How NOT to fund health care

The Executive Director of the Oregon Health Fund Board submitted a “Straw Plan” to the board on July 24th which included suggestions about how to finance a new health care program for Oregon. Unfortunately, these funding suggestions seem to violate at least one of the principles the Board is charged with meeting.

The enabling legislation for the Health Fund Board (SB329) sets out a number of principles for a new Oregon health care system. Principle 3 states:

“Financing of the health care system must be equitable, broadly based and affordable.”

The Board’s Finance Committee made recommendations in June that sought to adhere to that principle. Unfortunately the Straw Plan released last week ignored those recommendations; aiming instead to finance a new health care system with funding that is inequitable, narrowly based, and questionably affordable.

The Finance Committee recommended that the system be funded predominantly with a payroll tax, which would at least be broadly based (if questionably equitable and affordable). The Straw Plan makes no mention of a payroll tax. Instead, it proposed three new taxes: a health insurance premium tax, a hospital tax and a tobacco tax.

Taxing the premiums of those who are fortunate enough to have insurance is a way to make insurance even less affordable than it is today. Taxing hospitals is simply a way to shift the burden to patients who are unlucky enough to need their services. And, taxing tobacco is the least equitable, narrowly based, unaffordable way to make a minority pay for the health care of others. Oregonians soundly defeated the tobacco tax idea when they voted down Measure 50 last year. If voters won’t tax smokers to pay for children’s health insurance, why would they want to tax smokers to pay for anyone else’s insurance?

The Health Fund Board has a daunting task before it. It should not make that task even harder by accepting an inequitable, narrowly based and questionably affordable financing scheme.

Founder and Senior Policy Analyst at Cascade Policy Institute, Steve Buckstein is Director of Cascade’s Government Transparency Project and the Oregon Economic Opportunity Project. Based in Portland, Cascade Policy Institute is Oregon’s free market research center.

  • Beaverton Business Owner

    Was there any reason given for tossing out the Finance Subcommitte’s plan? As a businessowner, I don’t like the idea of new payroll taxes… but with health care costs fluctuating wildly, I would certainly be willing to take a look at that if my insurance costs were to go down.

    I’m no health care expert, but premium and hospital taxes would make costs MORE expensive, as that’s essentially what’s happening now with uncompensated care. (Not to mention that the hospital taxes would naturally get passed on to premium costs anyway.)

    Having said that, I was in favor of the cigarette tax (guess that makes me one of those Moonbats), and Oregonians didn’t defeat the concept of a cigarette tax… they defeated the concept of putting it in the Constitution. The opposition to Measure 50 was clearly focused on the location — and not the substance — of the policy.

  • John Fairplay

    Good for you! It’s the American way to want someone else (like tobacco users) to pay for things. Your greed becomes you. If you’ll please list your business name, I’ll be sure to shop elsewhere.

    • dean

      I agree with BBO’s analysis of why the cigarrette tax raise failed. But I also agree with Steve that it is unfair to tax that group for this purpose. I tend to think the whole issue is moot because this is going to get solved at the federal, not state level after the fall election if Obama wins and if the democrats increase their senate majority, both of which are more likely than not.

      And John…threatening to boycott a business because you disagree wtih someone’s politics is kind of an extreme left wing tactic isn’t it? Do you really want to go there? Its like socially responsible investing in reverse. You could end up paying more by going to a business that happens to have politics more like yours.

    • Beaverton Business Owner

      Well, Johnny, every pack that you smoke ends up costing me twice: Once in the higher premiums that I have to pay, and once when I pay my taxes and I have to pay for all the state employee’s higher premiums.

      I don’t know if it’s possible that Measure 50 sould have been structured differently, but I’m a fan of fee-based funding: those who cause costs to increase should be the ones to pay.

      Oh, and I’m in business-to-business services… so chances are you won’t have to make the agonizing decision to patronize our little shop! 🙂