HB 2010: Oregon’s Medicaid $$ Laundering Bill

The Governor has already signed into law an extension of a strange tax that most of the payers of this tax had been lobbying for. With Representative Julie Fahey (D-Eugene) as its chief sponsor, HB 2010 replaces the statutory expiration of the Health Insurance Premium Assessment from 2026 to 2032.

Oregon hospitals love this tax. It’s one of those rare moments when lobbyists walk through the halls of the Oregon capital seeking a special assessment on their client.

They love it because they get more than the amount taxed back. The state taxes are generally dedicated to Medicaid funding. In this state, that program is called the Oregon Health Plan. If states use this funding mechanism, then the federal government matches by 90%. So, this “tax” behaves like an investment for hospitals that nearly doubles their money, not too shabby.

That’s not true for all entities that pay this tax. Pure health insurers must pay as well but don’t get the same deal. So they pass this cost on in the form of higher insurance premiums.

In expanding Medicaid through the Affordable Care Act, the Obama administration, like its preceding Bush administration, tried to put an end to this scam. Even Democrats have literally called it that. In Bob Woodward’s 2011 book, Obama’s Wars, then Vice President Joe Biden is quoted as calling this a scam.

I don’t necessarily find fault with this bill or other states going along with the scam. It’s a bad policy choice at the federal level. Unilaterally saying no to federal money at the state level is not a fiscal policy solution. This needs to be solved by Congress, and we’ve got a budget reconciliation bill in the works that should be able to do just that.

Eric Shierman lives in Salem and is the author of We were winning when I was there.