Oregon voters approve new taxes to pay for Medicaid

Oregon’s referendum comes as states nationwide engage in tough conversations on how to maintain Medicaid costs.

A small group of activists rally against the GOP health care plan outside of the Metropolitan Republican Club, July 5, 2017 in New York City. Republicans in the Senate will resume work on the bill next week when Congress returns to Washington after a holiday recess.  (Photo by Zach D Roberts/NurPhoto via Getty Images)
A small group of activists rally against the GOP health care plan outside of the Metropolitan Republican Club, July 5, 2017 in New York City. Republicans in the Senate will resume work on the bill next week when Congress returns to Washington after a holiday recess. (Photo by Zach D Roberts/NurPhoto via Getty Images)

There’s never been a ballot measure asking voters to weigh funding for the Affordable Care Act’s (ACA) Medicaid expansion until Oregon’s. On Tuesday, voters statewide were asked to decide whether to keep taxing insurance companies and hospitals to pay for health insurance or tell the state legislature to return to the drawing board and think of something else. They chose the former.

Expanding Medicaid coverage to all people living in poverty has been a decades-long priority for Oregon. But covering everyone — not just pregnant women, kids, seniors, and adults with disabilities — who lives 100 percent below the federal poverty level led to some budget setbacks over the years. So when the federal government agreed to pay for 100 percent of the costs associated, at least for a few years, Oregon opted to further expand Medicaid coverage to people living up to 138 percent of poverty.

Now 94 percent of Oregonians have health insurance — one of the nation’s highest insured rates.

Last year, states needed to start pitching in financially; per the health law, the federal government’s financial share fell to 95 percent in 2017 and will fall to 90 percent by 2020. How Oregon intends to pay for its share is on Tuesday’s ballot.

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By voting yes to Measure 101, voters upheld temporary taxes passed by the state legislature and okay-ed by the governor last year. (Three Republican state legislators who opposed the taxes petitioned to get the bill on the ballot.) The 1.5 percent tax on some insurers and managed care organizations and 0.7 percent tax on large hospitals would raise anywhere between $210 to $320 million over the next two years. (Due to a federal labor law, states can’t tax self-insured plans.) The measure also raises revenue for the state’s reinsurance program, which helps lower premiums for plans offered on the Obamacare marketplace.

Oregon’s referendum comes as states nationwide engage in tough conversations on how to maintain Medicaid costs. Kentucky officials are imposing work requirements, premiums, and issuing other administrative changes — thus saving an estimated $2.4 billion over the next five years. Kentucky is saving state dollars by rolling back health plan benefits and transitioning thousands off Medicaid. At least nine other states are pursuing similar changes; a few didn’t expand Medicaid, but hope to align it with other welfare programs.

Alternatively, Oregon is funding Medicaid expansion through provider taxes. Eight of the 33 states that opted to expand Medicaid said they intended to fund their share with provider taxes, said Kaiser Family Foundation’s Robin Rudowitz. (This does not include Oregon.)

“The flip side of rolling back coverage is it increases costs in other areas,” Rudowitz told ThinkProgress. Her team’s review of over a hundred Medicaid expansion studies found reductions in uninsured visits and uncompensated care costs for hospitals and clinics in states that opted to expand eligibility. 

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Supporters of the provider tax say that coverage of 350,000 low-income Oregonians hangs in the balance. Voting down Measure 101 means state legislators would have meant lawmakers needed to reassess the budget hole in February. “Expansion population is most at risk,” said Janet Bauer, of Oregon Center for Public Policy. State officials could also decide to cut programs not related to health care, she said. 

“It makes sense for members of the health industry to contribute to its success,” Bauer told ThinkProgress. “Why would we want to pirate resources that were raised for other [items] — that could go to kids in schools — when the health care industry has the self interest and capacity to contribute?” 

Republican Rep. Julie Parrish, who spearheaded the effort to get the taxes to a vote, said insurers will offload taxes to consumers. Insurers subject to tax increases can only raise premiums by 1.5 percent. She also told Oregon Public Broadcasting that Medicaid more broadly “needs fixing.”

Parrish received support from Oregonian Editorial Board, but that’s about it. There’s large support for taxes among the health care sector — including hospitals. The thing to watch out for is voter turnout, which looks to be very low for the single ballot initiative.

UPDATE: This post as been updated to note that Oregon voted yes to Measure 101