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Health care tax passes Oregon Legislature, heads to governor

SALEM — A $670 million health care tax package has passed the Oregon Legislature and now heads to Gov. Kate Brown, providing enough funds over the next two years to prevent Medicaid recipients from losing health care and avoid closing a newly-built psychiatric hospital with hundreds of patients.

House Bill 2391 received final approval Wednesday in a 20-10 vote by the Oregon Senate, achieving the supermajority support that any new tax measure needs. The bill is now essentially an oxygen supply to the 2017 legislative session that, in its final three weeks, has been hampered by a gridlock between Democrats and Republicans over the state's financial woes.

The provider taxes, along with other health-related bills, allow lawmakers to fill a huge chunk — up to almost $900 million — of the $1.4 billion-hole in the state's 2017-19 budget that must be balanced by July 10. The remaining gap could be solved through a combination of spending cuts and, if the two parties can make a last-minute deal, tax hikes on businesses.

The package also helps the Oregon Health Plan, the state's Medicaid program, continue providing billions of mostly federal dollars into the local economy every year under President Barack Obama's Affordable Care Act, which GOP leaders in Congress are in the process of trying to repeal. The system provides government-funded health care for 1 million low-income residents, roughly a quarter of Oregon's population; more than 350,000 of those individuals were more recently brought into the system through Obamacare's Medicaid expansion.

Republican Sen. Jackie Winters, who carried the bill to the chamber floor with Democratic Sen. Elizabeth Steiner Hayward, says the measure reinforces the existing funding structure borne out of the 2003 session.

"It was with the help of the Oregon Hospital Association that offered to assess themselves so that we could leverage federal dollars to rescue and keep the Oregon Health Plan on life-support," Winters said. "Without them, access to health care for our most vulnerable Medicaid eligible population would not exist and hospitals would face mounting, uncompensated care cost and continuing shifts of cost to private-paying patients."

HB 2391 imposes a new .7 percent tax on top of the existing assessment on hospitals' net patient revenue that Winters referenced on the Senate floor. It also creates a new 1.5 percent "premium" tax on health plans provided by some insurers as well as the 16 coordinated-care organizations that facilitate the Oregon Health Plan.

With the exception of Sens. Winters, Ted Ferrioli, Fred Girod and Rep. Sal Esquivel, Republicans opposed the bill largely out of concern that health providers would ultimately shift the higher costs to patients. They also say it's inappropriate to impose new tax policies when controversies at the state's chief health department, the Oregon Health Authority, are still unfolding and the future of Obamacare is uncertain.

"We can assume at some point in time next year that Congress is going to make significant changes in Medicaid, and all of this that we are doing it may disappear," said Republican Sen. Jeff Kruse. "We don't know that, but at the end of the day what we will still have is two new taxes."

Steiner Hayward responded to conservatives by noting that the taxes sunset in two years. She also says lawmakers like herself who handle the state's health policies will be "starting the next round of conversations" about OHA and Medicaid "as soon as September."

Ferrioli, leader of the Senate GOP caucus, was one of three Republican votes in favor. He said the bill has flaws like any other proposal but it's otherwise good public policy.

"The narrative is that Republicans do not vote for more revenue ... that we are insensitive to people in need," Ferrioli said. "Neither of those things is true. And that's what I intend to demonstrate with my vote."