues to threaten actions to undermine the Affordable Care Act.

No matter how you spin the situation, Oregon could feel a financial pinch as early as mid-November when its funding runs out for health insurance for thousands of children in the state. The legislature won’t convene until February, so a potential gap in coverage could lead to a reduction in benefits and new enrollments.

Oregon Senator Ron Wyden is working with Senate Finance Chair Orrin Hatch on a bipartisan funding plan for CHIP, but House GOP leaders want to tie continued funding to spending cuts for Medicare, community clinics and grace periods for Affordable Care Act payments.

Oregon policymakers could have an even bigger problem on their hands if voters reject the $320 million funding package that includes a health insurance tax and a new hospital tax. While the majority of the $320 million will shore up the state’s Medicaid program, it also would fund a reinsurance pool that limits individual insurers’ financial exposure for high-cost patients.

The Oregon Reinsurance Program calmed Oregon’s market and paved the way for 6 percent lower insurance premiums. The shaky status of the reinsurance program could affect Oregon’s pending application for a waiver from the Centers of Medicare and Medicaid to administer its programs flexibly. If Oregon’s funding package is rejected, the waiver request could be in jeopardy – along with lower insurance premiums.

According to the Portland Business Journal, Alaska requested a similar waiver, which was approved. However, waiver applications by other states have been rejected or withdrawn. The Washington Post reported Trump intervened to block a waiver request from Iowa, which was seeking ways to increase competition and bring down premiums. Oklahoma withdrew its application after CMS inaction. Minnesota was granted a waiver, but CMS reportedly cut a low-income enrollee program.

The longer-term view isn’t any better. The US House has approved a budget resolution that will be used as the vehicle to move a major federal tax cut and that calls for massive cuts over the next decade to Medicare and Medicaid.

Threatened Medicaid Referral Creates Capitol Shivers

 A serious threat by Rep. Julie Parrish, R-West Linn, to refer legislation to raise funds to sustain Oregon’s Medicaid program from an increase a hospital tax and a new tax on health insurers has sent shivers down the spines of legislative leaders and created shudders for other interest groups that could be targets to patch Oregon’s budget hole.

 A serious threat by Rep. Julie Parrish, R-West Linn, to refer legislation to raise funds to sustain Oregon’s Medicaid program from an increase a hospital tax and a new tax on health insurers has sent shivers down the spines of legislative leaders and created shudders for other interest groups that could be targets to patch Oregon’s budget hole.

A big part of Oregon’s budget fix approved this session could spring a leak if Rep. Julie Parrish, R-West Linn, successfully refers the legislation that increases a hospital provider tax and adds a tax on insurers to sustain funding for Oregon’s Medicaid program.

Parrish followed through on her threat by filing a referendum petition with the Oregon secretary of state this week. She will have 90 days to gather less than 59,000 signatures of registered Oregon voters to refer the Medicaid funding package to the ballot. Parrish reportedly has monied backing to support the referral drive.

The threat by Parrish of a referral of Medicaid legislation has created what could fairly be called a panic in the state Capitol because it could undo the only major step lawmakers took this session to address a projected $1.4 billion budget deficit. The uncertainty caused by a referral would add to anxiety caused by congressional consideration of an Obamacare replacement that would reduce Medicaid funding sharply over the next decade.

Parrish says her goal is not to gut Medicaid, but “hold it accountable.” She wants to apply voter pressure to ensure Oregonians receiving Medicaid benefits are actually eligible and to address state mismanagement such as expensive IT failures. Parrish calls the hospital provider and insurer taxes amount to a sales tax on health care services and private health insurance, which are simply passed along to consumers. Coordinated Care Organizations also would face a tax in this legislation. A broad coalition of health care providers, insurers and CCOs supported the revenue-raising to maintain Oregon’s expanded Medicaid coverage. Parrish claims there were three other bills introduced this session that would have reduced the Medicaid funding gap without taxing hospitals and health insurers.

If a possible referral isn’t contentious enough, Democratic legislative leaders may have sparked an even wider partisan wildfire over a bill that would schedule a referral vote next January 23 and allow lawmakers to write the referral ballot title, which is sometimes all voters ever read about a measure.

