The Price of Mismanagement: Assessing the Impact of Measure 101 (Part 1)

February 28, 2018

 

Last month, Oregon made history as the first state to have voters decide on how to pay for Medicaid costs.

 

In a special election for ballot initiative Measure 101, voters approved to have hospitals and health insurance providers absorb some of the costs of our state’s Medicaid expansion. For hospitals, that tax is 0.7 percent on their net revenues, and for health insurance companies, it’s a 1.5 percent tax on premiums.

 

Of course, the average American taxpayer would perceive this as a win. Many would much rather have healthcare entities pick up the bill for the high costs of coverage.

 

What these voters don’t realize is that this isn’t a win for them, not at all.

 

For one, the tax on health insurance companies is basically an indirect transfer to all Oregonians, since these companies can turn around and increase health insurance premiums by up to 1.5 percent for consumers, including all the small businesses, K-12 school districts, nonprofits and thousands of college students who buy these health insurance plans.

 

These taxes on hospitals and insurance companies will impact consumers in other ways too:

1. Healthcare services will cost more as hospitals compensate for the tax.

3. Oregon school districts will bear the heavy burden of $25 million in healthcare taxes.

2. Other businesses will be forced to raise prices because of their higher health insurance premiums.

4. Local governments will be impacted too, which will ripple out to our citizens.

 

Of course, no one wants our citizens to lose healthcare coverage, and that fear was what enabled Measure 101 to pass because there seemed to be no other alternative.

 

However, that isn’t true either.

 

State lawmakers knew that the five-year federal commitment former Gov. John Kitzhaber established back in 2012 would expire in 2017. Now, in the face of federal match reductions and growing pension costs, lawmakers failed to prepare for this $1.8 billion deficit.

 

Those in opposition to Measure 101 made alternative proposals, including a cigarette tax increase, so there were other options on the table that could be more sustainable.

 

Either way, lawmakers had plenty of time to prepare for this foreseeable deficit.

 

Had they and other government agencies managed our healthcare funding better, we might not be taxing hospitals and elementary schools right now.

 

The Price of Mismanagement

 

See, the issue here isn’t the Medicaid expansion itself.

 

Having everyone insured is a good thing and ideally will be cheaper for all in the long run. It reduces the spread of preventable diseases and the number of ER visits, which can rack up huge costs for taxpayers.

 

The problem lies in our government’s woeful mismanagement of healthcare funding.

 

Let’s not forget the Cover Oregon disaster, which the Committee on Oversight and Government Reform slammed in a staff report titled, “How Mismanagement and Political Interference Squandered $305 Million Federal Taxpayer Dollars.”

 

More recently, a state audit conducted this past fall found that the Oregon Health Authority (OHA), the agency which oversees our Medicaid program, has made grave errors in its management.

 

The OHA itself even reported that it has failed to create “a foundation of consistent operational rigor and accountability in our Medicaid operations.” And it shows, at the taxpayers’ expense.

 

Auditors found that approximately 41 percent of Medicaid enrollees were ineligible, resulting in an estimated $274 million in avoidable expenditures.

 

On top of that, the OHA is currently wrapped up in a lawsuit with the non-profit Medicaid provider FamilyCare and ironically filed the lawsuit on the same day FamilyCare went out of business.

 

These actions do not inspire confidence, to say the least.

 

We’re funding this agency to ensure that our tax dollars are helping those in need of care, and they want to blow it on spiteful lawsuits and Medicaid overpayments.

 

Uncertainty for Oregon Healthcare

 

As a leader in progressive healthcare, the nation’s eyes are on us.

 

But the truth is—we aren’t leading in a way that inspires others to follow. We’ve resorted to forcing schools, hospitals and small businesses to pay for our government’s lack of foresight.

 

We’ve put our money in the wrong hands. Had lawmakers and the OHA not squandered our healthcare funding, we wouldn’t even need Measure 101, but here we are.

 

At this point, would any other state want to follow in our footsteps?

 

If we want the rest of America to see healthcare as a right, then we need to set the example. We need to show other states that you can provide coverage to all, without making taxpayers suffer staggering costs.

 

Stay tuned for next week when I discuss the specific effects of Measure 101 on our healthcare system, school districts and the overall economy.

 

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