Referendum 301 Policy Brief
As politicians in Washington DC do everything they can take healthcare away from families, Oregon leaders passed smart, bipartisan policy, the Oregon Healthcare Protections bill, which protects coverage and reduces the price of healthcare for hundreds of thousands of Oregonians.
But now, enemies of health care access, led by political consultant and state representative Julie Parrish, are collecting signatures on a referendum that would take away healthcare from hundreds of thousands and drive up premiums. These healthcare rollbacks would endanger families across the state.
Oregon’s leaders have made protecting healthcare a priority: 95% of Oregonians have coverage and every child now has access to healthcare. We can’t afford to slide backward.
Referendum 301 refers major portions of HB 2391, Healthcare Protections bill, including the insurer/CCO tax of 1.5% and the 0.7% tax increase on hospitals.
• If these revenue provisions failed at the ballot, it would have a $316 million state fund impact on the Oregon Health Plan (OHP) budget. A cut of this proportion is equal to cutting the entire Medicaid expansion program (of approximately 340,000 individuals) plus an additional $29 million in cuts.
• It would also end funding for the reinsurance program, likely ending the programs viability. According to DCBS, this could result in increases to individual market premiums by as much as 6% in 2018.
The Healthcare Protections bill earned bipartisan support in the legislature, as well as the support of major health care groups, including the Oregon Nurses Association, Oregon Medical Association, the Hospital Association, 15 CCOs, and an overwhelming majority of insurers who do business in the state.
Impacts and options:
While the reinsurance program is not included in the referral, the program would lose significant funding without the insurer tax. The Department of Consumer and Business Services (DCBS) is in the process of seeking a federal waiver to leverage approximately $50 million in federal funding to help pay for part of the reinsurance program. Without the insurer tax, it is unknown whether the waiver would be approved.
Last week the DCBS released preliminary premium rates for the individual market which accounted holding down rates by 6% due to the reinsurance program. In other words, without reinsurance, rates would be 6% higher. Insurers may also be more likely to withdraw from rural parts of the state that they deem more financially risky without a reinsurance program.
Oregon Health Plan:
Without the insurer/managed care tax or 0.7% increase in large hospitals, revenue for the Oregon Health Plan would be reduced by approximately $316 million. A cut of this proportion is equal to cutting the entire Medicaid expansion program (of approximately 340,000 individuals) plus an additional $29 million in cuts.
There are also practical implications of a referral. The parts of the bill that are referred do not become operative until 30 days after the election. This delay creates challenges for DCBS’s rate decisions, challenges with obtaining necessary federal approvals, and delays in collecting revenue that will have a financial impact on the state’s ability to fund Medicaid.
HB 2391 (the Healthcare Protections bill being refered) includes $600 million in additional state revenue to support the Oregon Health Plan, plus an additional approximately $80 million in state funds to support a reinsurance program in the individual commercial market which mitigated rate increases by 6% for the 217,000 Oregonians who buy insurance for themselves or their families. HB 2391 included several changes to raise this revenue:
- A new two-year insurer and managed care tax on commercial and Medicaid health plans to support OHP and the reinsurance program;
- A two-year increase the current hospital assessment on large hospitals from 5.3% to 6.0% (a 0.7% increase) and extending the sunset on the overall program until 2021;
- Creates a new hospital assessment on rural hospitals at 4.0%;
- Discontinues the hospital transformation performance program;
- Creates a new intergovernmental transfer program with the Oregon Health and Science University (OHSU) and carves OHSU out of the hospital assessment;
- Transfers ending and excess fund balances from the Oregon Medical Insurance Pool and Marketplace accounts to the reinsurance program.
Initiative 301 was filed by Rep. Parrish, Rep. Esquivel, and Rep. Hayden on July 5, 2017. It would require 58,789 valid signatures to the Secretary of State by October 1 to qualify for the ballot.
The initiative only to refers the insurer/managed care tax of 1.5% and the 0.7% increase on large hospitals. It does not to refer other portions of the bill including: (1) the OHSU carve out of the hospital assessment, (2) extension of the hospital assessment to rural hospitals, (3) discontinuation of the hospital transformation program, or (4) the reinsurance program.