DSHS Budget Proposal would Harm Health Care, Cost Federal Funding

Even with the specter of I-1033 behind us, the state budget situation is bleak because of the lingering impact of the economic recession. The deficit facing the Governor as she prepares her budget could be as high as $1.8 billion.

A recent memo from the Department of Social and Health Services' Health and Recovery Services Administration—written in response to the Governor’s request for budget reduction proposals—helps illustrate the size of the problem. Acknowledging that “these are serious cuts, and cuts on top of cuts,” the Department proposed deep reductions in key health care programs:

• The largest reduction ($69.2 million) would come by eliminating important benefits for lower income adults receiving Medical Assistance, including maternity support services, hospice, hearing, non-emergent dental, vision, podiatry, physical therapy, occupational therapy, speech therapy, interpreters for medical services, and Medicare Part D (prescription drugs) copays. Funding for school-based Medicaid services would also be eliminated ($5.6 million).

• The proposal would eliminate access to state programs that provide health care to lower income children between 205 percent and 300 percent of the federal poverty line, taking a step backward on the state’s commitment to “Cover All Kids” in order to save $11.6 million.

• Reductions in mental health care ($12.9 million) would include eliminating funding for the Program for Adaptive Living Skills and eliminating funding for community support services for individuals discharged from state hospitals.

• The proposal would also eliminate drug and alcohol treatment for all low-income adults not enrolled in a separate DSHS program ($5.5 million).

• There are also $8.3 million in administrative cuts and staff reductions included in the proposal.

The reductions in state spending are only part of the story. These proposed cuts would cost the state an estimated $101.4 million in federal matching funds.

In Franklin and Yakima Counties, 28 Percent of the Population Lacked Health Insurance in 2008

According to new data from the U.S. Census Bureau, 13.1 percent of Washington’s population went without health coverage last year. Among the state's 19 largest counties – those with populations over 65,000 – there was significant variation, with more than one of every four Washingtonians in Franklin County and Yakima County lacking health insurance.

Counties with larger populations generally experienced lower uninsured rates compared to the state average. Yet even in King County, one of every 10 residents (10.6 percent of the population) was uninsured in 2008. In addition to King County, Island County (9.5 percent), Thurston County (10.9 percent), and Spokane County (11.8 percent) all experienced uninsured rates significantly lower than the statewide average. In Benton, Clark, Kitsap, Lewis, Pierce, Snohomish, and Whatcom counties the uninsured rate was about the same as the state average.



Of Washington’s most populous counties, Franklin County and Yakima County had the highest uninsured rates in 2008, which stood at 27.7 percent and 27.5 percent, respectively. Residents in the counties of Grays Harbor (16.0 percent), Clallam (16.6 percent), Cowlitz (16.7 percent), Skagit (16.7 percent), Chelan (19.7 percent), and Grant (20.5) were also significantly more likely to lack coverage compared to those in rest of the state.

While today’s data sheds much-needed light on the disparities in health coverage throughout Washington, next year’s data are likely to be far worse. In 2008, the unemployment rate averaged 5.3 percent in Washington. However, the economy deteriorated dramatically in 2009. As of August, the unemployment rate in Washington stood at 9.2 percent, and nearly 66,000 jobs have been lost in the state since January. A BPC analysis of the census health coverage data in 2007-08 shows the employer-based coverage weakened significantly during that period – a trend that will certainly continue throughout 2009.

For information on the uninsured rate among children in Washington State counties, click here to view an analysis from Washington Kids Count and the Children's Alliance.

Editor’s note: The Census Bureau originally planned to release single-year estimates of all indicators included in the 2008 American Community Survey (ACS) today. Due to a coding error, however, ACS poverty estimates will not be released until September 29, 2009. That morning, the Budget & Policy Center along with Washington Kids Count will release an analysis of the latest poverty data from the ACS.

Public Insurance Keeps Uninsured Numbers from Rising, New Census Data Shows

New Census data shows that while the overall share of Washingtonians who lacked health insurance went down between 2000-01 and 2007-08, employer-provided coverage weakened significantly over that time. Public coverage, that is Medicaid, increased during that time, offsetting the decreases in employer-based insurance.

National data shows that in 2000-01, 13.1 percent of Washingtonians lacked health insurance. This number dropped to 11.8 percent by 2007-08. Over that time, the table below shows that employer-sponsored health insurance fell from 67 percent of the population in 2000-01 to 64.6 percent in 2007-08. At the same time, the share of the population covered by Medicaid jumped from 12.1 percent to 13.6 percent.

Before the Census data was released, the Budget & Policy Center, Washington Kids Count, and others expected there would be a decrease in the share of Washingtonians with health insurance between 2000-01 and 2007-08. The news that the share of the population with health insurance actually went up, highlights the importance of publicly provided health care coverage.

