Measure 101: What you need to know before you vote

The results of the January Special Election in Oregon could change your health insurance. Here’s what you need to know.

Battle over state tax on health care

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SALEM, Ore. – This January, voters in Oregon will receive a ballot with a single, densely worded measure on it. But don’t dismiss this special election. Measure 101 could impact insurance coverage and premiums for hundreds of thousands of Oregon residents, and $1 billion – or more – in state and federal funds. 

The measure relates to a bill passed by state legislators in July, which would temporarily tax some hospitals, insurance companies and a few other entities to make up for a Medicaid funding shortfall. Some call it a “provider tax,” some an “assessment,” but what it means is that several health care providers and organizations will pay a little extra for the next two years, and some people could see a slight increase in their insurance premiums, in order to keep low-income Oregonians insured.  

The bill had bipartisan support and was signed by the governor, but a campaign led by Rep. Julie Parrish (R-Tualatin/West Linn) garnered enough signatures to get the measure on a Special Election ballot.

Now, voters will be asked on Jan. 23, 2018 whether to approve the additional funding.

Even though the signature campaign got the measure on the ballot, Parrish opposes the measure and hopes the Special Election gets rid of the provider tax.

Supporters of the measure say a “yes” vote will preserve health care for low-income Oregonians, keep insurance rates stable for individuals who buy their own insurance, and protect hospitals from costly visits from uninsured patients flooding emergency rooms. The opposition campaign says a “no” vote will stop a $330 million tax that could ultimately trickle down to individuals, small employers, school districts, colleges, hospitals and public employee insurance plans.

Here’s what you need to know about the measure before you vote.

What Measure 101 would do

If Measure 101 passes, the bill Oregon legislators passed in July - House Bill 2391 – would be protected. That means for the next two years, many insurance companies, hospitals and other health care providers would be taxed between 0.7 and 1.5 percent.  

That money would bridge the gap in Medicaid funding, created by a state budget shortfall and federal cuts, to keep low-income residents on the Oregon Health Plan. The tax would be leveraged for more federal Medicaid dollars, so supporters say the couple hundred million raised by the state over two years would ultimately land Oregon as much as $1.3 billion, or more, in state and federal funds. This is not a new idea. Hospitals have been assessed for more than a decade in Oregon to garner more federal money with success.

Supporters of Measure 101 say a “yes” vote means 350,000 low-income Oregonians who are at risk of losing their health insurance due to Medicaid cuts would be able to stay on the Oregon Health Plan. The opposition says that number is a little lower – but either way, at least a couple hundred thousand Oregonians would get to keep their current insurance through the state.

Twenty percent of the tax would also fund what is called a “reinsurance” program, which is basically an insurance program for insurance companies. That pool of money would partially reimburse insurance companies for extremely expensive care, such as neonatal intensive care visits, cancer treatments or catastrophic accidents. The reinsurance program already reduced 2018 insurance rates by 6 percent for individuals who buy insurance on the open market, over what they would have paid otherwise. That’s what supporters of Measure 101 mean when they say that insurance rates are stabilized.  

Who pays the tax

Insurance companies, managed care organizations (like PPOs and HMOs) and the Public Employee’s Benefit Board (which provides health insurance to public employees in Oregon) would be taxed 1.5 percent on insurance premiums.

Many hospitals would also pay a 0.7 percent assessment on net revenue. Rural hospitals wouldn’t be taxed.

Small groups that buy health insurance for employees will see a 1.5 percent increase on their health insurance as insurance companies can pass on the tax to them. Large groups that negotiate with insurance companies could see higher premiums as well, but their rates are not set by the nonpartisan state Department of Consumer and Business Services (DCBS). Insurance companies are not allowed to increase rates by more than 1.5 percent because of Measure 101.  

Supporters of the measure say those are the only entities that will pay anything – everyone else is exempt. Individuals who buy insurance on the open market actually pay less because of the reinsurance program.

