Oregon Businesses to Pick Up Tab for Healthcare Costs or Face Penalty
Last week, the 79th Oregon Legislative Assembly convened to introduce a Bill that may disrupt our state’s private sector.
House Bill 4105 grants the Department of Consumer and Business Services the right to penalize “employers that offer health insurance coverage to employees but that have [full-time employees] who receive health care coverage through medical assistance program.”
The aim of this Bill is to shift the burden of healthcare costs from the taxpayers to employers by incentivizing employers to provide higher quality health insurance.
That way, employees who are double-dipping between federal assistance and their employer’s coverage will just stick with the latter, given that their employer can cover all of their and any of their dependents’ needs.
The Cost of Medicaid Expansion
As a business owner, my top priority is taking care of my employees. But is it fair to task businesses with the immense responsibility of providing that kind of coverage to each of its employees?
Also, in light of Measure 101’s passing last month, it seems like our state’s government is coercing other entities (i.e. hospitals, health insurance providers and now all businesses) to pay for its lack of foresight.
Oregon put in a tall order years ago with our aggressive Medicaid expansion under the ACA and is now forcing others to pick up the colossal tab left in the aftermath of various factors like: federal match reductions, mismanagement of funds, compliance to the federal government’s request that Oregon pay more for Medicaid beneficiaries and much more.
Considering these variables, our state’s cost for Medicaid is estimated to be $163 million a year. Even if these taxes can generate the maximum projection of $320 million within two years, who will make up the difference if, and probably when, we fall short?
It begs the question: Are there more sustainable alternatives to paying the exorbitant costs of this Medicaid expansion that don’t fall directly on our private sector?
Oregon state law already penalizes larger businesses that have 50 or more full-time employees if they do not provide insurance. Now the stakes are higher if this Bill passes.
It’s bound to make a fiscal impact, since nearly half (45.7 percent) of Oregon’s population uses federal medical assistance for coverage. In fact, only 18.6 percent of people statewide are covered by their employers.
Though small businesses won’t be affected by the legislation. Many larger business owners will feel the financial strain of being forced to provide a group health benefit plan with an actuarial value of at least 70 percent.
According to the Bureau of Labor Statistics, Oregon employers already pay significantly more than the national average for employees’ insurance, wages and salaries, as well as retirement and savings. Plus we have the fifteenth highest corporate income tax nationwide.
HB 4105 will only increase the already steep costs of putting people to work, but no industry will be as devastated as the temporary staffing business.
Contract staffing agencies will not only have to account for their permanent staff but also every candidate they recruit for clients. For every worker enrolled in federal healthcare, the staffing company will be penalized.
And that penalty for employers is based on “the average cost of a full year of employee-only coverage under a group health benefit plan that has an actuarial value of 70 percent” multiplied by the number of employees using federal healthcare. Then that number is multiplied by 0.9.
That means every single new and existing employee becomes a liability for the company, ultimately creating a ripple effect throughout the job market as businesses become weary of the skyrocketing costs of employment.
Healthcare Provider Impact
On the flipside, this Bill does offer a few perks to our healthcare providers practicing in Oregon.
The Employer Responsibility for Medical Assistance Trust Fund is a collection of all the penalties and interest businesses will have to pay.
This money will go to the Oregon Health Authority to increase reimbursement for healthcare providers who serve medical assistance recipients and operate in medically underserved areas.
This Fund will also be used for the following purposes:
1. To make supplemental medical assistance payments to healthcare providers if 30 percent or more of a provider’s patients are medical assistance recipients or uninsured.
2. To reimburse safety net providers for the cost of providing care, without expectation of compensation, to Oregonians who do not have health insurance.
3. To provide funding for medical residency programs in this state.
Both medical providers and students stand to gain a substantial amount of reimbursement and funding as a result of HB 4105, so I can appreciate those benefits.
The Future of HB 4105
The Bill still has a long way to go before becoming law, so there’s still time to take action as you see fit. You can contact your local Oregon State Representative to voice your concerns or praise for HB 4105.
For those representatives who sponsored the Bill, hopefully they can answer the many questions regarding how this legislation, if passed, will impact our state’s local businesses and the overall economy.
It is our mission as Oregonians to do what is right for our state and be active participants among the powers that govern it.