Oregon’s business tax burden has increased 45% since 2019, and marginal personal income taxes in Portland are now the country’s second highest. Yet legislators this session continue to pursue a state-managed universal health care system that would require roughly $20 billion annually in new taxes.
Not only is this a huge amount of money (it’s more than the entire current annual state budget), but it assumes state health officials can create, implement and then operate a complicated health insurance system unlike any other in the country. This would require a degree of administrative expertise far beyond the state’s capabilities. In fact, Oregon would be the only state in the nation to establish a universal health care plan. Several other states already have considered and rejected the idea, including Colorado, Massachusetts and Vermont.
This session’s work extends an effort begun in 2019 with the passage of Senate Bill 770, which created a Task Force on Universal Health Care to develop a publicly funded health care system. Last fall, the task force delivered its final report to the Legislature. This session’s sequel, SB 1089, would create a Universal Health Plan Governance Board to develop a universal health care implementation plan and funding model by the fall of 2026. The bill is effectively a lifeline for an unwieldy proposal for which Oregon has neither the funding nor the expertise, as OBI’s Katie Koenig testified on April 19.
First, the funding.
The task force assumed that creating a universal health care system in Oregon would cost more than $20 billion per year, which the state would raise through new and increased taxes. These include an employer payroll tax, which would generate roughly $10 billion per year, and increases in personal income taxes, which would generate a similar amount. That’s a lot to pay, especially given that 94% of Oregonians are covered by some form of health insurance already, according to the Kaiser Family Foundation.
And that assumes that Oregon manages to create a state-managed universal health care system at all. Roughly a decade ago, Oregon spent years – and more than $240 million – in an attempt to develop a health exchange website called Cover Oregon. The project failed, and Oregon ultimately adopted the federal health care exchange. Creating a universal health care system would be substantially more difficult.
Supporters of universal health care argue that it would save Oregonians and businesses money, as they would not need to pay for the coverage they now receive. They’d just pay universal health care taxes instead. Accepting this argument requires a level of trust in state government efficiency and service delivery that history does not support.
Instead of continuing to pursue universal health care, the Legislature should seek to address the real problem. If 94% of Oregonians already have health insurance, focus instead on covering the remaining 6%. Odds are, it can be done with far less cost and disruption to the current system.