During the last legislative session in Washington, lawmakers decided to cut funding for the state’s Basic Health Plan. This will result in a loss of coverage for Washingtonians who do not receive insurance through their employer. At the same time, the unemployment rate in the state has been rising, which means many people who did have employer-sponsored insurance will no longer have coverage. Because of these trends, we anticipate that a drop in the share of Washingtonians with health insurance will become evident in the near future.

Editor’s note: On September 22, 2009 the Census Bureau will release state-by-state estimates of poverty, median income, and health insurance coverage for 2008 from the American Community Survey (ACS). The ACS has a very large sample size, allowing for single-year estimates at the state and county levels. On the 22nd, the Budget & Policy Center and Washington Kids Count will jointly release an analysis of poverty, median income, and health coverage in Washington using the latest ACS data.

The Children's Alliance along with Washington Kids Count posted an analysis of the latest census data looking specifically health coverage among children in Washington. Consistent with the general population, they find that Washington's S-CHIP program (Apple Health for Kids) has kept number of children without health insurance from climbing in 2007-08.

New Census Health Insurance Data Likely to Show Declines in Health Coverage throughout Washington State

Tomorrow, the U.S. Census Bureau will release national and state health insurance data for 2007-2008. The data will provide a preliminary glimpse of the impact that the current recession has had on families in Washington and throughout the nation. The data will not however, capture the full impact of the current economic crisis which deepened dramatically in 2009.

The new Census data is expected to show significant increases in the share of the population that is uninsured since the early 2000’s to 2007-2008. The loss of employer-sponsored health insurance is likely to be the dominant driver behind this trend. During the current recession, the economy sunk rapidly in 2009 and many more people lost their jobs and their health insurance. So while tomorrow’s release will signal trouble, next year’s 2008-2009 health coverage data will undoubtedly be far worse.

For example, as the graph below shows here in Washington the unemployment rate jumped from an average of 5.3 percent in 2008 to 9.1 percent by July 2009. Since the start of 2009, over 64,000 jobs have been lost in the state. As a result, next year’s 2008-2009 data will show a large drop in the number of Washingtonians enrolled in employer-sponsored health coverage.

Stay tuned to schmudget tomorrow when the Budget & Policy Center in conjunction with Washington Kids Count will post an analysis of health coverage trends in Washington using the new Census data. Our analysis will highlight changes in the share of the population without health insurance over time and will detail changes in employer-sponsored coverage and public coverage in Washington State.

Editor’s note: Tomorrow’s release will also include updated data on poverty and median income. To obtain state-level estimates of these measures, however, the Census Bureau recommends using data from a different survey, the American Community Survey (ACS). The latest ACS data for 2008 will be released on September 22, 2009. That morning, the Budget & Policy Center and Washington Kids Count will post analysis of the ACS data on poverty, median income, and health coverage in Washington State.

UPDATE: Basic Health Waiting List Continues to Grow

Last month we posted on the increasing numbers of people on the waiting list for the state Basic Health Plan. As the revised graph below shows, this trend continues. In June there were 31,275 people on the list. Today, there are 38,662.

The State Budget and Federal Recovery Funds

This post contains corrected numbers.

Deep cuts in state budgets during a recession can have a significant harmful impact on the economy. In recognition of this fact, the federal government passed the American Recovery and Reinvestment Act of 2009 (ARRA), which includes significant fiscal aid to Washington State.

The recently enacted state budget relies heavily on ARRA funding to partially offset the effects of cuts in health care, education, public safety, and economic security.*

Health care**
The largest component of federal stimulus funding is an increase in federal funding for Medicaid, the primary source of public health insurance for lower income families. The increased federal contribution allows lawmakers to cut state spending on health care without reducing total funding for the program. Washington State is expected to receive $1.8 billion in Medicaid funding from ARRA.

However, the state budget does not take full advantage of ARRA funding for Medicaid because it cuts too deeply. Examples of cuts that cause a loss of federal money include:

• A $33 million cut in reimbursements for providers of Medicaid and SCHIP managed care services will result in a loss of $44 million in federal money, more than doubling the total size of the cut.
• A $38 million cut in nursing home rates results in a loss of $56 million in federal funds.
  
• An $18 million cut in reimbursements for pediatric services results in a $25 million loss in federal funds.

Education
Another component of ARRA is the State Fiscal Stabilization Fund, which provides flexible funding for education and other programs. In education, this fund is being used to partially offset devastating cuts in three areas:

• $176 million for levy equalization, which assists property-poor school districts that have difficulty raising sufficient property taxes to fund local schools.
• $562 million for a voter-approved (I-728) initiative that provides funding to school districts for quality improvements such as class size reduction, extended learning, early learning, or professional development.
• $81 million for higher education institutions.

Public Safety
The remainder of the State Fiscal Stabilization Fund ($182 million) is appropriated to the Department of Corrections to offset cuts in public safety and rehabilitation programs.

