Tax translates to sweet deal for hospital association, higher costs for consumers

Hospital costs will account for about half of all medical spending in the United States next year, according to an analysis by the PwC Health Research Institute.  In Oregon, some legislators are raising questions about whether hospital dollars are buying high-quality health care or high-paid hospital lobbyists.

Case in point: The CEO of the Oregon Association of Hospitals and Health Systems was paid $1.24 million last year, an amount that was not publicly known until reported by Willamette Week.

The lobbyist, Andy Davidson, negotiated an agreement in which the hospitals association is paid to help administer a 5.3 percent tax on hospital’s net revenues. The tax paid by the hospitals funds the state’s Medicaid program which pays for health care for Oregon’s poorest residents.

The state pays the hospitals association $428,000 a year to administer the payments. Hospitals –and their patients – also pay the association 1 percent of the tax collected, which totaled nearly $6 million this year.

That means Oregonians indirectly paid more than $6 million to the hospital association. How? The tax was passed on to patients in their hospital charges. In fact, nearly every Oregonian paid the tax because higher medical costs are passed on to consumers through higher health insurance premiums.

As consumers struggle with rising health care costs and with the state facing a $1.4 billion budget deficit, the hospital association’s double role as a provider tax administrator and beneficiary has drawn scrutiny.

“Is it appropriate? I don’t know but it’s an awful lot of money,” state Rep. Mitch Greenlick, a Portland Democrat and chairman of the House Health Care Committee, told Willamette Week.

Oregon Rep. Dan Rayfield, D-Corvallis, asked whether the Hospitals Association is being excessively rewarded and at the expense of Oregon taxpayers and patients.

“When I see money shifted into a different entity, like the hospital association, I say could we be using that money to see more people get health care?”

Voices for Affordable Health has commissioned a survey to collect consumers’ opinions and experiences regarding hospital costs. Please take a minute to share your views.