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Health care provider tax narrowly passes House

The tax will bring in an estimated $600 million a year to offset the cost of expanded Medicaid coverage.

CAPITAL BUREAU - The House Thursday narrowly passed a new tax on health care providers.SALEM — The Oregon House of Representatives narrowly passed an increased assessment on health care providers that is estimated to bring in more than $600 million to help fund the Oregon Health Plan for the next two years.

The so-called provider tax would raise revenue from hospitals, insurers and coordinated care organizations — the regional networks of providers serving patients on the Oregon Health Plan — to help cover the costs of Medicaid and to pay for a reinsurance program, a reimbursement system protecting insurers from high claims.

It required a three-fifths vote. Republican Sal Esquivel, of Medford, was the sole Republican who voted for the legislation, giving it the required majority. Esquivel declined to comment after the vote.

Certain urban hospitals are now charged an assessment of 5.3 percent, set to expire in 2019.

The legislation would extend the assessment two years and increase it to 6 percent for those hospitals, and establish a new 4 percent on net revenue of rural hospitals.

The expansion of Medicaid under the Affordable Care Act allowed more people to qualify for the government's health care program: as of May 1, more than a million Oregonians receive health care through the Oregon Health Plan. The federal government picks up most of the tab, though Oregon's financial responsibility for the program is growing.

The proposal also creates a 1.5 percent tax on commercial health insurance premiums, and premium equivalents for managed care organizations and the Public Employees' Benefits Board, which oversees benefits for certain public employees.

Several Republican legislators spoke against the legislation in a late Thursday floor session, saying that the tax on insurance premiums would have an adverse effect on schools and small employers paying for their employees' insurance, and increase the cost of healthcare coverage for students at the state's public universities.

The vote on the tax comes near the end of a week of more critical news about the Oregon Health Authority's troubled management of the expansion population, including the out-sized costs of an IT system to handle eligibility for the program.

State Rep. Knute Buehler, R-Bend, as well as Rep. Cedric Hayden, R-Fall Creek, and Rep. Julie Parrish, R-Tualatin/West Linn, spoke out against the bill. Buehler said that the legislation failed to hold the Oregon Health Authority to account.

About 12,000 students enrolled in health plans through public universities would be subject to a 1.5 percent premium tax.

State Rep. Dan Rayfield, D-Corvallis, a supporter of the bill, said that the monthly increase in premiums would be less than $7 a month for students who have health plans through Oregon's public universities.

Rayfield also noted that legislators approved a 1 percent tax on insurance premiums to cover children under Healthy Kids legislation in 2009.

"The sky didn't fall...but children across Oregon got healthcare," Rayfield said.

The bill, which comprises a significant portion of lawmakers' attempts to close a $1.4 billion budget gap, now goes to the Oregon Senate.

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