Oregon

Oregon Passes Hefty Insurance Tax to Prop Up Its Scandalous Medicaid System

The state is spending $37 million a month on recipients potentially not eligible for the program.

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Oregon State Capitol
ZehnKatzen/Wikimedia Commons

On Wednesday, Oregon lawmakers passed a major new tax on hospitals and health insurers to raise $673 million to shore up the state's scandal-ridden Medicaid system.

The new levies—1.5 percent on health insurers and 4.6 percent on hospitals are a desparate attempt to plug the state's $1.4 billion budget deficit, about $1 billion of it is the result of Medicaid expansion. They will, however, do little in the way of reforming a wasteful system shot through with failed projects and inappropriate expenditures.

By far the costliest of these failed projects was Cover Oregon, the $300 million Obamacare exchange so utterly unworkable when it launched in 2014 the state was forced to abandon it.

It's successor, the Oregon Eligible or ONE system, is faring little better.

The Oregon Department of Human Services commissioned the ONE system in 2015 to handle a far less ambitious goal of verifying income eligibility for those applying for the Oregon Health Plan (the state's Medicaid program).

After spending $166 million—four times the initial contract costs—the state did manage to cobble together a workable website.

But Oregon still has not managed to perform federally-mandated income eligibility checks on 86,000 current Medicaid enrollees. The state is spending $37 million a month on potentially ineligible recipients, according to a May audit by the Oregon Secretary of State. That $444 million a year is about two-thirds of what the new hospital tax is projected to raise.

The state has booted some 14,000 people from the Medicaid rolls as a result of the audit and another 17,000 are under investigation.

Since 2016—when a federal waiver on conducting these income eligibility verifications expired—the state has terminated coverage for 300,000 ineligible Medicaid recipients, and state officials still can't say how much Medicaid money was dispersed in error.

Oregon Republicans have been harshly critical of the new tax plan, saying it does nothing to ensure the new revenue will not be wasted in a similar fashion.

"It should be a requirement to prove to the people we are making efficient use of the money they are already sending us before we ask for more," State Sen. Jeff Kruse (R-Roseburg) said in a newsletter.

State Rep. Knute Buhler (R-Bend) made a similar point in an Oregonian op-ed, calling the new taxes a missed "opportunity to repair and reform how the state funds and spends government health care dollars."

Still, enough Republicans voted for the plan to hoist it over Oregon Legislature's three-fifths requirement for levying new taxes.

The bill now goes to Gov. Kate Brown, who is expected to sign it.

Oregonians who are already facing double-digit premium hikes for 2018 can be expected to pay even more for health insurance premiums and hospital visits to cover a consistently wasteful and poorly-managed state healthcare system.

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  1. 1.5 percent on health insurers and 4.6 percent on hospitals

    Exactly. Penalize behavior and you’ll get less of it.

    1. Beat me to it.

    2. Great response.

    3. I’d love to see a study of how many doctors have stop accepting Medicaid patients. The reimbursements are laughable. Our ambulance company gets reimbursed for less than half our normal charge. If we were in a poor area and Medicaid took up more of our calls, we’d have to be massively subsidized or go to an call system instead of the 24/7 one we are now.

      1. Eventually you run out of other people’s money. This applies to Medicaid as well, since the only way to recoup those costs is to pass on the cost of Medicaid to other patients who actually have money. But of course the high price of healthcare has nothing to do with that. Nothing at all.

      2. My deductible is so high that the main benefit I get from having insurance comes from the insurance company capping the max amount that a provider can charge. I’m still stuck paying 100%, but at least it’s 100% of 50% of what the ambulance wanted to charge me.
        Fear of getting stuck paying the rack rate is what keeps me ponying up the premium every month.

  2. $166Million

    or free:

    IRS Form 4506-T, Request for Transcript of Tax Return
    Use this form to:
    order a transcript or other return information free of charge, or
    designate a third party to receive the information.

  3. “The new levies . . . are a desparate [sic] attempt to plug the state’s $1.4 billion budget deficit, about $1 billion of it is the result of Medicaid expansion.”

    The Republican House and Senate bills kill the ObamaCare Medicaid expansion–and that can’t happen soon enough.

    The worst part of it isn’t even the burden on the taxpayer. It’s sick, working people who can’t afford insurance or care.

    Medicaid only reimburses providers for a fraction of the cost of care, so providers are expected to gouge insurers to make up for all the money providers lose treating Medicaid patients. By expanding Medicaid eligibility, Oregon is creating a larger Medicaid patient population in the state, and, hence, increasing the losses hospitals suffer from the program and putting even more pressure on providers to gouge insurers.

