The wrong approach to health care reform
Dan Harmon, Board Chair AOI, Oregonian Guest Opinion
May 1, 2009
I wonder how many Oregonians would find the health care tax discussions occurring in Salem "reasonable."
The Oregonian's editorial on the subject ("A reasonable approach to Oregon health care reform," April 23) applauded legislators who quietly announced their decision to impose a 1.5 percent tax on health insurance premiums to finance expansion of the Oregon Health Plan. Their goal is laudable -- providing insurance to 80,000 Oregon children who currently lack coverage. Unfortunately, this new tax would fall squarely on the shoulders of Oregonians who currently have private health insurance.
Small businesses lack the option of self-insuring to avoid the tax, so their workers would face higher health insurance costs from the premium tax.
Legislative leaders hope that raising taxes to provide health coverage to children is emotionally and politically appealing and that such an appeal is strong enough to carry the day even during a statewide recession, the second highest unemployment in the U.S., and a $4.5 billion revenue shortfall.
Oregonians should let their lawmakers know they oppose a tax on health insurance premiums. Expanding Oregon Health Plan coverage should get serious attention in Salem, but funding should come from a broad-based and equitable tax source. A health insurance premium tax fails that test.
Legislators are simultaneously considering a substantial increase in the state's existing hospital tax. The current program works well -- a modest 0.63 percent tax on hospital revenue is used to leverage federal matching funds. The hospital tax is effectively repaid through increased Medicaid payments.
This approach is successful only when the repayment formula uses the hospital tax to leverage federal funds without raising health care costs for the rest of us.
But now legislators are considering a new tax of up to 4 percent on Oregon hospitals. This approach represents a sixfold increase from the current level -- well beyond what the state can offset with increased payments.
Again the goal is laudable. Legislators would like to use this new tax to insure 100,000 Oregonians who otherwise wouldn't have coverage. But as with the premium tax, this proposal uses "cost-shifting" (taxing those who have health coverage to pay for those who don't) as a way to fund these new program costs. This additional cost will inevitably lead to reduction in private health insurance programs and a corresponding increase in uninsured Oregonians.
Oregon's hospital tax has been worthy of our support in the past. It funds health care for uninsured adults, and if properly designed, it can do so without shifting costs. But the new proposal to significantly expand the current hospital tax fails this test. It simply allows the Legislature to spend beyond what it can afford by shifting costs to others.
Legislators must carefully consider taxes on health care in the larger context and as part of the discussion of other business taxes that could imperil job growth. Taxing health care to pay for health care will simply raise the cost of health care. Current negotiations around the future of any such taxes must not use cost-shifts to fund state programs.
Dan Harmon is chairman of the board of Associated Oregon Industries and executive vice president of Hoffman Construction of Portland.
Link to the story: http://www.oregonlive.com/opinion/index.ssf/2009/05/the_wrong_approach_to_health_c.html
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