Oregon House moves to renew provider tax to fund state Medicaid program

The Oregon House voted Thursday to renew a tax on hospitals and health insurance plans to help increase funding for the state’s Medicaid plan.

House Bill 2010 would adjust and extend taxes on hospitals and health insurers, which the state uses to bolster federal funding for the Oregon Health Plan, the state’s Medicaid program that provides health care to low-income individuals and those with disabilities.

The taxes are expected to raise $2.1 billion to support the Oregon Health Plan, which covers 1.4 million Oregonians, including more than half of children in the state.

The Oregon Health Plan is funded by a mix of state and federal funds, including the assessments on hospitals and insurance providers.

The hospitals support the taxes, though, because they unlock billions in federal matching dollars. The federal government funds the majority of the state’s Medicaid spending. According to Georgetown University’s Center for Children and Families, the federal government contributes $1.37 to Oregon’s Medicaid coverage for every $1 Oregon spends.

The hospitals essentially get much of the money back in the form of larger reimbursements for the care they provide to low-income Oregonians, and it reduces the amount care provided to people without insurance that goes uncompensated.

The Hospital Association of Oregon, a powerful lobbying group that represents hospitals’ interests in the state, said passing HB 2010 was one of its priorities this legislative session because it enables the state to secure additional federal funding for the Oregon Health Plan. By leveraging these taxes, the state can access significant federal matching funds, which make up about a quarter of Oregon’s Medicaid funding.

“We’re eager to see this bill get across the finish line, because it protects access to care for so many Oregonians,” Becky Hultberg, president and CEO of the hospital association, said in a statement. “And hospitals depend on these resources to help keep critical services, like maternity care, available in communities across the state.”

The tax on hospitals in Oregon is set to expire in September, while the tax on health insurance plans would end in 2026. HB 2010 would extend the sunset dates for these tax deals to 2032.

“One out of every three Oregonians rely on the Oregon Health Plan for their health coverage,” House Speaker Julie Fahey, D-Eugene, said in a statement. “HB 2010 will help ensure that those Oregonians continue to have access to care and that our hospitals and providers have the resources they need to serve all Oregonians.”

Rep. Andrea Valderrama, D-Portland, who voted to approve the bill, said before the House floor vote that the state’s Medicaid program covers nearly half of all births in Oregon and that 42% of those insured under the Oregon Health Plan are people of color.

“That means thousands of parents, regardless of their income, have access to vital services like regular check-ups, ultrasounds, screenings for complications, nutritional counseling, and maternity services at many of our community hospitals,” Valderrama said. “Reauthorizing these resources is a commitment to protecting access to care for children, seniors, low-income families, and rural communities.”

The bill still needs approval from the Senate before it goes to Gov. Tina Kotek for her signature.

The Oregon House approved HB 2010 without knowing what’s in store for Medicaid at the federal level. The U.S. House on Tuesday passed a budget resolution that calls for cuts to a chunk of spending that’s dominated by Medicare and Medicaid.

It’s unclear how congressional cuts to Medicaid would impact Oregon and its federal funding for the Oregon Health Plan.

— Kristine de Leon covers consumer health, retail, small business and data enterprise stories. Reach her at [email protected].

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