When Oregon had a $900 million budget hole to fill for medical care for the poor, voters approved new taxes in January. They backed $320 million in taxes on hospitals and health insurers to help preserve Medicaid services for about 400,000 poor Oregonians.
But the problem of paying for the coverage has returned. The Oregon Health Authority has a slightly smaller total hole to fill for the 2019-2021 biennium — down to an estimated $830 million. Where should the Legislature come up with the money to pay for the coverage?
The state needs to look at cutting costs and raising revenue. One of the options Gov. Kate Brown’s office is considering is bad policy.
The budget hole returns because those taxes passed in January are scheduled to expire. Federal support is dwindling. Costs are also expected to rise by 3.4 percent.
Tina Edlund, senior health policy advisory to Gov. Kate Brown, has revealed some of the revenue options being considered in interviews.
One she mentioned is to tax employers whose workers are on the Oregon Health Plan — that’s the state’s version of Medicaid. This concept is sometimes called a Walmart tax. The idea is companies that don’t pay their workers enough are getting a corporate subsidy from the government, so they should pay it.
But it would likely have may unintended and unwanted consequences.
If such companies were taxed, they may raise prices, may not be able to hire as many employees or may pay employees less. None of that is great.
If such companies were taxed, how would the tax be determined? Eligibility for government programs is based on household income and household size. Companies have no direct control over household income or household size. Is it then fair to saddle them with that tax? It would create a perverse incentive for companies to hire people with small families or a spouse who gets paid very well.
It’s also important to remember that many employees who are not on Medicaid get some sort of federal subsidy for their health insurance. If the argument is that companies should have to pay up when they aren’t paying enough, why would that only apply to employers with employees on Medicaid?
The state shouldn’t just target certain types of employers to pay for health care for the poor. The tax should be transparent and broadly based across the economy.