The ballot measure that is now enrolled as SJR12 has been in some version of a draft legislative concept since at least 20075 when then-House Health Committee Chair Mitch Greenlick first proposed the concept for consideration. Until 2017, the idea never had a committee vote to advance the concept, but in 2018, the measure (with slightly different language from SJR 12), moved out of the House Health Committee where Rep. Greenlick was still committee chair, and passed on a party-line vote on the House floor. The measure died in the Senate for lack of a further committee process.6 In 2020, Rep. Greenlick passed away while in office7 and the mantel for his vision of a constitutional right to healthcare was picked up and reintroduced by Senator Elizabeth Steiner Hayward, a practicing family physician.8
Though the final language of the measure being referred to voters has evolved since its first iteration, the version headed to the ballot for voter consideration on November 8, 2022, reads as follows:
PARAGRAPH 1. The Constitution of the State of Oregon is amended by creating a new section 47 to be added to and made part of Article I, such section to read:
Section 47. (1) It is the obligation of the state to ensure that every resident of Oregon has access to cost-effective, clinically appropriate and affordable health care as a fundamental right.
(2) The obligation of the state described in subsection (1) of this section must be balanced against the public interest in funding public schools and other essential public services, and any remedy arising from an action brought against the state to enforce the provisions of this section may not interfere with the balanced described in this subsection.
However, for most voters deciding a YES vote based on the limited information available prior to the election,9 it will not be immediately apparent that passage of an aspirational idea will create significant budgetary and healthcare delivery issues in order to implement the constitutional right created by the measure. Moreover, the inclusion of a constitutional, individual private right of action against the state set forth in subsection (2) of the proposed language sets the stage for intense legislative debate and judicial litigation to interpret voter intent in passage of the measure. A review of written testimony highlights that even proponents of the measure failed to realize in their advocacy for SJR 12 that a private right of action was being created with passage of the resolution and that it will likely spur future litigation.10
Budgetary Impacts and Cost-Shifting Burdens
During the Covid-19 pandemic, the need for Oregon’s Medicaid program expanded from nearly 1.1 million covered lives to over 1.4 million covered lives.11 While Oregon’s original Medicaid expansion under the Patient Protection and Affordable Care Act covered lives at up to 138 percent of the federal poverty level, expanded coverage during the pandemic allowed lives to remain covered without a redetermination process of eligibility.12 To achieve this level of support, the Oregon Legislature made investments of state general funds, federal funds, lottery funds, and other funds in the amount of $30.15 billion (26.7 percent of all total state-available resources) into the Oregon Health Authority in the fiscal biennium of 2021 to 2023.13 Those funds reflect a combination of state contributions and Medicaid match funding from the federal government. Even with the growth in the Medicaid population, Oregon still has an uninsured rate of nearly six percent of the population or an estimated 226,000 lives.14
If, after passage of SJR 12, the legislature made the policy leap that remedying the inequity of the fundamental right issue for the uninsured population would be to simply expand the Medicaid capitation program to include those uninsured lives, based on the most recent capitation rate average, the legislature would be short over $2.5 billion in Medicaid funding biennially.15 However, covering the lives of the uninsured population will not be the end of the discussion, as the measure’s language is silent on whether just having insurance coverage for all meets the requirement of “access to” health coverage under the proposed amendment. Insurance coverage alone covers a myriad of combinations of what is and is not reimbursable care, and subsection (2) in SJR 12 assigns the obligation of the healthcare right to the state, and not directly to private or public insurers. Assumedly, if SJR 12 passes, an underinsured resident would have just as strong a private right of action against the state under subsection (2) as an uninsured patient if the insurance coverage he or she was relying upon could not deliver “cost-effective, clinically appropriate and affordable health care.” More concerning is that the measure is silent in defining words like “cost-effective” and “clinically appropriate,” and though the legislature can come back and define those terms statutorily to give them meaning, the legislature will not meet again in a timely manner to put definitions to all of the measure’s undefined terms before a passed constitutional amendment would go into effect 30 days after the election.16 Without a special legislative session, the battle over seemingly benign words like “affordable health care” and “fundamental right” might begin in a courtroom before it can take place in a legislative hearing room.
