When Gov. Ted Kulongoski signed House Bill 2116 into law on Aug. 4, it expanded state health coverage to an additional 80,000 uninsured children and 35,000 low-income adults in the state.

It also put the burden of paying for it on insurers and hospitals through an additional tax. A section in the bill allows that cost to be passed on to policyholders.

"It's true that insurance companies are allowed to pass the tax on to clients through rate increases," said Cheryl Martinis of the state's Insurance Division. "We expect most will do that."

Beginning Oct. 1, the new tax that is in effect through 2013 requires insurers to pay the state

1 percent of the gross premium amount paid by their members.

"All of the carriers are going to be passing the tax along," said longtime Albany insurance agent Rick Rebel. "It is a burden and people aren't happy."

Rebel said insurers have had to tell policyholders that along with renewal increases coming up for many in September, they will have another 1 percent in October.

Carrie McKay at McKay Truck and RV Center in Albany is one who is having a hard time figuring out why the state would assess another tax in this economy.

"The last five years we've seen insurance rates go out of sight. We do what we can to keep it down, raising deductibles and whatever but then this," she said. "It may not sound like much, but we're trying to keep people employed."

McKay said she understood the insurers' position, but it doesn't make it any easier to swallow.

"It just doesn't seem like a good time to do this," she said.

Rebel said insurers had little choice.

"Their margins are small as it is. They aren't going to eat it."

Oregon is now one of 12 states providing universal health care for children. The plan is expected to provide coverage for up to 95 percent of children in the state.

In passing the bill the legislature voted almost entirely along party lines, with all 36 Democrats voting for the bill in the House and all 24 Republicans voting against it. The Senate vote was 20-9 with Republicans Jackie Winters of Salem and David Nelson of Pendleton joining 18 Democrats in support.

The state originally attempted to expand health coverage in 2007 with a tobacco tax increase, which voters defeated.