Hospitals react to Governor’s 4% hospital tax

Andy Davidson, president & CEO
Oregon Assoc. of Hospitals and Health Systems

Oregon’s hospitals have a shared objective with the governor, the Oregon Health Fund Board and members of the Oregon Legislature when it comes to increasing health care access for all Oregonians, especially children.  Access to appropriate care, as well as to state, federal and commercial insurance programs remains one of our single most important policy priorities.

At the same time, however, we struggle to understand the rationale and wisdom of financing the lion’s share of this critical increase to the Oregon Health Plan through a 4% hospital tax on Oregon’s community hospitals.  This financing approach has implications that will ripple through communities across the state at the very time when Oregon’s hospitals are facing a severe downturn in their net operating revenue.  On average, hospital margins in this state continue to decline year over year.  In 2007, the average margin was 3.9%, an amount less than the amount of the proposed hospital tax itself.

At today’s press conference, the governor asserted that hospitals will more than recover this tax as the result of a reduction in the amount of uncompensated care they provide today.  These assertions are simply inaccurate.  Hospitals will undoubtedly see a variable decrease in the number of patient’s who have no insurance coverage at all.  Unfortunately, Oregon’s Medicaid program historically pays providers far less than the actual cost of providing care. As such, hospitals can not simply make it up on volume.

At the same time, we will still have more than 500,000 citizens in Oregon with no health insurance who must seek care when and where they need it, regardless of their ability to pay.  We must all recognize that the number of uninsured Oregonians will continue to rise at record rates, at the same time that Oregon’s provider community is facing considerable payment reductions and other changes from the Medicare and Medicaid programs.  This budget further decreases already reduced payment rates by an additional 10%.  As a result, with the significant burden of an increased hospital tax, Oregon’s policy makers could be creating the perfect storm for an increasingly fragile health care delivery system.

With the 2009 Legislative session commencing in 5 weeks, we strongly encourage the governor and legislative leaders to work in concert with the hospital community in order to find a solution that can work for all concerned – most importantly our state’s uninsured citizens.  This is the path that we have taken together in past sessions and one which has proven quite successful for the neediest Oregonians.

Oregon’s hospitals remain committed to finding and supporting a sustainable long-term solution to our critical health care cost and access problems.  It is our mission.

Andy Davidson
OAHHS president & CEO

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