Give us your Viewpoint.

 

Background

When published immediately prior to the session, the Governor’s Recommended Budget (GRB) contained a proposal to significantly expand the current provider tax program.  The GRB proposed to increase the hospital tax from its current rate of .63% to 4.0%.  In addition, the GRB contained a new tax on health insurance premiums on fully insured health plans.  This was set at 1.5% of total premium, but exempted from taxation all plans that are less than fully insured - self funded plans, labor and Taft-Harley trusts, etc.  These exempt plans are estimated to represent about 40% of the health insurance revenue in the state.  This proposal was included in HB 2009, and would raise approximately $1,484 million in state and federal funds in 2009-11.  This is enough to cover 100,000 adults and 80,000 children.

Then came another proposal.  This alternative imposed a 1% tax on the processing of all health care claims, regardless of whether they were made on commercial plans, self-funded plans or Taft-Hartley trusts.  Under this proposal, hospitals would pay the 1% on the claims of their employees, and would also continue to pay their current tax of .63% on net patient revenues.  This tax would raise around $782 million in the 2009-11 biennium (state and federal funds combined) and would cover 50,000 adults and 60,000 children.

House and Senate leadership appointed two legislators each to negotiate a final resolution:  Senators Betsy Johnson (D-Scappoose) and Alan Bates (D-Ashland), and Representatives Mitch Greenlick (D-Portland) and Mary Nolan (D-Portland).  These legislators have met with hospitals and health insurance carriers multiple times and attended hearings on the claims tax proposal. 

Legislators Made a Decision

On April 7th, the Oregon AFL-CIO’s weekly legislative update broke the news that the legislative team had decided to move forward with the Governor’s proposal.  Before any proponents of the claims tax alternative had heard from legislators, they read the following in the AFL-CIO newsletter:

“The Legislature decided to levy a fee on insurance premiums and not charge a sales tax on insurance claims - a big thank you to all of the legislators who were involved in this decision! Health care reform is looking good, but there are still a few more big changes that need to happen for health care reform to really work for working Oregonians.”

Now Oregon Businesses need to Evaluate the Impact on Their Health Care Costs

Since the Legislators involved appear to have settled on a premium tax and higher hospital tax, business needs to carefully evaluate the impact on their own health care costs.  As the debate develops, AOI will work to ensure that legislators are fully informed about how the business community is impacted by such taxes.