Democrats defended the earlier vote as a way to prevent a deeper budget hole. If Oregonians rejected the Medicaid tax measure in a January special election, then lawmakers would have time to find an alternative during the 2018 short legislative session. Republicans charged Democrats with ambushing Oregon’s referral process and trying to suppress voting by scheduling a special election on a date with an anticipated lower voter turnout.

Parrish isn’t alone in threatening a referral. In fact, she finds herself a strange bedfellow with an entity she rarely agrees with – SEIU 503.  The largest union in the state made headlines earlier in session when it held a rally on the steps of the Capitol and threatened to refer any transportation package bill unless lawmakers secured new revenue for schools and other vital services. 

She and some Democrats also have threatened to refer the $5.2 billion transportation funding package. The threat from Democrats differs from Parrish. They want to hold the transportation bill, which has fairly broad bipartisan support, hostage to try to force legislative action this session on a corporate tax measure. After the transportation package passed out of committee Saturday evening, 16 House Democrats sent a letter to Speaker Tina Kotek urging her to “re-focus on the all-important task of identifying addition revenue.”  The implied threat hanging over the letter doesn’t go as far as SEIU’s saber-rattling, but it does raise concerns among stakeholders as we enter the final days of session.

Democratic leaders, including Governor Brown, threw in the towel on a corporate tax bill a week or so ago after it became clear there wasn’t consensus on a replacement for the current corporate income tax – and not enough votes to pass anything in the Senate. Nothing would be done to change the corporate tax, they said, until the 2019 legislative session.

The Oregon legislature is expected to wrap up remaining budgets and head home before its constitutionally mandated July 10 adjournment deadline, unlike at least four other states – Washington, Illinois, Maine New Jersey. It took three special sessions before Washington lawmakers reached a budget deal. New Jersey’s budget stalemate resulted in a partial government shutdown, but a solution was suddenly found after social media exploded with pictures of Governor Chris Christie lounging on an empty beach that was closed to the public because of the shutdown. Illinois has been in budget gridlock for three consecutive years.

Referral of the Medicaid funding package could bring Oregon back to the brink of a deep budget hole and put more pressure on legislative leaders to look at other tax hikes. Some education advocates are already urging lawmakers to resume work on a corporate tax measure earlier than the 2019 session, and perhaps as early as a special session later this year. If the Medicaid referral is successful, pressure would grow to look at cuts, not just in Medicaid, but also in the Public Employees Retirement Fund.

As noted in a previous Oregon Insider, adjournment can’t come soon enough, but even when it does it will seem more like an intermission than the end of the play. The animating issues of the 2017 session – the budget hole, Medicaid spending, corporate taxation and transportation funding – may still be anything but resolved.

Governor Rolls Out "Education Budget"

Governor Kitzhaber unveiled a budget proposal today that he called "first and foremost an education budget."  He said his budget "creates space for front-end investments in education and early learning by cutting back-end spending on health care and corrections." 

His 2013-15 budget, which was previewed by The Oregonian and Salem Statesman Journal today, puts controversial changes to the Public Employees Retirement System (PERS) squarely in the center of an effort to carve out more money for schools. And that could bump into political resistance from the newly Democratically controlled House.

Despite that, the atmosphere in the state Capitol was markedly different than in Washington, DC, where partisan wrangling continues over how to avoid plunging over the so-called fiscal cliff. While there is no looming fiscal cliff here, the governor's budget will only serve as the framework for the 2013 legislature to hash out a final budget with Democrats at the controls in both the House and Senate.

Senator Richard Devlin, D-Tualatin, already named to be Senate co-chair of the Joint Ways and Means Committee, was charitable toward the governor, as quoted in the Salem Statesman-Journal.  "I appreciate the governor's candor about the specific challenges we face in funding education and the Oregon Health Plan in the next biennium," Devlin said.  "With his recommended budget, Governor Kitzhaber has provided a good starting point for the budget negotiations ahead of us."

New House Republican Leader Mike McLane, R-Powell Butte, praised Kitzhaber for addressing PERS, but questioned the rosiness of revenue projections and the lack of any fund reserves to cushion the budget in case the economy falters in the next two years.

The governor's plan for more money for K-12 schools rests on the premise that the legislature will accept his recommendations to reform PERS in two ways:

• By limiting cost-of-living increases to the first $24,000 in retirement income; and

• By closing a benefit loophole for out-of-state retirees.