Assuming that courts and the legislature can define what “cost-effective, clinically appropriate and affordable health care” means, the real question is going to be one of balancing the cost of the newly-created right against the rest of the budget. The measure seeks to create a balancing test between the legislature’s anticipation of legal actions and judicial remedies for the state’s failure to deliver upon the right against other public funding expenditures. While Oregon currently funds public education at 8.25 percent of all available state and federal funds (nearly 19 percent less than current healthcare spending),17 only a portion of lottery dollars and the Common School Fund (the share of the K-12 budget funded with revenues derived from state lands) are constitutionally guaranteed sources of public education funding.18 Most other non-education spending, with the exception of transportation, other lottery expenditures, debt obligations, and user-fee-based budgets, are non-guaranteed general fund expenditures, subject to biennial legislative deliberations. 19
The term “other essential public services,” also undefined by SJR 12, will likely be deliberated in every biennium as to what is “essential” given that today’s legislators are precluded from binding the hands of future legislators regarding funding and policy decisions.20 Constitutionally-required spending and debt obligations must be accounted for first in the budgeting process; what remains available will be the subject of intense debate, given that Oregon’s largest source of general fund revenue is based on income taxes, which fluctuate in boom and bust economic years. Should a court find that the state is not doing what it needs to meet its obligation, the state can meet the financial obligation through some combination of (1) spending from existing revenue sources not otherwise constitutionally obligated and reducing other general fund programmatic spending, (2) increasing revenues from new or existing sources to cover shortfalls, (3) passing the obligation to counties and other governmental jurisdictions as an unfunded mandate with a three-fifths vote of both legislative chambers (the expectation being the state would meet its obligation to fulfill the constitutional right by enjoining another political subdivision to carry the financial burden),21 or (4) cost-shifting the burden to employers and healthcare practitioners.
The Washington State Legislature faced a similar type of judicial challenge when it adjudicated conflicting interpretations of state constitutional language regarding education funding.22 The court in McCleary v. Washington found the Washington Legislature had failed to meet its constitutional obligation to properly fund public education in a manner that would appropriately educate children.23 The court stated:
If the State’s funding formulas provide only a portion of what it actually costs a school to pay its teachers, get kids to school, and keep the lights on, then the legislature cannot maintain that it is fully funding basic education through its funding formulas.24
To meet its obligation under the McCleary decision, the legislature increased education funding in 2013 by 11.4 percent.25 However, the court determined that number was insufficient to comply with its finding that the legislature was inadequately funding public education and the case ended up back in court. The judge found the legislature in contempt, and issued a $100,000 per day fine for every day the legislature failed to comply with the education funding mandate.26 From the original state supreme court decision until the court determined the legislature had met its obligation, over six years had passed. The legislature was forced to pass cost-shifting measures to local governments and increase state education funding by an additional $776 million in 2018 in order to achieve compliance with the original order. The legislature also had to set aside an additional $105 million in contempt of court fines.27 In total, Washington State’s education budget went from $13.54 billion in 2012, when McCleary was first decided, to $25.5 billion for the 2017-19 biennium after the court declared the state in compliance – an 88 percent funding increase backfilled by new property tax increases, a tax on internet sales, and the end of tax exemptions for extracted fuels and bottled water.28
Unlike McCleary, in which a group of parents sued collectively for Washington’s public school children, SJR 12 has an individual private right of action against the state. The McCleary court determined that a “basic education” could be universally delivered to all children with a generalized increase in funds because the cost of the education delivery is uniform and its cost drivers like health insurance, salaries, and pensions, are known and predictable.
In contrast, the individual healthcare needs of over 4 million Oregonians, and whomever else the courts determine to be “residents” of the state, present a myriad of potential financial obligations and judicial remedies that could be required if individual citizens successfully sue the state for access to this newfound right of healthcare. An analysis of Oregon’s cumulatively aggregated health costs (private pay and publicly funded) can be calculated from existing data sources at the Department of Consumer and Business Services (DCBS) and the Oregon Health Authority (OHA), as well as public employer insurers like the Public Employees Benefits Board (PEBB) and the Oregon Educators Benefits Board (OEBB). But basing healthcare spending needs off of floor calculations of funds being spent now for healthcare in Oregon does not factor in whether the current coverage people have is adequate to meet the new constitutional standard, or whether the costs people are paying now are affordable. A recent report showed that upwards of 69 percent of bankruptcy filings in Oregon, depending on the county where the action was filed, included medical debt in requests for debt discharges.29 That is a strong indication that notwithstanding that nearly 96 percent of Oregonians have some kind of medical coverage,30 the coverage they might have does not go far enough to keep patients from incurring the type of medical costs that could be passed along to the state (and ultimately, taxpayers and private employers) should SJR 12 pass.
Even without SJR 12, Oregon’s health costs, particularly as they relate to prescription drug programs, are presently being hotly contested. The OHA is seeking through its Section 1115 Medicaid waiver to exclude coverage of high-cost drugs for cancer and other life-threatening diseases.31 These drugs are approved through the Food and Drug Administration’s drug fast-tracking program, but Oregon does not want to compensate drug companies for their use under the state’s Medicaid program.32 If SJR 12 passes, such denials could become immediately actionable by a cancer patient or an individual with a chronic, debilitating illness whose doctor believes those drugs are clinically appropriate and in line with the fundamental health right created by the ballot measure.
