Oregon’s health care landscape faces a major upheaval under the landmark federal tax and spending bill signed into law last week by President Donald Trump.
The legislation delivers the largest tax cuts in U.S. history and gives more money to immigration enforcement and border security, paying for it in part with some of the deepest reductions ever to federal health care funding. It calls for an estimated $1 trillion in cuts to Medicaid, the joint federal-state program that ensures health coverage for America’s poorest and those with disabilities.
More than 1.4 million Oregon residents — roughly one in three — receive coverage through the Oregon Health Plan, the state’s Medicaid program. It provides health coverage for more than half of the state’s children.
State health officials warn the new federal mandates could strip coverage from as many as 200,000 Oregonians and force tough decisions for lawmakers, health care providers and insurers.
New work requirements could disenroll thousands
One of the most immediate impacts of the law is the tightening of Medicaid eligibility requirements — particularly in states like Oregon that expanded coverage under the Affordable Care Act.
Under the new rules, able-bodied adults between the ages of 19 and 64 who became eligible under the 2010 Affordable Care Act’s Medicaid expansion will have to prove that they are working, volunteering, or attending school for at least 80 hours per month to remain eligible.
Certain groups — such as parents of children 13 and younger, people with certain chronic medical conditions and caregivers — are exempt. The Oregon Health Authority estimates about 462,000 Oregonians will be subject to the new work and reporting requirements.
Dr. Emma Sandoe, director of Oregon’s Medicaid Division, said the new rules could result in 200,000 people losing coverage — not necessarily because they fail to meet the work requirements, but because of stumbles keeping up with the paperwork.
The work requirement takes effect at the end of 2026, though states can request a delay of up to two years.
More frequent income checks could also kick off Medicaid enrollees
The law will also increase the frequency with which Medicaid enrollees must confirm their eligibility. Under the new law, income verification checks — along with the work verification — must be conducted every six months starting at the end of 2026.
Oregon currently conducts Medicaid eligibility reviews every two years — a timeline state officials say is intended to minimize administrative burden and maintain continuous coverage.
This approach, unique among states, was made with federal approval and backed by research on the problem of “churn” — when people lose coverage temporarily due to paperwork issues rather than a change in eligibility.
State health officials say the resulting decline in Medicaid enrollment will lead to a significant loss of federal funding for Oregon. The Oregon Health Authority estimates that the state could lose up to $1.4 billion annually — or up to $16 billion over 10 years.
Implementing the checks will also be costly. Sandoe said updating computer systems and hiring more administrators could cost hundreds of millions of dollars.
Cuts will reduce payments to hospitals, adding to financial strain
The law severely curtails two ways Oregon supplemented Medicaid reimbursements through additional federal payments. Without them, hospitals could lose millions of dollars annually providing treatment to Medicaid patients at a loss.
A 6% provider tax, which Oregon levies on hospitals, allows the state to draw down more federal dollars. The state returns the taxes to hospitals through higher reimbursements, and most hospitals recoup more than they pay.
Under the new law, states that expanded Medicaid under the Affordable Care Act — including Oregon — will see a cap on the provider tax reduced from 6% to 3.5% between 2028 and 2033. (States without Medicaid expansion will be allowed to maintain the higher cap.)
The Oregon Health Authority estimates the change will cost the state at least $4 billion in lost state and federal Medicaid funding by 2032, and more than $11 billion over a 10-year period.
Additional supplemental payments to hospitals, known as “state-directed payments,” will be capped at 100% of Medicare rates for states like Oregon that have expanded Medicaid. These payments are used to boost Medicaid reimbursement rates for hospitals and other providers.
Both were controversial — particularly the provider tax, which some saw as allowing the states to game the system — but were long tolerated by a federal government that recognized hospitals would struggle to make ends meet without them.
The Hospital Association of Oregon warns that the state will have to find ways to backfill the loss of billions of dollars in federal Medicaid funding.
“For Oregon hospitals, these changes are coming at a time when the health care system is teetering on the brink of financial failure,” Becky Hultberg, CEO and president of the hospital Association of Oregon said in a statement.
Many hospitals have already begun cutting costs, citing uncertainty around federal funding. Providence Health & Services recently eliminated 600 positions, including 134 workers in Oregon, and that more layoffs could come. Samaritan Health Services is considering closing two maternity health units.
Obamacare plans will get more expensive
The bill fails to extend federal subsidies put in place during the COVID-19 pandemic to lower the cost for Affordable Marketplace plans, which could further shrink enrollment in Oregon’s health insurance marketplace.
The subsidies are set to expire at the end of the year. Without them, state health officials estimate that Oregonians enrolled in Marketplace plans will have to pay an average of $960 more per year for health insurance premiums starting next year.
In response, several insurers have proposed premium increases, warning that the reduction in subsidies may push healthier individuals out of the market — leaving behind a smaller, higher-risk pool of enrollees and driving costs even higher.
What didn’t make the cut
Some cuts outlined in earlier versions of the bill were stripped before it won final approval.
A House-passed provision to ban federal funding for gender-affirming care was stripped in the Senate version. That’s not for lack of support among majority Republicans, but because Senate rules required provisions of the budget reconciliation bill to relate to spending. A more expansive bill would have needed approval from 60 senators.
A proposal to penalize states like Oregon that offer state-funded health insurance to undocumented immigrants also failed. Similarly, the provision was ruled impermissible under Senate budget rules.
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