The House Revenue Committee moved HB 2116 to Ways & Means on Thursday, marking one more step on the path toward a new provider tax.  HB 2116 contains both a hospital tax (3.1%) and a health insurance premium tax (1%). 

The entire cost of the premium tax will be picked up by employers who are already paying for commercial health insurance for their employees; the hospital tax will be fully recoverable through federal matching funds (and thus will not contribute to the cost shift.) AOI opposed the bill solely on the basis that the insurance tax is imposed on too narrow a base, and will not be sustainable over the long term.

HB 2116 is intended to renew and expand funding for the Oregon Health Plan (OHP) and associated children’s health care programs.
 
The hospital tax will be used to increase the OHP Standard population from 25,000 to 60,000 adults, and the insurance premium tax will be dedicated to children’s health insurance coverage.  Other provisions of the bill raise children’s eligibility for the OHP from those under 185% of the federal poverty level (FPL) to those under 200% of FPL.  This change, funded through the premium tax, will add roughly 60,000 children to the OHP.  The tax will also pay for sliding-scale subsidies for children above 200% FPL--approximately 20,000 of them.
 
HB 2116 will add $9 million in additional funding for the Family Health Insurance Program (FHIAP), which subsidizes employer payments for health care benefits.
 
A premium tax is not sustainable.
Taxing a narrow group of businesses for a broad-based health care expansion is not equitable or sustainable in the long term.  The funding mechanism in HB 2116 (premium tax) is predicated on the idea that premiums will remain steady.  Unfortunately, this is impossible.  Increasing the cost of health insurance will cut down the number of employers who can pay for it.  The fewer employers there are paying for insurance, the fewer taxes will be collected.  The fewer taxes, the less funding for the newly expanded Oregon Health Plan.  This brings us right back to where we started—except that fewer people have health insurance, and health insurance costs more.

We can’t afford to expand the Oregon Health Plan right now.
The state is in the middle of the worst recession since the 1980s.  Unemployment in Oregon is almost the highest in the nation—the state lost close to 10,000 jobs in March alone.  Health insurance is a benefit that is costly for employers to provide; regardless, legislators plan to increase that cost.  This leads to a hard choice—a business can drop coverage for its employees, or it can drop employees.  Either way, the cumulative effect of increasing insurance costs will be fewer insured lives.