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.