Medicaid Funding Must Be Part of Fiscal Reform

Funding for Medicaid is part of the large Fiscal Initiative puzzle. The state is required to pick up a larger share of Medicaid costs in the upcoming biennium, aggravating the size of the projected deficit.  About $230 million of taxes to cover Medicaid will expire, extending the hole even more.  Assuming none of the anticipated General Fund revenue growth is directed to Medicaid, the anticipated deficit is $860 million.

The Governor’s Medicaid Working Group is framing the Medicaid revenue solution exclusively in the context of an $860 million Medicaid hole. This challenge has been posed out of context of the larger fiscal challenge. The committee is reviewing many health care related tax increases such as insurance taxes, claims taxes and non-reimbursable provider taxes ultimately will be paid by business and/or consumers.

The Fiscal Initiative is concerned that the Legislature will once again fund Medicaid without dealing with the larger structural challenges in the budget, especially related to education.  In fact, long-term, Medicaid dollars can be saved through upstream investments such as family planning, prenatal care, and early intervention. This will require substantial technical work and advocacy in the CCO 2.0 process. The Oregon Business Plan is eager to help.

There are several leading options for reform:

  • Hold per capita cost growth to no more than 3.4% annually, and adopt value-based purchasing practices.
  • Invest in upstream health and preventive practices that reduce chronic disease and expensive medical procedures.
  • Reduce caseload without eliminating eligibility/benefits by lifting more Oregonians out of poverty.
  • Consider any revenue options to pay for Medicaid in the context of the state’s overall revenue needs, recognizing that Medicaid is part of the larger budget balancing puzzle.