Governor Inslee Releases His 2021-23 Operating Budget – New Revenue Used to Balance the Budget

Today, Gov. Inslee released his proposed 2021-23 budget. Themes in his budget include emphasizing equity, addressing the ongoing coronavirus (COVID-19) pandemic, rebuilding the state’s economy and protecting vital services.

The governor introduced a balanced budget. He did this by maximizing savings, using some reserves, narrowing the “bad debt” tax loophole and introducing new revenue. His revenue plan includes a new 9 percent capital gains tax on the sales of stocks, bonds and other assets. This tax would go into effect in fiscal year 2023, generating more than $3.5 billion over the next four years. To help fund investments in public health, he also proposes a new and permanent per-member per-month assessment on health insurance carriers, estimated to raise about $200 million in fiscal year 2023.

The Big Budget Picture

Budget watchers held their breath as this budget was introduced – focused on whether there would be deep cuts to programs and services, including health care and the social safety net. With the exception of the cuts to Western and Eastern State hospitals (see below), WSHA does not see any significant cuts that would impact hospitals, patients or their communities. This is a result of Gov. Inslee’s new revenue proposals, in combination with the budget savings measures he took during the interim (staffing furloughs, hiring freezes, selective vetoes of last year’s budget items). Nor do we see any direct taxes on hospitals in this budget.

The budget exercise, however, is not over. The Legislature will convene on Jan. 11, 2021. Both the House and Senate will propose their own versions of the 2021-23 budget in March, and then both chambers will negotiate a final budget agreement. Revenue forecasts released along the way will inform the process.

Budget Highlights

COVID-19 response

• $387.5 million state ($438 million total funds) for public health to contain the spread of COVID-19 (diagnostic testing, case investigation and contact tracing, care coordination, outbreak response, data collection and analysis, public communications, and operational and information technology support) from July 2021 to June 2022.
• $9.6 million state ($9.6 million total) to DOH to administer and distribute (plan, prepare, deploy) COVID-19 vaccines, including scaling up vaccine operations and the state’s immunization information system.

Behavioral health

• $99.4 million state savings ($109 million total savings) from closing 11 civil wards at Eastern and Western State hospitals. WSHA is very concerned about this proposal given there are not sufficient community facilities available to care for these patients.
• $13.5 million state ($13.5 million total) to increase bed capacity for inpatient treatment. WSHA is concerned that this is inadequate to meet the need for community beds needed, especially with the planned closure of 11 civil wards at Eastern and Western State hospitals.
• $7.4 million state ($20 million total) to increase access for Medicaid behavioral health services by increasing provider rates.
• $8 million state ($8 million total) to increase mobile crisis teams and additional $8 million state ($10.4 million total) for youth mobile crisis teams.
• $220,000 state ($840,000 million total) to develop a state tracker for inpatient psychiatric beds
• $1.5 million state ($1.7 million total) to support parents and families of teens and children with outpatient mental health services.
• $27.9 million state ($30.5 million total) to improve the state hospitals’ delivery of competency evaluation and restoration services for individuals involved in the justice system, as required by a settlement agreement from litigation about the state’s unconstitutional delays (Trueblood).
•  $1.4 million ($1.7 million total) to continue the children’s Mental Health Referral Service and $803,000 state for funding the Partnership Access Line and the Psychiatric Consultation Line
• $2.4 million state ($2.4 million total) to increase child psychiatry fellowships and residencies in mental health at the University of Washington.

• $2.2 million state ($4.7 million total) for case managers at area agencies on aging to coordinate  for Medicaid clients with mental illness who are living in their own homes.
• $8.4 million state ($16.9 million total) to increase dementia care capacity for civil patients in state and local psychiatric hospitals who are ready to transition to the community.
• $4.6 million state to expand recommendations of the Action Alliance for Suicide Prevention for a responsive, multi-agency suicide prevention system.

Difficult to discharge patients
WSHA is pleased that Gov. Inslee’s budget invests in long-term care. We have been strongly advocating for additional resources in this area, which continues to be challenging and underfunded.

• $22.9 million state ($46.1 million total) to fund nursing home services and building costs at the Transitional Care Center of Seattle – a DSHS-owned nursing home created to accept difficult-to-place residents from acute care hospitals – creating more inpatient capacity.
• $23 million state ($42.7 million total) for costs and staffing related to the COVID-19 pandemic, including quality assurance, Residential Care Services (RCS) complaint backlog reduction, technology expansion, and the transition of patients from acute care hospitals to ALTSA community settings more quickly.
• $11.5 million state ($22.9 million total) annual rebase to the nursing home daily Medicaid rates.
• $2.1 million state ($4.3 million total) to support increased Preadmission Screening and Resident Review (PASRR) specialized services for individuals with intellectual disabilities who are in nursing facility care. Funding to meet requirement to initiate PASRR within 120 days of request.
• $5.9 million state ($11 million total) to increase capacity at five State-Operated Living Alternative (SOLA) facilities for children and youth
• $5.7 million state ($10.3 million total) for anticipated increase in eligible high school graduates who will seek Development Disability Administration (DDA) services.
• Funding for increased Medicaid rates at long-term care facilities: $11.4 million ($24.2 million total) for adult family homes; $10.4 million state ($23.6 million total) for agency in-home care workers; $39.8 million state ($90.3 million total) for individual in-home providers of in-home care.
• Due to WSHA’s advocacy, direction to HCA and DSHS to submit waiver to HHS to authorize presumptive eligibility for clients preparing for hospital discharge who may need long-term services and supports.

Other Health Care

• $62 million state ($142 million total) from the restoration of previously assumed savings from Healthier Washington.
• $143 million state ($464 million total) from the restoration of previously assumed savings from assumed Medicaid fraud and waste that were not realized.
• $0 state ($395 million total) to increase appropriation for the Medicaid Quality Improvement Program (MQIP) to be extended for one year. This will fund the state’s transformation work through the Accountable Communities of Health and initiatives focused on long-term services and support, supportive housing and supported employment.
• $15 million state ($15 million total) to implement DOH’s new Health Care Enforcement and Licensing Modernization Solution (HELMS) to transform licensing and enforcement processes, improve data security and support records management.
• $18.4 million state ($22.4 million total) to support public health information systems at DOH.
• $8 million state for the University of Washington’s Family Medicine Residency Network to maintain residency slots.
• $36.8 million state ($36.8 million total) to Washington State University for the continued development of its medical school program.
• $120,000 state ($120,000 total) to perform the required program evaluation of the Washington Rural Health Access Preservation (WRHAP) pilot. It includes 13 rural Critical Access Hospitals that receive payments for achieving certain quality metrics

Other Important Areas

• $455,000 state ($455,000 total) for the Department of Revenue to implement a Business and Occupation Tax and Public Utility Tax exemption for state and federal grants received by hospitals and other entities for COVID-19 relief and response.
• $3.2 million state ($3.2 million total) to address broadband equity and access. There is also $45 million in the capital budget to increase access for underserved homes and businesses.
• $3.2 million state ($3.2 million total) to support nine regional public health directors as a component of regionalizing public health districts.

Hospital Advocacy Week, Feb. 1-5
The Legislature is Going Virtual This Year – and So Are We!

With the ongoing spread of COVID-19, the Legislature is taking its operations online. This means they will not be meeting with the public in-person.

This year it is even more important that hospitals elevate their voices with lawmakers. To accommodate a virtual event, we are extending this advocacy event over a week and WSHA will focus on making appointments with certain target legislators: those who are members of health care or fiscal committees, those in leadership positions and those who were newly elected. For all other legislators, we ask that you try to connect with them during this time.

Stay tuned for more information!