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.
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.
