Marty Wilde: Who pays the tab for healthcare?

by Marty Wilde

Two conversations are happening in Salem right now, and both of them use the word “cuts.”

They differ in that, for education cuts, it’s a matter of serving fewer students with fewer resources. For the Trump Administration’s cuts to the Oregon Health Plan, we will have to serve the same number of people with fewer resources. The healthcare bill that is coming due will hit the state, providers, employers, and individuals hard.

School districts are working through a hard problem that has a recognizable shape. Statewide K-12 enrollment has fallen from roughly 582,000 students in 2020 to about 540,000 in 2026, a drop of more than 43,000 kids.

Fewer students means less money under the State School Fund formula, and it also means fewer students to teach. The fixed costs do not fall as fast as the rolls do, which is why districts keep landing in deficit anyway. But a district that has lost seven percent of its enrollment is solving a problem with a floor under it.

The Oregon Health Plan has no floor. The problem there is serving the same number of people with less money to do it. Nobody in Oregon stopped being sick when Congress changed the federal match.

OHP covers about 1.4 million Oregonians, roughly one in three of us. The Oregon Health Authority projects the state will lose $9.4 billion as a result of H.R. 1, and that work requirements alone could push as many as 200,000 people off their insurance.

A consultant’s analysis for OHA put total coverage losses at 238,000 and estimated that hospitals will take 25% less in Medicaid revenue, which adds up to about $17 billion over the coming decade.

It is not just about eligibility, though. The bill also squeezes the provider tax that Oregon has relied on more heavily than most states, cutting it from 6% to 3.5% over 10 years. Oregon built an unusually broad program and financed it primarily through provider taxes, which means the state is unusually exposed now.

When someone loses Medicaid, they do not stop needing care. They stop having a way to pay for it in advance. The diabetic still ends up in the emergency department, just later and in worse shape. The prenatal patient still delivers a baby.

So the honest question is not how much money the federal government saved. The question is who receives the bill instead. In Oregon, there are three answers, and none of them is comfortable.

Fourteen of Oregon’s 37 rural hospitals lost money caring for patients last year, before any of this took effect. Congress created a rural transformation fund as a concession to members worried about exactly this, and Oregon received $197.3 million from it for 2026.

That is meaningfully less than the roughly $400 million per year that rural Oregon is expected to lose in federal health care funding over the next decade. Worse, no more than 15% of a state’s award can go directly to providers, since the money is meant for workforce pipelines and technology rather than for keeping the lights on.

Uncompensated care does not evaporate. It gets absorbed by hospitals as charity write-offs, passed along to employers and families through higher commercial premiums, or picked up by state taxpayers. The federal savings is real on the federal ledger and imaginary everywhere else, because what actually happened is that a public cost became a private one. Call it a tax cut if you like. It is collected by your insurance carrier rather than the IRS, and you do not get to vote on the rate.

The Governor convened an advisory panel to find a way through this. In July, the panel handed her more than forty options for reducing OHP spending and no consensus about which ones to choose, leaving a $421 million hole that will roughly double as the federal phase-outs continue.

One item on that list explains the whole dynamic. Adult dental care is optional under federal rules, and eliminating it would save the state nearly $88 million in the next biennium. It would also produce a predictable wave of dental infections in emergency departments, which are the most expensive place in Oregon to treat a tooth.

The panel showed little appetite for it, and they were right to hesitate. But every option on that list has a version of the same problem, where the savings is booked in one agency and the cost shows up in another. We are very good at moving a cost from a line item we control to a place where nobody has to count it. But that doesn’t eliminate the problem.

A payroll tax is the best solution. Providers paid the higher provider taxes because, by “washing” those revenues through the federal Medicaid funding formula, they gained back about twice as much. The federal government has changed the rules to prohibit that approach, at least to the extent that the provider taxes exceed 3.5%. However, they did not prohibit raising the revenue in other ways and getting the federal match through an alternative approach.

As I wrote earlier this year, a payroll tax, paired with a cap on provider fees to insurers, is an economically sensible, bipartisan approach to the problem. Pragmatically, one of the major drivers of uninsured status is the reluctance of private employers to provide health insurance to low-income workers and their families. This isn’t a criticism — health insurance costs are high, increasing, and highly variable.

The combination of a payroll tax and a cap on provider fees achieves savings for everyone by keeping a high insured rate, ensuring fair compensation to healthcare providers, keeping costs down, and stabilizing private health insurance costs. The savings it achieves come through simplification, reduction of administrative costs from burden-shifting, and effective use of the federal match, not from denying healthcare to the poor.

Conservatives tend to advocate for dropping the 100,000 immigrants currently insured through Healthier Oregon as a way to save money. That program does cost about $750 million annually, split roughly in a 6:1 ratio in terms of state to federal funds, compared to the 1:3 ratio for the documented population. However, by putting a right to healthcare in the Oregon Constitution, the voters gave everyone the right to healthcare, not just citizens.

Arguing that the courts would allow the repeal of Healthier Oregon despite this, removing coverage doesn’t solve the problem. As they aren’t currently covered under the federal Medicaid program, we’d still have 200,000 people coming off Medicaid, plus an additional 100,000 from Healthier Oregon. Would it save money? Yes, but it would worsen the cost-shifting caused by the federal changes.

In fact, covering the undocumented through Healthier Oregon is the most cost-effective way of addressing the problem. Where the Legislature deserves some criticism is in their failure to provide a revenue basis for Healthier Oregon. As an estimated 74% of undocumented people work, a payroll tax is also the most logical way to fund that program.

The two conversations do connect. Children whose families lose coverage show up at school with untreated asthma, untreated dental pain, and untreated anxiety, and the school is the only public institution legally required to keep serving them. A district managing declining enrollment is now also managing the downstream effects of a federal health care decision it had no part in.

Congress did not reduce the cost of caring for 1.4 million Oregonians in the Big Beautiful Bill. It just moved who pays it and how. The work in front of the Oregon Legislature next session is to show the public how they will continue to pay the bill under the new federal law and, hopefully, to provide them a viable alternative.

Marty Wilde represented central Lane and Linn counties in the Oregon legislature. For more of his Letters From a Recovering Politician, subscribe at https://martywilde.substack.com/subscribe.

Copyright (c) 2026 Marty Wilde. All rights reserved. Reprinted by KEPW-Whole Community News with the author’s permission.