The fine print of the reinsurance program kickback is that while Measure 101 allows insurers to raise rates up to 1.5 percent to make up for the tax, because of the stability created by the reinsurance program, individual rates for 2018 dropped by 7.5 percent relative to what they would have been otherwise (netting a 6 percent savings). Rates still increased, but not as much as they would have without reinsurance. 

“That 1.5 percent assessment averages out to $5 per person per month,” explained Jake Sunderland, spokesman for the DCBS. “For $5 a month the assessment is able to fund a reinsurance program [that saves] about $25-$30, on average, per person per month.”

Rep. Parrish also says that colleges could raise tuition and hospitals will increase prices to make up the difference, although that claim at this point is theoretical.

Who supports Measure 101

More than 200 people attended a rally in Southeast Portland on Sunday to support Measure 101. Proponents say it will help protect people who rely on the Oregon Health Plan and Medicaid for the health coverage.

Virtually all entities that stand to be taxed support the measure. The Yes for Healthcare campaign has compiled a list of supporters that includes Kaiser, Legacy, PeaceHealth and Providence hospitals, AARP Oregon, the Oregon Association of Hospitals and Health Systems, and dozens of other organizations.

Campaign finance reports show many of these organizations contributed generously to the Yes for Healthcare campaign. Legacy Health System and Greater Oregon Behavioral Health, Inc. both donated $25,000. School Employees Exercising Democracy, Oregon Education Association, Willamette Dental Management Corp, Nurses United Political Action Committee and the Oregon Association of Hospitals and Health Systems all gave $10,000.

 “It is endorsed by more than 80 organizations, including AARP-Oregon, nurses, and child advocates,” said Patty Wentz, spokeswoman for the Yes for Healthcare campaign. “When you have a plan backed by all these organizations and lawmakers on both side of the aisle, voters can be confident it is well-vetted and will do what it says it will.”

It’s not that hospitals and other health care companies benevolently welcome an additional tax; instead, the extra funding will come back to hospitals and other care organizations in the form of Medicaid payments. It also keeps them from having to provide emergency care for uninsured patients who can’t pay their bills.

“At the end of the day we all pay for that care,” said Andy Van Pelt, Executive Vice President of the Oregon Association of Hospitals and Health Systems. “This is a way to prevent that and keep things stable for the time being.”

People who work in health care fear without Measure 101 they could see pre-Affordable Care Act levels of uninsured people waiting until their health problems are unmanageable before showing up in emergency rooms, and then grappling with expensive treatment options.

“Before the [AHA] expansion you’d have someone come in and we’d say, ‘You need a CAT Scan,’ and they’d say, ‘I can’t afford it,’” said J.R. McLain, an emergency room nurse who works at Providence Portland Medical Center. “For me, as a nurse, it was heartbreaking. To just look at somebody and see them struggling with this decision – do I get this CAT Scan and see there’s something I need to be treated for or do I pay my rent? Sometimes they would get it done and sometimes they wouldn’t.”

Who opposes Measure 101

Rep. Parrish leads the opposition of Measure 101, along Rep. Cedric Hayden (R-Roseburg). The two legislators both have committees donating to the opposition campaign, Stop Healthcare Taxes.

The finance activity for Hayden’s political action campaign, All 36, shows big donations from Lane County land developer Norman McDougal ($50,000), Stimson Lumber CEO Andrew Miller ($15,500). Other donations from Oregon businesses include Tigard construction company TerraFirma Foundation Systems ($5,000), Favorite Mistakes Sports Bar in Albany ($2,500) and Albany bowling alley Lakeshore Lanes ($2,500). 

Stop Healthcare Taxes PAC, controlled by Parrish, does not yet show any significant contributions except for a $25,000 cash donation from All 36. 

In addition, Parrish said Patty Buehler, the wife of Rep. Knute Buehler (R-Bend), has personally donated to the campaign. 

“We are sort of like a really small grassroots campaign,” Parrish said. “The state says, ‘Buy health care, we’ll tax you.’ Health care is a basic human need but taxing it doesn’t make it cheaper.” 