Practitioner Participation Through Licensure Mandates
If the Oregon State Legislature could generate the revenues necessary to fully fund SJR 12 to the levels that will be required either statutorily or as the result of litigation, money cannot address the fact that there are not enough practitioners to meet expanded participation in the healthcare system. The lack of practitioners speaks to issues of both practitioners who are not taking or serving at capacity the Medicaid, low-income, and rural populations, as well as those who are limiting insurance acceptance and moving to concierge, cash-payor care.33 Nationally, a recent study found that just 25 percent of primary care physicians were seeing 86 percent of Medicaid patients, and 25 percent of specialty care practitioners were providing 75 percent of specialty services.34
Suppose for a moment that the state had practitioners fully accepting and serving Medicaid patients. If lawmakers determine, as an example, that the best way to meet the new obligation created by SJR 12 is to further expand Medicaid, the challenge will be that there simply are not enough bodies to do the work. Oregon’s nursing staff shortage crisis has reached an all-time high, with the delta between the need for nurses and the rate of graduating new nurses a net negative 1,300 nurses short per year.35 Nearly half of Oregon’s 45,000 nurses are traveling nurses from out of state,36 which was already unsustainable even before Oregon might consider licensure requirements to implement SJR 12. The physician shortage in Oregon is also complicated, with a 2021 Kaiser Family Foundation report ranking the state 20th in the nation for states facing primary care shortages.37 A report from Oregon Health Science University does a more thorough analysis than the Kaiser report, detailing the lack of access to dental care and prenatal care, care deserts where there are no practitioners within reasonable driving distance of patient need, and the over-utilization of hospitals as a primary care replacement.38
The combination of lack of providers taking Medicaid and lack of providers generally available will squeeze lawmakers into making difficult statutory choices to meet voter expectations and any judicial remedies that might be put upon the legislature after the first successful lawsuits to implement the measure. One such policy choice the legislature might adopt is compelling practitioners to serve low-income, rural, and Medicaid patients as a condition of medical licensure. Article I, section 18 of the Oregon Constitution could afford some measure of protection against the state compelling practitioners to provide unpaid services,39 though very little case law exists in Oregon as it relates to takings of “particular services” or of an individual’s labor. A court would likely be faced with having to determine if the consideration of the licensure itself is a form of compensation (i.e., the value the license confers upon the person who can then use it to earn future revenues) or that the license and some minimum level of compensation set to a public rate of reimbursement (such as Medicare or Medicaid payment levels) meet the “just compensation” standard in the state constitution’s takings clause.40 However, as Americans have recently witnessed during the Covid-19 pandemic, state governments have enjoyed broad latitude in their police powers as a matter of implementing public health agenda policies; a court could hold that a constitutional fundamental right is enough to compel practitioners to participate in the delivery of care by virtue of the constitutional right created by voters without upsetting the takings clause or requiring a need to compensate a practitioner’s labor in the manner in which a practitioner could otherwise charge for services.41
What is clear is that Oregon cannot meet the demands created by an individual constitutional right to healthcare without participation in the delivery of that healthcare by practitioners. Therefore, practitioners should expect that state lawmakers will likely enjoin them by some kind of statutory means to ensure that patients are served at the fullest level of access determined to adequately fulfill the constitutional right.
Employer Requirements and ERISA Exemptions, Challenges
Another statutory path the Oregon Legislature could take would be to shift the cost burden of implementing SJR 12 to private employers. This could take form in some combination of new tax increases on businesses; a requirement for employers to pick up the employee cost of copayments and deductibles; a requirement for mandatory payments by employers into health savings accounts (HSAs); or requiring an increase in paid time off for Oregon’s already mandatory statewide sick-leave laws.42
Additionally, the legislature could choose to require insurance companies to increase their share of coverage payments by reducing or eliminating copayments and deductibles, or by passing new mandatory statutory coverage for therapies, treatments, and pharmaceuticals that are not currently covered by the state or insurance plans negotiated by employers. This cost-shifting strategy to private employers and insurance companies would allow the legislature to absolve itself of any financial responsibility for SJR 12, while allowing lawmakers to warrant to the judicial branch during a compliance proceeding that the legislature has fulfilled the constitutional right for Oregonians.
