Governor's Plan To Plug Oregon Health Care Shortfall Faces Uncertainty

By Dirk VanderHart (OPB)
Portland, Ore. Feb. 15, 2019 9:12 p.m.

With little fanfare, a nearly $380 million package to help fund health care for low-income Oregonians cleared a legislative committee Friday morning with strong support from both parties.

The passage in the Joint Committee on Ways and Means sets a path for the funding to clear both chambers in short order, offering some certainty in how the state will fill a nearly $922 million Medicaid funding gap in the next two years.


It also signals an early-session victory on one of Gov. Kate Brown's key priorities. Brown made health care funding a central piece of the budget proposal she rolled out last year. She says her plan — developed by a work group that included healthcare companies, business and labor — would fund the Oregon Health Plan for six years.

Oregon Gov. Kate Brown waits to enter the House chamber for her inaugural address on Monday, Jan. 14, 2019 at the Oregon Capitol in Salem, Ore.

Oregon Gov. Kate Brown waits to enter the House chamber for her inaugural address on Monday, Jan. 14, 2019 at the Oregon Capitol in Salem, Ore.

Bradley W. Parks / OPB

“I don’t remember this ever moving this early, ever,” Brown said of the health care funding package that progressed Friday, House Bill 2010.

But while that bill contained two pieces of Brown’s proposal — extended taxes on hospitals and an expanded tax on health insurers — two additional ideas are far less certain.

Brown has proposed a $2-per-pack hike on cigarette taxes, a move she argues would bring Oregon more in line with other West Coast states and improve health by prompting smokers to quit. That hike could eventually bring in nearly $350 million every two years, but the bill has yet to get a substantive hearing, and has so far received a tepid response from legislative leaders. Brown’s office has speculated that — even if a tax did pass — opponents would likely refer it to voters.

Another proposal would slap a new tax on employers whose workers are on the Oregon Health Plan, the state’s version of Medicaid. Brown’s office has not released specifics on how that would work. The governor could not say Thursday when a bill on the proposal would be released.

House Speaker Tina Kotek, D-Portland, was noncommittal recently when asked how viable the cigarette and employer taxes are.

“Those are the most uncertain,” she said. “You could see those bills later in session.”’


Republicans have been more blunt.

In a recent hearing of the House Health Care Committee, Rep. Cedric Hayden, R-Roseburg, called Brown’s plan “half-baked at best.”

“It’s very clear even from our political leaders in this building they’re uncertain whether that’s going to happen,” Hayden said, speaking specifically of a cigarette tax increase.

At least part of Brown’s plan seems certain to pass. House Bill 2010 extends and modifies a tax on hospitals, for which they can be reimbursed via federal Medicaid dollars. It also expands and increases a tax on insurance providers, including a provision aimed at roping in large companies that hadn’t been paying under a previous framework.

The bill passed 19-2 in the full Ways and Means Committee on Friday, but that margin belied tensions that cropped up along the way.

In separate hearings, Hayden twice attempted to introduce amendments to the bill that would have provided relief for schools and small employers who might see their insurance premiums increase.

The proposals drew compliments from Democrats, who nevertheless shot them down. They argued that the balance of the deal — which is accepted by hospitals and insurers — is too fragile to risk Hayden’s amendments.

“While there’s merit to the proposal, we have something on the table at this time that all the players have agreed to,” state Sen. Lee Beyer, D-Springfield, said Friday.

That sentiment didn't sit well with some. State Rep. Mike McLane, R-Powell Butte, one of two lawmakers to vote against the bill Friday, said the proposal would be unfair to small businesses.

"We should have slowed down," McLane said before the vote. "We should have given Rep. Hayden time and at least discussed his amendments."

With HB 2010 now past the Joint Ways and Means Committee, it can receive votes in both chambers of the Legislature. Should it pass by similar bipartisan margins that sent it out of committee, Brown will have $379 million secured toward filling the Medicaid funding gap — but little more certainty in whether she’ll be able to plug the rest.

“If you look at the numbers … it is very difficult to sustain funding for the Oregon Health Plan for more than a two-year cycle without that cigarette tax and that employer assessment,” Brown said recently. “I am confident that, if they don’t get the votes or are not supportive of those two particular pieces, that they’re going to have to find another strategy.”