What happens if Measure 101 passes

If Measure 101 passes, for the next two years virtually everyone who qualifies for the Oregon Health Plan will continue to be covered under the plan.

Hospitals, insurance companies and other health care organizations in Oregon will be assessed between 0.7 and 1.5 percent.

The reinsurance program will be funded through 2019. For individuals and small businesses, insurance rates have already been set for 2018 and those rates can’t change. In 2019, rates for individuals will see a discount again because of the reinsurance program, likely around 6 percent over what they would be otherwise, according to the DCBS. Small businesses will see an increase of 1.5 percent because of the measure. 

Rep. Parrish says some other groups of people will pay extra because of the health care tax – students, for example, could pay an extra 1.5 percent, she says. The DCBS refutes that claim as the reinsurance program actually keeps insurance rates lower for individuals who buy insurance through healthcare.gov.

Parrish also says schools and other large groups who purchase health insurance for their staff will see rate increases in 2019 due to the assessment. If they are large enough to be part of a large group plan, their rates are not set by the DCBS and those groups negotiate rates with insurance companies. There’s no way to know at this point whether the 1.5 percent tax would trickle down to all large-group employees but it’s possible.

What happens if Measure 101 fails

If Measure 101 fails, the health care safety net House Bill 2391 created will start to unravel; however, what that looks like is a bit muddy at this point. Two groups of people could be hit hard: Oregonians who are currently insured under the Oregon Health Plan, and individuals who purchase health insurance through the exchange.

More uninsured

If the measure fails, the state will have to either cut coverage for big groups of people, reduce coverage, pay providers less, come up with a lot of extra money to make up for the loss, or some combination of the options.

The Oregon Health Authority says there are three groups of people that could take the hit for the money gap: Either 350,000 adults and children who had been covered by the Medicaid expansion under the Affordable Care Act; 120,000 children who are covered under the Children’s Health Insurance Program (CHIP); or the few hundred women with cancer who are covered under the Breast and Cervical Cancer Treatment Program. The most likely scenario is to cut coverage for 350,000 people, but that has yet to be decided.

“If 101 doesn’t pass the insurance tax will not go into effect, which will leave a budget hole of $210 million,” said Mary Sawyers, spokeswoman for the Oregon Health Authority. “The legislature will have to instruct us what to do during the February session.”

Reinsurance ends

The reinsurance program will also end, although there is enough money squirreled away to keep the program funded through 2018. In 2019, however, rates will rise and some Oregon counties could find themselves without any options for health insurance through healthcare.gov, meaning no one who lives in those counties could benefit from financial assistance through the Affordable Care Act. 

“2019 is where it gets ugly,” said DCBS spokesman Jake Sunderland. “At a minimum, rates are guaranteed to go up by at least 6 percent in the individual market and there is a very high risk that insurance companies might decide to stop offering coverage in rural areas or other expensive markets where it’s hard to get carriers to participate today even with reinsurance.”

Compromise possible

Rep. Parrish said the doomsday scenarios are not set in stone. She notes that the Legislature will meet for a short session in 2018 and could get some other options passed. She suggested ideas such as moving public employee health care coverage to the health care exchange or adding more taxes to tobacco products.

“I hope that my colleagues are ready for some compromise in the short session,” Parrish said. “If voters vote no and say we’re paying you to solve our problems and compromise and we don’t do it, shame on us. I hope every voter in the state holds us accountable in November.”

 

Correction: A previous version of this article stated that Carl Wolfson contributed to the opposition campaign. Wolfson has not contributed to the campaign and said he does not support the effort to repeal the bill.

Other donors who recently contributed to Rep. Hayden and Parrish's personal political action committees have not taken a public position on the measure. Those include contributions from pharmaceutical companies Merck Sharp & Dohme Corp, Eli Lilly and Company, and PHRMA; Evergreen Biopower LLC; Anheuser Busch; and Altria Client Services Inc. , which provides services to tobacco producer Phillip Morris’ parent company, Altria Group.

Published Nov. 21, 2017

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