In 2019, the Oregon Legislature passed Senate Bill 770, which established a Task Force on Universal Health Care. This Task Force was charged with recommending a universal health care system that is equitable, affordable, and comprehensive, provides high-quality health care and is publicly funded, and is available to every individual residing in Oregon. The Task Force will be submitting its final proposal to the Legislature in Sept., with hopes for it to be introduced as legislation during the 2023 legislative session.
In short, SB 770 requires the Universal Health Care (UHC) Plan to be a single-payer system, which means the state would pay health care providers, like hospitals, clinics, and private practice doctors, for all the goods and services they provide to their patients. No more co-pays. No more employee or employer premiums. No more private health insurance (with a few exceptions).
The state would pick up all the costs: the $57 billion annually (estimated for 2026) that the state, employers, and citizens would otherwise spend on health care. Optumas, the Task Force’s outside consultant, estimates that, under current circumstances, Oregonians would spend $58 billion on health care, representing a savings of nearly $1 billion.
You’re probably thinking, “Great! I don’t have to pay anything out of pocket for a high-quality health plan? And we’ll all save money? What’s the catch?”
Turns out it’s a really big catch.
The Task Force is proposing two new taxes to pay for the UHC Plan: an employer payroll tax designed to generate $12.85 billion per year and a personal income tax (in addition to the existing state personal income tax you already pay) designed to generate $8.5 billion per year, for a total of $21.35 billion in new taxes per year. This would place an unprecedented tax burden on all employers, including the smallest of small businesses, and increase middle-class income tax rates to among the highest in the nation.
To put these figures in perspective, at the close of the 2021 legislative session, net General Fund and Lottery revenues were estimated at $27.73 billion for the entire 2021-23 biennium (two-year budget).
The $21.35 billion per year in new taxes proposed by the Task Force is an unbelievably massive amount of money and an unparalleled expansion of state government. The employer payroll tax is proposed to start at 7.25% on wages up to $160,000 per year, then 10.5% thereafter. The new personal income tax starts with fairly low marginal tax rates on Oregonians making up to 400% of the federal poverty level ($54,360 for a single filer) but once a taxpayer hits that threshold, a marginal rate of 9.3% kicks in. Again, this new income tax would be in addition to the 8.75% marginal rate that most Oregonians already pay.
Even if the program were to operate successfully as intended, this fiscal burden is excessive and nowhere near equitable, clearly distinguishing winners and losers, as indicated by the aggregate financial and distributional impacts presented to the Task Force by its own consultants on May 19, 2022. Below are some notable quotes that speak for themselves:
“Increases in employer taxes are likely to exert downward pressure on wage growth or increase the costs of goods and services, indirectly shifting the impact of universal health coverage to individuals.”
Even with the decline in statistics, some individuals and employers will end up paying more.
Self-employed workers would have to pay both employer and individual taxes, which would most likely exceed current premium costs.
The higher the salary, the higher the payroll tax. A double incentive to push down wages.
Plans and the companies that support the plans would cease to fulfill their current functions. Business closures and layoffs would be anticipated for all employees in this sector.
Employers who previously did not offer insurance benefits will be subject to a payroll tax. This adds new costs for small businesses; they will subsidize large companies. This could have significant and lasting economic effects.
“A payroll tax on self-employed workers would likely shift costs to the self-employed population, as they would only pay premiums in the current situation and pay both payroll and income taxes in the future; self-employed workers subsidize large employers.”
Anthony K. Smith is Oregon state director for the National Federation of Independent Business
