Gov. Brown should veto lawmakers' punitive approach to cost controls

Hospitals have been steadfast partners for many years on problems our state has faced. When asked to help close the nearly billion dollar Medicaid budget gap this year, Oregon hospitals stepped up and responded to the call. But rather than gaining them good will, the legislature mere weeks later passed nearly $200 million in additional cuts to hospitals that will devastate their ability to provide quality, accessible health care. This punitive approach to governing is at odds with the normal model of collectively working to solve Oregon's problems.

Let's consider what hospitals agreed to in this legislative session to help the state close its yawning budget hole. First, hospitals agreed to a true tax of $120 million on top of the current program that generates more than $1 billion for Medicaid. They also agreed to give up an incentive program that would have generated $180 million in merit-based payments in the coming biennium. They agreed to these steps despite the very real fiscal problems these actions will present for them and their communities. Additionally, rural hospitals asked to be added to hospital tax program, generating additional money for Medicaid. All told this session, hospitals willingly provided more than $390 million in new revenue, through a combination of taxes and program cuts.

Oregon's community hospitals agreed to step up in these ways because it was the right thing to do for the health of all Oregonians.  

But now, before the ink even dried on the legislation for those new funds, hospitals were hit with an unexpected $200 million in cuts through Senate Bill 1067 that caps reimbursement rates for state employee and teacher benefit plans (PEBB and OEBB, respectively). SB 1067 came forward without any hospital input on the effect this will have on community hospitals and their ability to provide services. Moreover, it's troubling to pass this sort of proposal as many hospitals are already operating in the red, and as we face great uncertainty in Washington, DC surrounding future of our state's Medicaid expansion.

It should go without saying that hospitals are extremely concerned that their contribution to the budget solution was not considered sufficient, and that the Legislature chose to have hospitals "pay" again. The total impact of almost $500 million now that SB 1067 has passed will further erode hospitals' ability to meet operational needs and to provide the levels of service their communities require. And it will stymie further investment in healthcare transformation.

SB 1067 endangers Oregon's community hospitals' ability to be partners in the future. But more important, this bill will cause great financial harm to hospitals and jeopardize their ability to provide quality and accessible health care our communities and patients deserve.

Gov. Brown should veto this legislation and ask lawmakers to try again, this time working collaboratively with all stakeholders to develop meaningful health care cost control proposals.