Measure 97 impact mixed for Oregon health insurers

PORTLAND, Ore. -- PacificSource Health Plans would pay it, but Kaiser Foundation Health Plan would not.

When it comes to Measure 97, not all health insurers are created equal.

Eugene-based PacificSource, which lost $9.4 million in the first half of this year,faces a bill “in excess of $20 million” if the ballot measure passes on Nov. 8, said PacificSource CEO Ken Provencher.

M97 would impose a 2.5 percent tax on Oregon sales that exceed $25 million. It applies to C corporations only.

In health care, companies are structured in a variety of ways.

PacificSource and Cambia Health Solutions, parent company of Regence BlueCross BlueShield of Oregon, are tax-paying nonprofits and subject to the tax. Cambia gave $500,000 to the "No" on M97 campaign. Moda Health, which ran into financial trouble earlier this year before righting the ship, is a for-profit corporation. Kaiser, the largest insurer, and Providence Health Plan, which is No. 3, are both nonprofits.

“It’s not an equitable tax,” Provencher said. “It’s almost picking winners and losers, as far as who adds a 2.5 percent increase to their tax structure.”

Just as some insurers would face a tax liability while others wouldn’t, some medical providers would and others not. Most hospitals are nonprofit and would not be affected. Many medical clinics are C corporations and would, though some are structured as partnerships, and even benefit companies, and would not.

The tax would take effect on Jan. 1, if it passes. But health insurers wouldn’t immediately be able to pass the extra expense onto members.

PacificSource and other carriers have already set their Affordable Care Act individual and small group rates for next year. Eventually, they would pass along the tax in the form of higher premiums, which were rising even before the tax.

“Ultimately, we’d build it in,” Provencher said.

For large group plans, that impact could happen even sooner, since those contracts don’t necessarily conform with the calendar year.

“We’ve had quotes we’ve done more recently that have indicated if the measure were to pass, we’d add that to the charge,” Provencher said. “It would ultimately impact everybody."

KGW


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