If Oregon voters reject new health care taxes on Jan. 23, legislators will have to scramble.
The big issues: Will they figure out ways to get the needed money or do people on Medicaid face big cuts? And could the budget pain even extend to schools?
When Oregon legislators went home last year, they thought they had solved one of their knotty problems – how to pay Oregon’s share of Medicaid. That’s the state-federal program that provides health insurance for more than a million people in Oregon, from low-income families to frail seniors in nursing homes.
But now they have Measure 101, which asks voters to approve up to $320 million in taxes on hospitals and certain health insurers to help pay for Medicaid.
“Either we are going to be cutting people off of health care,” said Jessica Adamson of Providence Health and Services, “or we are going to be making some really terrible, terrible decisions on other budgets.”
Adamson, director of governmental relations for the hospital chain, is one of the chief spokespersons for the "Yes On Measure 101" campaign. She reflects the view of the broad coalition of health organizations, patient advocacy groups and others who back the measure and worry that its failure would leave the Legislature with a series of tough choices.
That’s disputed by State Reps. Julie Parrish, R-West Linn, and Cedric Hayden, R-Fall Creek, who led the petition drive to refer the taxes to the ballot. They both say they are committed to Medicaid and just think there are better ways to fund it.
Hayden is a dentist who serves Medicaid patients and Parrish depended on the program as a child.
“Nobody loses their health care on Jan. 24,” Parrish said, “and we’re committed to that.”
But there are doubts about the main alternative put forth by the two legislators.
During a Dec. 13 debate, Hayden said that revamping the hospital taxes could raise $250 million — covering all or almost all of the Medicaid hole.
“It is the fix we would do if the measure is defeated,” he said in an interview after the debate.
Hayden wants to raise the assessment on small hospitals and revamp how larger hospitals are assessed. But projections from legislative and agency analysts don’t back up Hayden’s approach.
They show that higher assessments on smaller hospitals would raise about $40 million at most. And his approach to taxing large hospitals would actually bring in less money than the levies contained in Measure 101.
“You’d go the wrong way on bigger hospitals,” said Philip Schmidt of the Oregon Association of Hospitals and Health Systems, which supports Measure 101. “And you’d gain just not a ton on the smaller ones.”
If there’s not an easy fix, what might happen?
Legislators deliberately scheduled the election for this month so they could take up the issue in their February short session if Measure 101 fails.
Veteran legislators and lobbyists say lawmakers will likely comb through the budget looking for places to cut.
There’s a lot of fear that they will cut coverage for the 350,000 adults who gained Medicaid through Obamacare. Under federal rules, the state can’t trim this Medicaid expansion population — they’re either all covered or they’re not.
But it’s a particularly unpalatable option for a number of reasons. For starters, the federal government currently covers 95 percent of the cost – meaning that the state would be foregoing around $4.7 billion in federal aid. That would have a huge negative impact on hospitals and other health care providers that could jeopardize their financial solvency. Oregon Health Authority officials say it would also greatly reduce hospital tax assessments — to the point that there might not be any net savings for the state.
“It may not actually solve the problem,” said Jeremy Vandehey, the agency’s director of health policy analysis, adding that the state has only done “rough math” on the impact of cutting the expansion population.
But the idea of cutting coverage to 350,000 Oregonians — almost 9 percent of the state’s population — would also cause a political firestorm.
That doesn't mean Medicaid is safe from any cuts if Measure 101 is defeated. Vandehey and other officials note that legislators could cut some benefits not required by federal rules and ratchet down fees it pays to health care providers. Potential targets range from adult dental care to a new program started by legislators last year to pay for health care for children who don't have legal immigration status.
Vandehey noted that these cuts all come with downsides. Cutting fees reduces the willingness of providers to serve Medicaid patients. And cutting things like dental care can exacerbate overall health problems that can lead to greater future costs.
Legislators could also cut a program financed by the insurance tax in Measure 101 that lowers costs for individual health insurance plans by up to $300 a year.
Jim Green, executive director of the Oregon School Boards Association, predicts that legislators would look at a wide range of cuts, and that could include health care and education.
“And then it really becomes a crapshoot as to what the state school fund gets,” he said. “What do crime and corrections get, what does the Oregon Department of Fish and Wildlife get from general funds, what does higher education get, what do community colleges get?”
House Majority Leader Jennifer Williamson, D-Portland, said that legislators will “have to do something, but who knows what it is at this point.”
However, she added, “I believe we will see cuts in health care and in education and in the big budgets in our state.”
Parrish, the legislator helping lead opposition to Measure 101, is skeptical. State revenue projections are up, and she said more savings could be wrung out of state government.
She and Hayden also back higher tobacco taxes, an idea that Democratic leaders rejected last year because they didn’t think it could pass the Legislature.
One thing most everyone agrees on: If Measure 101 fails, the issue will dominate the February session.