House Budget Overview and Top WSHA Priorities: Big Improvements on Mental Health and No Clinic Cuts

March 27, 2015

The state House of Representatives released its proposed operating budget today, with a lot of good news for health care. This is one of the best budgets we have ever seen for mental health funding, and a good one for health care overall. There are new investments in the system, especially in work force and mental health, and no major cuts to hospitals. Hospitals continue to add substantial revenues to the state’s budget through the Hospital Safety Net Assessment program.
WSHA is highly supportive of the House budget. Highlights include:

  • Hospital-owned clinics: No cuts in Medicaid payment;
  • Mental health: New investments of almost $100 million;
  • Hospital safety net assessment program: Increased funds for hospitals and the state from this program;
  • Loan repayment for primary care physicians: $7.65 million; and
  • No cuts to Critical Access Hospitals (CAH).

The House budget includes new revenues of about $1.4 billion. We have not seen the revenue bill yet, so some details are still forthcoming, but general budget highlights include:

  • The class-size initiative, passed by a slim margin of voters last fall, is assumed to be repealed;
  • Teachers will get a 3.1 percent raise;
  • Capital gains tax will be set at 5 percent for capital gains of more than $25,000 ($50,000 for a couple) in a year;
  • Carbon tax will be created, but is not part of the operating budget and will likely be in a referendum next year;
  • Business and Occupation (B&O) taxes will be increased 0.3 percent for some services, but we believe hospital care will be exempt from the increase; and
  • $144 million in marijuana revenue for the Health Care Authority budget.

Hospital-Based Clinics (No cuts): Fortunately, the House budget does not include cuts to hospital-based clinics and ensures access to primary and specialty care for Medicaid patients. The Governor’s proposed budget included a $42 million cut to hospital-based clinics that provide primary and specialty care to Medicaid patients. These cuts would have had a huge impact on low-income patients, who would likely find it difficult to find other clinics who accept Medicaid. In many communities, the hospital and its clinics are the main—or only—provider of primary and specialty care.
The Governor’s cuts would not have provided any financial benefit for the patients, but could reduce clinics’ ability to accept low-income Washington residents as patients. In the long run, the cuts could have negatively affected the clinics’ ability to stay open. Loss of clinic access could cause patients to not receive needed services or force them into higher-cost settings like the ER.
Read the issue brief about hospital-based clinics here, or a national report about how hospital outpatient departments differ from physician offices.
Mental Health Funding ($95 Million state funds): Mental health funding is our top budget priority this year, and we are ecstatic to see that the House budget also puts an emphasis there. The proposed budget includes both state and federal funds for the following items:

  • An additional 80 beds that were identified as a result of the Supreme Court case on psychiatric boarding. This appears to be about $10 million more than was contained in the Governor’s budget, $35.1 million state, plus $18 million federal funds.
  • Outpatient treatment in HB 1450 with $7.6 million state, plus $4.4 million federal funds. The bill moves treatment and intervention upstream of crisis by allowing an individual to be ordered to participate in outpatient assisted treatment if the person is determined to be at-risk based on past behavior and other criteria.
  • Crisis substance abuse services in HB 1713 with $1.7 million state, plus $1.1 million federal funds. Beginning April 1, 2017, the bill allows for the involuntary detention of people who are a danger to themselves or others because of their substance abuse.
  • Family input into the detention process in HB 1258 with $5.1 million state, plus $2.8 million in federal funds. The bill allows immediate family members to petition the court when their family member is not detained by a designated mental health professional. Some of these dollars will be used for intensive teams or inpatient evaluation and treatment (E&T) facilities.
  • Western and Eastern State Hospital expansion and other improvements with $18.5 million state funds. This funding includes a new 30-bed unit for long-term patients at Western State; an increase in pay to recruit psychiatrists (an ongoing problem); and emergency response teams and intensive care services at both hospitals.
  • Western and Eastern State will also receive $26.6 million for increased staffing and new competency-restoration forensic beds for individuals found incompetent to stand trial.  

Hospital Safety Net Assessment (approximately $140 Million): The budget also includes approximately $140 million in new revenues to the state from the assessment over the upcoming biennium, which is an increased projection from last year. It provides about $140 million per year in net benefit to the state and about the same amount to hospitals. The assessment is levied on hospitals and used to leverage federal dollars to help pay for services provided to Medicaid patients.
Read the issue brief for more information about the Safety Net Assessment.
Loan Repayment ($7.65 Million): Washington State does not currently have enough primary care providers to meet our need, and what’s more, the providers we do have are not evenly distributed across the state. Loan repayment is a crucial tool in bringing providers to rural and underserved areas.
Read the issue brief about loan repayment here.
Family Practice Medical Residencies ($3 Million): The budget provides $3 million for new family practice residency slots. This is less than WSHA’s budget request of $16 million.
Primary Care Payment ($0): Not included in the budget was funding to maintain payments for Medicaid patients at Medicare levels for primary care services.

Other Health Care Funding

Other health care projects and services were included in the budget, including:

  • Healthier Washington – $6 million in federal funds. The state’s Innovation Plan is federally funded, but the expenditures are included in the HCA’s budget. The state is hiring more than 40 staff people for the planning phase of the transformation plan.
  • Medical school for Washington State University
  • The Department of Health is increasing fees on Certificate of Need applications. The budget assumes increased revenue of more than $450,000 over two years. WSHA will share details of the fee increase as soon as they are available.
  • Family planning services are funded for non-citizens, with additional savings assumed for reduced Medicaid costs related to births.
  • A rate increase for substance abuse providers of $4.4 million state and $4.6 million federal funds.
  • Certified Public Expenditure (CPE) funding for ambulances.

Capital Funding

WSHA has been active in supporting capital funding for a competitive pool to offset the costs of renovations to or building new psychiatric units or facilities across the state. The funding for mental health and substance abuse services is:

  • $9 million for hospital and residential E&T facilities, and
  • $2 million for secure substance abuse facilities (tied to House Bill 1713).

The funding is a welcome addition, but is less than what we believe is needed to meet the need. We will testify next week to the need to increase this amount to create the new psychiatric treatment beds the state needs.
Read our issue brief about capital funds for mental health beds.
Several projects in more rural areas of the state have been identified as potential competitive candidates for E&T facilities. The competitive pool of funds will be available to hospitals and mental health organizations that will operate E&T facilities for patients who are detained or committed under the Involuntary Treatment Act. 

What’s next?

The House will hold budget hearings next week. The Senate will release its budget, possibly as soon as next week. Although the House budget includes $1.4 billion in new revenue, the Senate budget may not. We anticipate that getting to a consensus budget may be difficult and take some time.

Testifying Next Week: March 30-April 3

The hearing schedule is light this week, as most bills are working their way through executive session, and the focus is on the budget and floor action.
Monday, March 30

Operating Budget (House Appropriations)

Capital Budget (House Capital Committee)


Contact Us

Washington State Hospital Association
999 Third Avenue
Suite 1400
Seattle, WA 98104

Map / Directions

206.281.7211 phone
206.283.6122 fax

Staff List