Recent proposals at the state and federal levels threaten to cut payments to hospitals for the care they provide and hamper access to care for all Washingtonians.
At the state level, SB 5083 caps payments to hospitals for care provided to teachers and state employees who get their health insurance through the Public Employees Benefits Board (PEBB) or the School Employees Benefits Board (SEBB). This payment cap is a $340 million cut to hospitals when fully implemented.
At the federal level, cuts to Medicaid/Apple Health threatens access to care for 1.9 million Washington residents and would destabilize care for people across the state, regardless of their insurance status.
At a time when hospitals across the state have little to no financial cushion to absorb cuts, the proposals to cap payments through the PEBB and SEBB could be devastating. Hospitals will be forced to either cut services – affecting everyone in their community – or seek higher payment rates from commercial insurance plans. This would raise premiums for privately insured people. The Washington State Hospital Association (WSHA) is urging lawmakers to reject SB 5083.
“The state is touting this proposal as reducing health care costs, but it does nothing to lower the cost of providing hospital services. In reality, SB 5083 shifts the burden of covering costs from the state to hospitals and commercially insured people, or it will mean hospitals will cut services for everyone,” WSHA President & CEO Cassie Sauer said. “The health care system in Washington state is facing challenges on multiple fronts and each of them will hamper the ability of our communities to access critical health care services.”
Cuts from the federal government to the Medicaid program – known as “Apple Health” in Washington state – would harm Washington’s most vulnerable residents. Cuts could result in loss of coverage for Apple Health patients or a reduction in their covered services. Nearly 2 million Washingtonians rely on Apple Health for their health insurance coverage. About 800,000 of these are children.
Hospitals rely on Medicaid funds to sustain services. Significant cuts to Apple Health funding will result in cuts to health care services and possibly even the closure of some hospitals. When hospitals reduce services, they are reduced for the entire community. Rural hospitals would likely be hit the hardest because they serve a higher percentage of Apple Health patients.
“We want to ensure patients have access to the health care services they need, close to home,” Sauer said. “The threats at the state and federal levels are coming from opposite sides of the aisle but are likely to have the same result: harm for Washington patients. We are urging our lawmakers to take these concerns to heart and stand up for patients and their community hospitals.”
The Legislature is expected to vote on SB 5083 soon and will also be taking up budget cuts and new taxes to address the budget deficit. Congress continues to move down the path to Medicaid cuts.
Washington hospitals – of which 90% are nonprofit or public – were financially devastated by the COVID-19 pandemic. Hospital finances have improved somewhat in subsequent years, but margins are still dismal, with 95% of hospitals facing dangerously low margins (margins of less than 5%) or negative margins. Hospitals are also the only health care entities required to care for those who cannot pay for their care. Washington hospitals provide more than $400 million a year in free care to their communities.
