Discussions surrounding increasing and expanding the tobacco tax to fill a portion of the $800+ million Medicaid gap for the 2019-2021 biennium are heating up. This revenue option came as part of a funding package created through a governor convened interim workgroup. Other components of the package include an insurance premium and stop loss coverage tax passed in House Bill 2010 A and an employer assessment.

Amended in the joint committee on tax expenditures, House Bill 2770 B increases the tobacco tax by two dollars per pack aligning Oregon’s tobacco tax with Washington state, and expands the tax to e-cigarettes. This policy is anticipated to improve the health of citizens, especially youth, as a 10 percent price increase is estimated to result in a four percent reduction in adult tobacco use and seven percent in youth. Revenues from HB 2270 B will be allocated to the Oregon Health Plan (OHP), providing critical funding in maintaining Oregon’s Medicaid program.

In anticipation of an industry lead ballot measure, lawmakers amended the bill to refer the tax to the voters in the November 2020 election. If approved, the tax is anticipated to generate $115 million in the 2019-21 biennium and $350.4 million in the 2021-2023 biennium, and will be in effect for three biennia as part of a long-term Medicaid funding solution.

Association of Oregon Counties (AOC) supports the policy from a public health perspective. Nearly 1 million Oregonians rely on OHP for healthcare coverage, and in some counties, such as Jefferson, Josephine, and Malheur, more than 30 percent of the population is served by Medicaid, making full funding critical to the well-being of citizens and overall county health.  

HB 2270 B was also amended to remove the local option for taxation on e-cigarettes. AOC, on principle opposes policy that removes local control.

The bill was voted out of committee on June 18 and now heads to the House floor for consideration.  If passed by the House, the bill will go directly to the Senate floor for a vote.

Contributed by: Megan Chuinard | Public Affairs Associate