    Yeah, they’re taxing hospitals to keep the eligibility for Medicaid expanded, and then they’re forcing the providers to gouge the insurers because of all the extra Medicaid patients–that’s burning the candle at both ends.

    The Republican bills in Congress killing the ObamaCare Medicaid expansion is the second best thing about them–only because siccing the IRS on people for not buying broccoli is so morally wrong. Realize, however, there can be no fix for our healthcare system that doesn’t include killing the ObamaCare Medicaid expansion–because Medicaid (and Medicare) are the ultimate cause of the problem.

    1. Slate has a podcast up with the headline “A bill to destroy Medicaid.” Too late–Medicaid is self-destroying.

  4. “On Wednesday, Oregon lawmakers passed a major new tax on hospitals and health insurers to raise $673 million to shore up the state’s scandal-ridden Medicaid system.”

    That’s right! If you want more of something, tax the crap out of it.
    People will flock to provide that thing, since it is a universal human desire to pay taxes.

  5. Requires coordinated care organizations (CCOs) to pay to OHA into the Health System Fund, no later
    than 45 days following the end of a calendar quarter, an assessment at the rate of 1.5% of the gross amount of total
    payments made to the CCO by OHA for providing medical assistance health services during that calendar quarter.

    If you have to pay to OHA 1.5% of the total amount OHA has paid to you, how is this not effectively a 1.5% reduction in the amount OHA is paying you and wouldn’t it just be simpler – less paperwork – to cut reimbursement rates by 1.5%? Is there something I’m missing or are legislators really this willing to create an elaborate, expensive ruse to disguise what they’re doing and why are they trying to disguise it?

    1. Shhhhh! They’re working up their nerve to gradually raise the tax to 100%. Damned clever, eh wot?

    2. “…and wouldn’t it just be simpler – less paperwork – to cut reimbursement rates by 1.5%? ”

      I’m just speculating, but it wouldn’t surprise me if Federal dollars are tied to the State reimbursement rate and this is an attempt to keep the Federal dollars flowing at a maximum amount.

      (If so, it’s probably illegal, but it’s undoubtedly something the Obama administration would have intentionally ignored.)

  6. I don’t think I understand the thinking of Oregon legislators.

    Certainly they don’t really think that the way to fund the state’s ObamaCare program is to tax insurers and hospitals. That makes no sense because it would directly increase the cost of the health care that is already causing enormous budget problems for the ObamaCare program.

    That would make no more sense than, say, taxing medical devices, or creating disincentives to increase supply of medical goods and services, or increasing regulatory burdens to make health care less expensive. Oh … wait … the ACA actually does this. It all makes sense in the bizarro-land of American health care politics.

    1. “Certainly they don’t really think that the way to fund the state’s ObamaCare program is to tax insurers and hospitals. That makes no sense because it would directly increase the cost of the health care that is already causing enormous budget problems for the ObamaCare program.”

      Pretty sure these are the same folks who swear you can tax “business” and the customers won’t end up paying the bill.

    2. Look at this chart:

      http://tinyurl.com/lcayz2f

      The entire system is predicated on forcing hospitals to gouge insurers to make up for Medicaid only paying for a fraction of the cost of care.

      It’s been that way for decades. Why wouldn’t they double down on doing the same thing they’ve been doing since forever?

      It isn’t even that they’re oblivious to TANSTAAFL, exactly. They just don’t care about the impact this has on the cost of private insurance. They get their votes by keeping Medicaid expanded–for whatever reason.

      The only progressive solution I’ve ever seen to that problem was the individual mandate in ObamaCare, which was intended to force young healthy people to buy insurance specifically because they hardly use it.

      1. “It isn’t even that they’re oblivious to TANSTAAFL, exactly. They just don’t care about the impact this has on the cost of private insurance. ”

        Or they want to drive private insurance into bankruptcy and then declare the obvious necessity of Single Payer health care.

        1. ^ Pretty much this. I can’t say for certain if that is an intended consequence, but foreseeable consequences are not unintended consequences in my book.

      2. The only progressive solution I’ve ever seen to that problem was the individual mandate in ObamaCare

        If you’re going to have people do something you want them to do, you need to have oomph behind it. They should have been putting scofflaws in jail. That silly little income tax penalty doesn’t scare anyone. To be consistent, progressives can’t be firm with the law but soft with the enforcement.

        1. The ones who know what they’re doing, know the solution is to cut Medicaid.

          If expanding Medicaid is wrong, they don’t want to be right.

          They want nationalized healthcare in Oregon. If that makes the insurers flee the state or leaves Oregon with single payer, well, that’s what they want anyway.

          They want to soak the rich.

          They want democratic socialism.

          Breaking the insurance companies in that scenario is a good thing.

