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Oregon Lawmakers Tax Hospitals, Insurers To Fill Yawning Budget Gap

<p>State Sen. Alan Olsen, R-Canby, in the Oregon Senate on Monday, Jan. 14, 2019, in Salem, Ore.</p>

Bradley W. Parks


State Sen. Alan Olsen, R-Canby, in the Oregon Senate on Monday, Jan. 14, 2019, in Salem, Ore.

Oregon lawmakers have staunched a big part of a sizable funding hole in the state’s health care system, sending the second major bill of the 2019 legislative session to Gov. Kate Brown for signing.

On Thursday, the Senate passed House Bill 2010, a $380 million package of taxes on hospitals and health insurers that will remain in place for six years. The bill, a key focus of Brown and Democratic leadership, passed the chamber on a 23-7 vote, with three of the Senate’s 12 Republicans joining Democrats in support.

The bill had already passed the House by a wide margin.

HB 2010 expands and extends a set of assessments approved by voters in January 2018’s Measure 101. One part of the legislation, which is supported by the health care industry, modifies an existing tax on state hospitals.

A more controversial provision will increase a 1.5 percent tax on health insurance providers to 2 percent — a move Republican critics say will raise health care costs for small businesses and schools. Proponents point out it will save many consumers money, because of a “reinsurance” program that helps give insurers certainty.

HB 2010 was an early priority for Democrats this session, in part because the money it raises can now be included in a budget framework the Legislature’s budget-writing committee is expected to release next week. The bill is the second major legislation that headed to the governor's desk this week. The other was a new statewide rent control policy Brown signed into law today. 

On the Senate floor Thursday, state Sen. Alan Olsen, R-Canby, said voters would react negatively to the tax package. They approved the health care assessments in 2018, he said, with an assurance they would only last for two years.

“We told Oregonians it was a temporary assessment,” Olsen said. “No wonder people don’t like government. We can’t keep our word.”

Sen. Elizabeth Steiner Hayward, D-Beaverton, argued voters will see the need for expanding the taxes to fund the state’s Oregon Health Plan, which insures nearly 1 million Oregonians.

Steiner Hayward also nodded to another fact: The state still needs to find hundreds of millions of dollars to close what the governor’s office says is a $922 million funding hole in the program this year. Gov. Brown has proposed two measures to do that — a $2-per-pack hike on cigarettes and a new tax on employers who have workers on the Oregon Health Plan — but there are doubts among legislative leaders that they have support.

“We have not given up on the two other ideas that the governor mentioned in her budget,” House Speaker Tina Kotek, D-Portland, said Thursday. “I don’t know where those are going, per se.”

Copyright 2019 Oregon Public Broadcasting

Dirk VanderHart is JPR's Salem correspondent reporting from the Oregon State Capitol. His reporting is funded through a collaboration between public radio stations around the Northwest called the Northwest News Network.