Lastly, the legislature could assess a fine on taxpayers and businesses for failing to maintain insurance coverage for themselves individually or for a business’s employees. Massachusetts has adopted a similar policy on businesses to support subsidized healthcare programs with no legal challenges having been brought forth against the policy.43
The challenge Oregon lawmakers will face in any schemes that involve employers will be that ERISA plans will likely be exempt as ERISA preempts state laws relating to any employee benefit plans.44 Oregon’s major employers like Nike and Intel, as well as hospitals and large physician clinics as employers, fall under ERISA and could not generally be compelled to participate in new state mandates designed to fulfill the constitutional requirements of SJR 12. Most recently in 2017, the state legislature carved ERISA plans out of legislation to raise health insurance premium taxes on employers who bought insurance in the small or large group markets and that were not otherwise self-insured.45 Under the insurance premium tax law, Oregon employers covered by the legislation were made to pay a 1.5 percent sales tax on healthcare premiums (later raised to two percent in subsequent legislation) for the purpose of funding an insurance risk pool and Medicaid. 46 The tax was challenged through a referendum and upheld by voters.47
While large, self-insured employers currently enjoy no requirement to subsidize public health in the way small employers and individuals do, the fact that they give their employees some form of coverage will not insulate the state from an individual claim if the employee of an ERISA-covered employer still seeks enforcement of the employee’s constitutional right. As an example, such an employee could have a costly or life-long illness that the ERISA employer doesn’t fully cover. The employee under SJR 12 could seek treatment coverage paid for by the state if the employee could make the claim that the treatment sought was “cost-effective, clinically appropriate and affordable health care.” As a cost-containment measure, ERISA-covered employers could actually reduce health coverage to employees so that the state might pick up the cost if a statute or judicial opinion determines the types of coverage being cut are actually a responsibility of the state under SJR 12.
The one possible safety valve the state has to enjoin ERISA-covered employers would be passing legislation to tax ERISA plans for the purpose of funding Medicaid. While this is untested in the 9th Circuit Court, the United States Court of Appeals in the 6th Circuit held that Michigan’s Health Insurance Claims Assessment Act, a one percent tax on claims paid by self-insured plans to help fund Michigan’s Medicaid program, was not preempted by ERISA.48 Under federal law, a state can assess up to a six percent tax per provider type to assist in generating state funds for federal Medicaid matches so long as provider and payment taxes generate no more than 25 percent of the state’s required share of Medicaid, and no payee is promised the return of such funds for payment of such a tax.49 Such a proposal, if passed, would likely be immediately litigated, but given the more liberal nature of the 9th Circuit, one could speculate that this court would find similarly to the more conservative 6th Circuit that taxation of ERISA plans does not interfere with the management decision of those plans and reach a similar holding. The real question is not whether a court would make the same finding; rather, it is whether Oregon lawmakers are ready to require the largest corporations in the state to pay a significant tax on healthcare in order to have the funding necessary to make good on the promise of SJR 12.
In November, Oregon voters will determine whether establishing a constitutional right to healthcare is also worth the tradeoff of allowing individuals the ability to litigate that right against the state for damages and specific remedies. While other states’ constitutions have generalized language about the health and wellbeing of their citizens, or even more specific health-related carveouts, like California’s state constitution Article XXXV related to medical research, no state has seemingly gone as far as the Oregon Legislature in constitutionalizing specific healthcare obligations, and likely for good reason. While well-intended, the measure has real potential to create serious budgetary risks and exacerbate provider scarcity at a time when most states are actively trying to find ways to provide more healthcare coverage and access, and when states are competing for scarce healthcare personnel.
When courts weigh in after the passage of healthcare as a fundamental constitutional right with an individual private right of action attached, SJR 12 will become Oregon’s version of Washington’s McCleary. The funding will never be enough, the litigation will be ongoing, and the legislature will be forced to seek new revenues or pass costs along because the state simply does not generate enough tax revenue to cover the potential costs of the measure.
SJR 12 will require practitioners to be engaged with healthcare delivery in a manner that could drive practitioners to leave Oregon rather than be compelled to participate, further creating equity gaps in access to care. The cost shifting to counties, individuals, healthcare systems, and private employers will create new pressures on resources where counties are already cash-strapped, and Oregonians already have some of the highest personal income and business taxes in the nation. If large corporations covered by ERISA are left out of the equation, it shifts the costs even further upon the smallest of small employers.
The legislature’s poorly-structured balancing test in its attempt to protect other public spending will offer little protection from a judiciary that will be the final arbiter of defining the measure’s meaning and determining voter intent. In referring SJR 12 to the people for a vote, the legislature set a table for which it has not enough resources to fill the plates. Voters should strongly consider whether the aspirational idea of healthcare as a fundamental right to require “cost-effective, clinically appropriate and affordable health care” is worth the real risk of losing funding for other public services, and creating new burdens for practitioners and employers.