    3. “Oregon legislators.

      Certainly they don’t really think …”

      I think that covers it.

    4. In some ways, it’s like the minimum wage or the drug war.

      We’ve all known for years that the worst victims of the minimum wage and the drug war are minorities.

      So why were minority groups the biggest advocates of minimum wage increases and the drug war for so long?

      Part of it is ignorance. Economics to them was just another empty rationalization to them.

      Part of it was nefarious. If your political power depends on having a high number of victims of racism?

      Well, the minimum wage draws white kids and immigrants into jobs they wouldn’t bother to compete for otherwise and the drug war makes minorities with few other options the biggest victims of that policy, too.

      If your political power depends on having a high number of victims of racism, then policies facilitate creating greater number of minorities who have been victimized–and that translates into political power for them.

      Why would Oregon’s progressives who champion themselves as the solution to the problem of insurance costing so much enact policies that increase the cost of health insurance?

      Doesn’t that question answer itself?

      Calling them ignorant is probably giving them the benefit of the doubt, but I’m not sure they deserve that.

  7. “The new levies – 1.5 percent on health insurers and 4.6 percent on hospitals are a desparate attempt to plug the state’s $1.4 billion budget deficit, about $1 billion of it is the result of Medicaid expansion. ”

    I’m absolutely shocked to find out the Medicaid expansion is causing budget deficits. That news is completely unexpected!

  8. Regarding taxes and behavior, QB Derek Carr just signed a new deal:

    “Details within the contract haven’t been announced yet, and it could be interesting to see if Carr backloaded his deal. As ESPN’s Adam Schefter noted, there is no state tax in Nevada, where the Raiders will eventually move. If you compare that with California’s13.3 percent tax rate you can see why Carr might prefer the really big salary numbers to come on the back end of the deal, potentially saving millions.”
    http://www.sportingnews.com/nf…..3ka6reu2xr

  9. >>>Still, enough Republicans voted for the plan to hoist it…

    they have those in Oregon?

    1. Put a wall around Portland and Eugene, and you would be hardpressed to find a progressive in that state, except maybe some tourists in Ashland. Just the rest of the west coast, it’s very very conservative outside of the urban centers and academia. Washington is deep red outside of Seattle, and California is still the home state of Reagan east of Interstate 5.

  10. I can’t believe all of you fascists missed the most important part of this story. By throwing 300k ppl off of medicaid Oregon has just killed them. Literally.

  11. The failure curve of Blue State model just keeps not surprising us every single day.

    1. Progressives keep coming up with more spectacular ways to fail. At this point, the Oregon failure curve can only be mapped using a seven-dimensional Calabi-Yau topography.

  12. On Wednesday, Oregon lawmakers passed a major new tax on hospitals and health insurers to raise $673 million to shore up the state’s scandal-ridden Medicaid system.

    Next up: Oregon lawmakers are shocked, shocked, to learn health care costs are going up. (probably by 673 million)

    1. costs are going up. (probably by 673 million)

      You left out the $25m study that quantified the cost increase, so $698m.

  13. before we ask for more

    Someone ought to let those hospitals and insurers know the new taxes are optional.


  14. On Wednesday, Oregon lawmakers passed a major new tax on hospitals and health insurers to raise $673 million to shore up the state’s scandal-ridden Medicaid system.

    Market Failure?


    1. The state has booted some 14,000 people from the Medicaid rolls as a result of the audit and another 17,000 are under investigation.

      Moi-der-ah’s!

    2. Hell yeah it’s a market failure. Ask any progressive or socialist.

  15. A tax on hospitals. That will surely keep the costs of healthcare down!

  16. Thanks, Progress!!

  17. Reason’s goobers flip over the tax, mostly repeating the same meme.. Fine. But miss the larger message.

    PATIENTS UNDER MEDICAID SHOW NO BETTER OUTCOMES THAN UNREGISTERED ELIGIBLES!!!
    TOTALLY anti-rational, but goobers swallow it whole. On faith alone.
    “True Believers” in the church of RothardRockwellPaul

    Where does the research come from? (snort)
    Medicaid. (smirk)
    IN OREGON!!!! (OMG)

    Oregon is SATANIC … a PROGTARD state (gag) … except when their fuckups support my One True Faith
    Praise the Lord

    Mass movements do not need a god, but they do need a devil. Hatred unifies the True Believers.”
    -Eric Hoffer, “The True Believers” (1951)

    Throughout human history, the worst moral atrocitres have been committed by those manipulated to BELEEB they are defending some “greater good” — the Collective, the State, the Master Race, the Party or a God. Zealots and fanatics. The militant self-righteous.
    -Mike Hihn (1994)

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