Analysis of the Governor’s supplemental budget

December 18, 2017

Governor Jay Inslee released his proposed 2018 supplemental budget yesterday. This budget adds about $1 billion to fund basic education, but the governor also highlighted opioid use, emergency preparedness and mental health services as priorities. Read more from the governor here, or read coverage from Northwest Public Radio or The Olympian.

The good news for hospitals and health systems is that there are no major funding cuts to health care. The largest investments in mental health and health care overall are at Western and Eastern state hospitals.Here are some of the highlights from the governor’s expenditure budget, as they impact WSHA’s legislative priorities:

Maintains funding for hospital-based clinics. We are pleased to see this budget did not call for any Medicaid funding cuts to hospital-based clinics. These cuts would disproportionately impact lower-income residents who depend on hospital-based clinics for primary and specialty care.

Increased mental health funding ($243 million state, $72 million federal). The budget includes increased funding for Western and Eastern state, community mental health after years of underfunding:

  • $122 million to cover compliance and staffing costs at the state hospitals. The budget would fund 90 new hospital staff members at Western State, and 45 new forensic beds.
  • $74 million state funds, $69.2 million in rate increases to Behavioral Health Organizations for community mental health services.
  • $44 million in fines for the state not complying with the Trueblood lawsuit to restore mental competency of individuals to stand trial for criminal charges.
  • $2.3 million state, $2.3 million federal, for rate increases for long-term children’s mental health beds to maintain and expand access.

Opioids ($12.4 million state, $7.2 million federal). The budget makes about $19.6 million in investments in the combating the opioid crisis:

  • Medicaid rate increase to the Medicare rate for medication assisted treatment to help providers treat patients with opioid use disorder;
  • Department of Social and Health Services funding for care coordination, tribal-specific services, and expanded parent child assistance program. Funding is also provided to increase Naloxone distribution and tracking of provider treatment capacity for medication assisted treatment;
  • Continue youth alcohol, marijuana, and opioid use prevention program services in predominately rural communities;
  • Funding for the Department of Health to increase access to the Prescription Monitoring Program (PMP) and require all providers and pharmacists to check the PMP. WSHA has some concerns about this approach.
  • The capital budget also makes some investments for new facilities to treat patients who are involuntarily detained for substance use disorders and have dementia or other complex medical conditions.

The capital budget also makes some investments for new facilities to treat patients who are involuntarily detained for substance use disorders and have dementia or other complex medical conditions.

Other budget items include:  

  • Medicaid managed care premium rates ($14.8 million state, $54.4 million total). The budget reflects a 2 percent increase in managed care rates for calendar year 2019.
  • Healthier Washington savings restoration ($61 million state, $137 million total). The budget restores funding from savings not achieved through clinical behavioral health integration.
  • Pharmacy savings restoration ($36 million state, $123 million total). The budget restores funding for pharmacy services.
  • Health insurance market stabilization ($390,000 state). The budget includes funds for the Office of the Insurance Commissioner to study potential state-based reinsurance programs and publicly offer options to reduce premium increases.
  • Agency behavioral health integration to support behavioral health integration. The budget transfers Department of Social and Health Services behavioral health functions to the Health Care Authority. The Department of Health assumes licensing and certification for behavioral health programs.
  • Contract for Hospital Data System ($556,000 state) The budget includes funding to replace the Comprehensive Hospital Abstract Reporting System (CHARS).

Budget Background 

The governor’s budget is an update to the 2017 biennial budget. Because 2018 is a supplemental budget year, with just an update to the budget needed, the session is scheduled for just 60 days. The House and Senate will also release their versions of the budget during the session, as well as the final budget that both chambers support. The continued cloud over the budget is whether the Legislature has met the state Supreme Court’s expectations around the full funding of public education.

There are a few lingering uncertainties, however. There are few details about the governor’s revenue assumptions, and more information is expected in the next few days. More significantly, Congress has continued to fail to fund the Children’s Health Insurance Program. Without these federal dollars, the state’s budget would have a hole of between $60 million and $150 million, or be forced to eliminate health insurance for about 50,000 of Washington’s children.


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