tobacco 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.”


Brown’s Budget Focuses on Education, Human Services

Fresh off her successful re-election, Governor Kate Brown unveils her $23.6 billion General Fund budget that includes a $2 billion revenue challenge to state lawmakers to eliminate structural deficits in public education.

Fresh off her successful re-election, Governor Kate Brown unveils her $23.6 billion General Fund budget that includes a $2 billion revenue challenge to state lawmakers to eliminate structural deficits in public education.

Governor Kate Brown released her 2019-2021 budget recommendations that roll out ideas to shore up state health care funding, continue to invest in affordable housing and pay for initiatives she announced in her re-election campaign.

Proposed budgets are also notable for what they don’t include. Brown’s $23.6 billion budget proposal omits any mention of Public Employees Retirement System (PERS) cost-cutting or investing to restart bi-state conversations about an I-5 Columbia River Bridge replacement.

Her proposed budget did contain a $2 billion revenue challenge to legislators to bolster Oregon’s public education system. The challenge coincided with the rollout of the Coalition for the Common Good, consisting of Oregon public employee unions, a group of long-term care providers and Nike, in support of a major tax package.

“We want to bring a sole focus into revenue reform,” said James Carlson, president of the Oregon Health Care Association. “The reality is we can’t afford to waste another five years chasing a deal that may or may not happen” on cutting government costs.

Major business groups are positioned to resist a major tax overhaul without steps to reduce the $22 million unfunded PERS liability, which poses a drain on local government and school district budgets.

The $2 billion in new revenue would go to extend the school year, decrease class sizes, expand access to preschool and decrease college tuition at public universities. Brown faced sharp criticism in her re-election campaign for Oregon’s low high school graduation rate and failure to provide all of the funding voters authorized to expand career and technical education statewide.

Brown’s budget is heavy on aspiration and revenue projections. It also is very readable, has a reasonable amount of detail and is backed up by economic and revenue analysis. For example, it shows that $19 billion in revenue comes from Oregon personal income taxes, which represents 80 percent of the budget. Corporate income taxes and lottery proceeds contribute 4 and 5 percent, respectively. Roughly 50 percent of Brown’s proposed spending would go to education and 27 percent to human services.

Even though state lawmakers will have around $1 billion more in revenue than the previous biennium, Brown included tax increases in her budget, much of it to plug a funding hole for Medicaid. She proposed raising tobacco taxes by $2 and expanding taxes or assessments on hospitals, insurers and some employers.

In her budget, Brown proposes to shut down the Oregon Department of Energy and allow the state’s Chief Education Office to end. She asks for creation of an Oregon Climate Authority that would administer a “well-designed, market-based program to achieve our state climate emissions reduction goals at the least possible cost, while protecting our manufacturing industry and mitigating impacts on low-income and rural communities, communities of color, and Tribes.” 

Brown devotes substantial funding to her Children’s Agenda, including $285.8 million to provide preschool for an additional 10,000 children, $20 million for housing stability for homeless families, $13.8 million to integrate disorder treatment and behavioral health programs for families and $10 to increase “quality, affordable” child care. Brown wants to ensure 100 percent of Oregon children have health care access and proposes $47.1 million for a comprehensive child welfare system “based on positive human development” and that reduces the need for foster care.

Another campaign promise that showed up on Brown’s budget is incorporating standards from the federal Clean Air and Clean Water acts into state law. She also wants to fund an effort to eliminate a backlog in pending air quality permits.

Brown recommended expanding Oregon’s automatic voter registration system by including other public interactions with state agencies, such as applying for a hunting license, as triggers and sending voters ballots with return envelopes with pre-paid postage. 

After a gubernatorial election that broke state spending records and involved independent expenditures funded with dark money contributions, Brown committed to work on campaign finance reform.

The budget proposal sets aside money for earthquake preparedness, firearm safety, a university program dealing with threat assessment and immigrant defense. Some $5 million is earmarked for funding rural broadband infrastructure and $10 million for remediation of rural brownfields so they can be redeveloped.

Brown titled her budget proposal, “Turning Point: An Agenda for Oregon’s Future.” Here is the opening paragraph of the budget document:

“Oregon is at a turning point. Hundreds of thousands of people have moved here in the past 20 years, and a million more are on their way. We’ve done some good things over the years, but our state is changing, and changing rapidly. With the aging of Oregon’s baby boomer generation, and the impacts of recent dramatic federal tax changes and burgeoning federal deficits exacerbating these changes, one thing is clear: we can no longer do things the way we have in the past. We must grow up as a state, and we need to decide – together – what we want to be over the next 20 years. The challenges of affordability, of educating our kids, of mitigating the effects of climate change, and of maintaining a strong democracy will not get better unless we change our approach.”

She says Oregon must renew faith in democracy, spend money wisely, address affordability, prepare for the future and “finally fix our underfunded education system.”


Budget Battle Nears Final Showdown

Oregon lawmakers won't make their June 28 adjournment date as they continue to spar over a plan to balance the budget. But last week the sparring match took clearer shape when two rival revenue packages were unveiled by Democrats and Republicans.

The Democratic plan would raise $256 million more in revenue during the 2013-15 biennium, while the Republican plan would raise $352 million over the next two years, but also includes a $150 million tax cut for small businesses in the current biennium, which ends June 30.

A revenue-raising package is a precondition for majority Democrats to consider deeper cuts in public employee retirement benefits. However, some Democrats appear content to balance the budget with existing revenues and already approved PERS cuts and go home.

That's what might have happened except for Senator Chris Edwards, D-Eugene, who joined 14 Senate Republicans in voting down a $6.5 billion K-12 school budget. Edwards and Republicans may not have agreed on the reason for their vote, but the effect was the same — it forced leaders in both the House and Senate to consider alternatives to a balanced budget and more K-12 school funding.

Add to this political brew the support of business groups for tax hikes that affect their members. A willingness to go along with some relatively mild tax increases may result from looming ballot measures next year pushed by organized labor to impose even higher tax rates on corporations and high-wealth individuals. Legislatively approved tax increases now may take the wind out of the ballot measure sails next year.