Republican tax bill could slash billions for Oregon Health Plan, state officials say

A Republican tax bill passed in the U.S. House and headed for a vote in the Senate would slash billions in federal Medicaid funding across the country — leaving an outsized mark on states like Oregon that offer health care policies centered on inclusivity.

The state relies on more than $11 billion in federal funding each year to cover about 75% of its Medicaid program, known as the Oregon Health Plan.

That funding could be more than cut in half if the Republican tax bill passes, according to Oregon State Treasurer Elizabeth Steiner. State officials say the bill also has the potential to leave hundreds of thousands of low-income Oregonians without health insurance.

Republicans behind the bill say it will deliver large tax cuts, increase immigration security and impose welfare reform. Oregon leaders have called the bill financially irresponsible and a way to punish states that provide Medicaid regardless of citizenship status, and to patients seeking gender-affirming care and reproductive health care, including abortion.

Oregon Health Plan benefits have not changed at this time, and the Oregon Health Authority is still assessing the bill's potential impacts, agency spokesperson Amy Bacher told the Capital Chronicle.

One in three Oregonians are enrolled in the Oregon Health Plan. This includes more than half of the state's kids, as well as seniors who rely on Medicaid-funded nursing home support and individuals with caregiving needs.

Work requirements would push Oregonians off Medicaid

The bill would mandate that twice a year state officials verify all adults enrolled in Medicaid have worked or participated in community service for at least 80 hours each month.

These requirements would create unnecessary paperwork burdens for low-income people already working, and disincentivize people from enrolling, resulting in 100,000 to 200,000 Oregonians losing their insurance for not complying with the policy, Oregon Health Authority's Medicaid director, Emma Sandoe, told the Oregon Senate Health Care Committee on Tuesday afternoon.

"When people lose coverage, that also means reduced federal dollars coming into Oregon," Sandoe said.

The work requirements alone could reduce federal funding by $1.4 billion per year, she said. Over 10 years, that would result in a loss of up to $16 billion in federal funding for the Oregon Health Plan. These estimates do not include additional funding cuts caused by other provisions in the bill.

No federal funds for gender-affirming care

Another provision of the bill would prohibit federal funds from Medicaid and the Children's Health Insurance Program, or CHIP, from going toward gender transition procedures for minors. Beginning in 2026, that prohibition would expand to adults.

LGBTQ+ adults are twice as likely as non LGBTQ+ adults to have Medicaid as their primary source of insurance, according to the Williams Institute at University of California, Los Angeles. About 7,000 Oregonians use Medicaid to receive gender-affirming care, Sandoe said.

LGBTQ+ advocates in Oregon said the bill is another aggressive step from the Trump administration to target transgender Americans.

"If this bill passes, more transgender people will die," Blair Stenvick, a spokesperson for the nonprofit advocacy group Basic Rights Oregon, told the Capital Chronicle. "Gender-affirming care costs are a minuscule fraction of all Medicaid costs, and singling out transgender people — both youth and adults — is an intentional, ideological move from a fascist government obsessed with controlling people's bodies and personal decisions at all costs."

Immigration status policies tied to federal funds

The federal government would match 80% rather than 90% of Oregon's Medicaid funding unless the state ends its program insuring people regardless of citizenship status.

That drop in matching funds would amount to a $1 billion loss each year, Sandoe told the committee.

Oregon is one of seven states that offers Medicaid to eligible adults regardless of immigration status and one of 14 states, plus Washington, D.C., that covers children regardless of immigration status.

In 2017, the state passed a "Cover All Kids" program to extend Oregon Health Plan benefits to children regardless of immigration status. In 2022, the state allowed all eligible adults regardless of their immigration status access to health coverage through "Healthier Oregon." About 100,000 people are enrolled in the program.

Prohibiting Medicaid funds for reproductive health nonprofits

The bill would prohibit Medicaid reimbursement for 10 years to organizations that provide abortions. Federal funding for abortion has been prohibited for decades under the Hyde Amendment, but the bill would block organizations like Planned Parenthood and other nonprofit providers from receiving reimbursements for other reproductive health services, such as family planning and cancer screenings.

There are 12 Planned Parenthood centers in Oregon, Sandoe said, providing pap smears, cervical and breast cancer screenings and STD treatments, among other services to mostly low-income Oregonians.

About 70% of Planned Parenthood Columbia Willamette patients use Medicaid, the nonprofit's CEO and President Sara Kennedy told the committee. The nonprofit operates clinics in Vancouver, Washington, the Portland metro area, Salem, Bend and Ontario.

"Abortion access will absolutely suffer," she said, noting that only 10% of patients visiting the nonprofit receive abortions.

Planned Parenthood affiliates in Oregon already operate with a budget deficit because Medicaid reimbursement rates do not cover the full costs of providing care, she said. The federal bill would only exacerbate the nonprofit's deficit.

"If this bill passes, cancers will go undetected and untreated," she said. "Pregnancies will become more dangerous — not just for Planned Parenthood patients — but for our entire population, and that is even here in a state that has incredible protections for reproductive health care."

Tax limits on medical providers

The bill would also cap or freeze the taxes states can impose on medical providers — a strategy all states except Alaska use to increase the number of state dollars for Medicaid that can then be matched by federal dollars.

States rely on provider taxes to fund 17% of their Medicaid spending, according to most recent data available from the U.S. Government Accountability Office.

In March, Gov. Tina Kotek signed a bill into law extending its taxes on medical providers through 2032. These taxes fund about a quarter of the Oregon Health Plan, Oregon Public Broadcasting reported.

"States will be forced to take on a larger share of the burden of paying for Medicaid — an impossible task, given that Oregon is already dealing with a budget deficit," Oregon's U.S. Rep. Andrea Salinas, a Democrat representing the state's 6th Congressional District, told the Capital Chronicle.

All five of Oregon's Democratic U.S. House Representatives opposed the bill. Oregon's sole Republican congressman, U.S. Rep. Cliff Bentz, representing the state's 2nd District, voted in favor of the bill.

Oregon's U.S. Sen. Ron Wyden, a Democrat, said the stakes for the bill are "truly life and death" for Americans.

"Taking away health insurance and benefits like home care and mental health care from seniors, people with disabilities, kids, and working families will be deadly," he said in a news release.

This article was originally published by Oregon Capital Chronicle and used with permission. Oregon Capital Chronicle is part of States Newsroom and can be reached at [email protected].