^{Posted on October 9, 2002}

Universal care hinges on cost

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Cast against a national backdrop of eroding health coverage, Oregon moves into the spotlight next month with a ballot measure that would create a single statewide health plan for virtually all residents.

Consumer activists, senior citizen groups and church organizations have spent years trying to advance similar "single payer" health changes in state legislatures from Oregon to Vermont. But their grass-roots organizing efforts have been defeated repeatedly, with the opposition primarily led by the powerfully funded insurance and hospital industries.

This time, they're using a different approach, and because Oregon's Measure 23 is the first single-payer proposal to go directly before voters since 1994, it's drawing national attention to the campaign.

"It's the only state where people are going to get to vote in November on universal health care," said Dr. Ida Hellander, executive director of Physicians for a National Health Care Program in Chicago. The group represents about 9,000 doctors.

"If the Oregon measure passes, it's just the beginning," Hellander said. "It shows that it can be done, that it can work."

Supporters of Measure 23 say it would solve the problems of rising health costs, uncertain access to caregivers and haphazard limits on coverage. The plan would pay for practically all health services, and extend coverage to the 444,000 children and adults in Oregon who now go without health insurance, according to the latest Census estimates.

Opponents say the plan's billions of dollars in added taxes on personal income and employer payrolls would undermine Oregon's already faltering economy. The agency created by the measure would command a $20 billion annual budget and have the power to impose up to $10.8 billion in new taxes in the first year of implementation, which would be 2005.

Business groups and other opponents say health spending would surge under the measure. The reason, they say, is the plan adds coverage for many services that most people now pay for on their own, such as alternative medicine practitioners and prescription drugs for Medicare enrollees.

At the same time, critics say, the measure imposes no specific limits or consumer cost-sharing provisions to discourage excessive use.

"The reality is, it's inevitable these costs are going to rise rapidly, because you are talking about virtually unlimited options where people could access care free at the point of service," said Pat McCormick, spokesman for No Unhealthy Taxes for Oregon.

Health insurers and other opponents have given more than $400,000 to the campaign -- outspending Measure 23 supporters by more than 18 to 1, according to financial disclosures filed this month. Kaiser Permanente, Regence BlueCross BlueShield of Oregon, Pacificare, PacificSource and ODS Health Plans have each contributed more than twice the total raised by supporters, $22,023.

No more HMOs? Despite heavy spending by opponents, the measure might appeal to many voters who resent managed-care companies and -- with the recession -- fear losing their health coverage, according to some campaign watchers.

"There is great popular unhappiness with HMOs and health care in general," said Bill Lunch, political science professor at Oregon State University.

"If somehow, the proponents can make the connection between the problems and Measure 23 as the solution, it is not inconceivable that it could prevail," Lunch said.

Advocates say eliminating insurance company overhead costs and profits would allow the state to provide universal coverage for less money than employers, individuals and government programs currently spend.

Mark Lindgren, chairman of Health Care for All -- Oregon, the coalition behind Measure 23, said it would "vastly reduce" the existing health care bureaucracy. Administrative costs would be capped at 5 percent, compared with the 12 percent overhead typical among health insurance companies in Oregon.

"There is such huge savings possible by cutting out the middleman and bargaining aggressively with pharmaceutical makers," Lindgren said. "Individual costs should go down, and it's likely to be a really good deal for Oregon business as well."

The single statewide health plan would largely replace the jumble of private and public programs that now pay for health care, including individual insurance policies, most employer-sponsored health plans, workers' compensation medical claims, the state and federally funded Oregon Health Plan for the poor and the federal Medicare program for retirees. Oregon would have to gain approval from the federal government to tap Medicare and the federal money now going to the Oregon Health Plan.

A board with 10 elected members and five appointed by the governor would run the plan. The board's powers would include setting the fees paid to medical caregivers -- which the hospital industry and many doctors strongly oppose. The Oregon Medical Association, the state's largest physician organization, and the Oregon Association of Hospitals and Health Systems oppose the measure.

"You've got a problem already with health care providers who are opting not to accept low government reimbursement," McCormick said. "You would be providing an incentive for providers to move to other states."

To draw union support, drafters of the measure left room for health plans run by labor-management health care trusts. Employers and union workers opting to continue such plans would be exempt from the payroll and income taxes.

Despite that provision, the Oregon AFL-CIO recently announced its opposition, citing the increased tax burden on working people.

"We believe a universal health care system is the right way to go, but the burden of responsibility for paying for this one, we believe, is inappropriate," said the AFL-CIO's Lynn-Marie Crider. "We believe the responsibility should be borne primarily by the employers."

Views differ on tax burden The AFL-CIO position highlights measure supporters' toughest sell: persuading voters to pass a multibillion-dollar tax increase while the state struggles to emerge from recession. Opponents are seizing on the tax burden to sway voters.

"You are going to drive employers out of state or close their doors by imposing an 11 percent payroll tax," said Mark Nelson, the lobbyist heading the opposition.

According to supporters' calculations, the plan would cost the state about $19.9 billion in its first year. Existing government programs would cover about two-thirds of the costs. The remaining third, about $6.3 billion, would come from additional taxes. Estimates by the Oregon Department of Administrative Services suggest the additional tax burden could come closer to $10 billion the first year.

Supporters say most Oregonians would pay less in taxes than they currently spend on premiums, co-payments and out-of-pocket costs for doctors, dentists, home health supplies, prescription drugs excluded by private health insurance and Medicare, and long-term care -- which all would be covered by the single-payer plan.

Households earning less than 150 percent of the poverty level, currently about $27,000 for a family of four, would be exempt from the income tax increase. The tax rate would increase with income, up to a maximum of an additional 8 percent, which would nearly double the current top tax rate of 9 percent.

Supporters are appealing to voters' worries about the security of their health care coverage when many employers are cutting benefits or raising the share of costs borne by workers.

"Premiums are going up ridiculously. People are losing jobs and health coverage. Things are getting worse every day," Lindgren said. "It's not just wild-eyed liberals saying this."

Joe Rojas-Burke: 503-412-7073, joerojas@news.oregonian.com