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Oregon House advances $670M health care provider tax

SALEM — A $670 million health care tax package designed to help sustain Medicaid services for the next two years and avoid the shuttering of a newly-built psychiatric hospital passed the Oregon House Thursday.

The 36-23 decision vote exceeded the constitutionally-required supermajority by just one vote.

House Bill 2391 is among the most high-profile pieces of legislation in Salem this year. Without it, lawmakers would have less than a month to solve a large chunk of the state's upcoming $1.4 billion shortfall, a psychiatric hospital in Junction City, Ore. with 100 beds and 400 workers would be on the chopping block and more than 350,000 low-income Oregon residents could lose health insurance under the federal Medicaid expansion almost immediately.

The package is among Gov. Kate Brown's top priorities she wants lawmakers to get done before the required July 10 adjournment. In a briefing with the state capitol press Wednesday, Brown noted she'd continue to fight the GOP minority's efforts in Congress to derail the Medicaid expansion and repeal President Barrack Obama's legacy legislation, the Affordable Care Act.

"The conversation, at least from what I've been able to read and in my conversations most recently with Sen. (Jeff) Merkley, is that the proposal will likely starting kicking people off after the 2020 elections," Brown said. "I find that appalling that we would keep people on for a year or two to get past the 2018 election cycle and then devastate 23 million Americans."

Passage of the so-called "provider" tax is also essential for the Oregon Health Authority's nearly $20 billion budget, proposed as a companion bill, for the 2017-19 biennium. House lawmakers approved the OHA budget, House Bill 5026, immediately following the provider tax, which squeaked by on a narrow three-fifths vote after Republican Rep. Sal Esquivel broke with his party to help majority Democrats advance the bill the next stage.

Both health care bills now head for final approval to the state Senate. The provider tax has broader support among Republicans in the Senate than it did in the House, so it's expected to clinch supermajority support more easily.

The package includes raising an existing tax on hospitals' net patient revenue — 4 percent on small, rural hospitals and 6 percent on large hospitals — and imposes a new 1.5 percent tax on health plans provided by some insurers as well as coordinated-care organizations that facilitate the state's Medicaid program, called the Oregon Health Plan.

The proposal has been several months in the making among Democrats, Republicans and key health care industry players, who worked in good faith toward the common goal of ensuring that billions of federal Medicaid matching-dollars, which begin tapering off next year, continue flowing into Oregon's local economy.

But negotiations were ongoing up until hours before the vote, with House Republicans opposing the premium tax as being too high.

"The inclusion of a tax on insurance premiums will result in higher health care costs for small businesses, college students and everyone in between," said Republican Rep. Cedric Hayden, who played a key role in negotiating the provider tax package. "It's disappointing that bipartisan alternatives were not given the consideration they deserved by the majority party."