Economic Security
ARRA also expands federal support for the state’s WorkFirst program, which provides temporary assistance to families with very low incomes. During the recession, the need for WorkFirst has grown significantly. TANF contingency funds ($193 million) is intended to help pay for the increased need. Another $12 million is made available to assist in the state’s child support collection program.

* ARRA also included significant fiscal relief that does not directly impact the near-general fund budget.
** Separately from ARRA, Washington State will benefit from the reauthorization of the State Children’s Health Insurance Program, which enhances federal support of state efforts to insure lower income children.

Four Facts About GA-U#1: GA-U is an Important Part of Our Health Care System

Today is the first installment in a special series on General Assistance-Unemployable, a state program that provides assistance to adults who cannot work because of disability and are not eligible for other programs.

State investments in health and economic security ensure that everyone can meet basic needs in times of financial hardship. The General Assistance-Unemployable (GA-U) program provides temporary assistance to Washingtonians that are unable to work due to disability. The program plays an important role in the state’s health care and economic security infrastructure by providing medical benefits and modest financial assistance to those who are not served by other public assistance programs.

The medical benefits provided to GA-U clients are part of a larger systemic effort in Washington to broaden access to health insurance. This effort includes lower-income workers who receive benefits through Basic Health to children who are covered under the state’s Apple Health for Kids. Maintaining funding for GA-U reflects our state’s long term goal of expanding access to the uninsured to improve health outcomes and better manage costs.

GA-U clients range from those who suffer from physical ailments stemming from injuries to others with debilitating mental illnesses. Health issues are a primary concern for clients in the GA-U program, many of whom suffer from co-existing physical, mental, and substance abuse problems. There are 21,000 people enrolled at any given month in the GA-U program and clients can be found in every county of the state.

Importantly, GA-U fills gaps that would otherwise exist in our state’s health care infrastructure. Eligibility for other assistance programs is very limited for adults who do not have children at home, even if they are unable to work to support themselves. And federal programs do not cover adults whose disability is considered to be temporary. For these Washingtonians, GA-U provides access to much-needed medical help and the chance to avoid deep poverty and homelessness.

Budget Cuts Hurt Working Families

With unemployment expected to rise to record levels, opportunities to achieve economic security through employment are diminishing. Families who are struggling during these difficult times need state investments in health, education, and economic security more than ever. The proposed budget cuts in the Governor's and Legislature's budgets will come as a double-hit to working families who may no longer have market-based resources to rely on. Two examples are health care and education:

• Health Care - Job loss is often accompanied by loss of health insurance. And during recessions, employers may eliminate coverage in order to save costs. Losing health insurance could have a devastating impact on the health and finances of working families. The proposed state budget cuts would remove access to affordable health insurance for many Washingtonians. For example, Basic Health, a state-funded health insurance program that provides coverage to lower income families is facing cuts that would eliminate coverage for 40,000 people.

• Education -Rising unemployment often increases the demand for workforce training and higher education. These programs have long term benefits for workers and the economy. Even one year of higher education can increase an individual’s lifetime salary and help workers meet the needs of employers when the economy recovers. But the proposed deep cuts to funding for community colleges and public universities will reverse this trend by reducing access to higher education for students and workers in the state.
  

Maintaining Our Priorities
Deep budget cuts are not the only solution to our state's fiscal problems. Washington lawmakers should consider raising revenue to avoid dismantling our important public infrastructures and use the Working Families Tax Rebate to offset the disproportionate impact a regressive tax increase would have on lower income families.

Accounting for Medicaid Spending Growth

Medical assistance has been one of the fastest growing segments of the budget in the last decade, which prompts some in the state to argue for spending cuts in this area. But it is important to understand the reasons for this growth, particularly that our Medicaid investment has grown significantly to meet our commitment to care for Washington’s seniors and people with disabilities.

To understand Medicaid spending, I divided Medicaid beneficiaries into two groups: a) people over age 65 and/or with disabilities, and b) all other low income children and adults. The cost of serving these two groups is quite different. In 2005, seniors and people with disabilities made up 21 percent of Medicaid enrollees, but accounted for 61 percent of categorized spending (Figure 1). Other adults and children make up 79 percent of enrollees, but only 39 percent of spending.


The growth in spending on medical assistance can be understood along these same lines: people over age 65 and/or with disabilities compared to all other low income children and adults. In addition, growth can be evaluated based on changes in enrollment and per-person spending. Using expenditure and enrollment data from the federal Department of Health and Human Services, I broke down nationwide Medicaid spending growth between 1995 and 2005 into the following four categories (also see Figure 2, below):

• Enrollment of seniors and people with disabilities: Eligibility guidelines have not changed significantly for this group of people, but the population is aging, medical advancements are extending life expectancy, and economic factors have played a role. This factor explains nearly one-third of the total growth in spending.


• Per-person spending on seniors and people with disabilities: The cost of health care and changing benefits have risen significantly for this population, contributing nearly one-third of the national growth in spending. (In Washington State, a shift from institutional care to home and community based care has controlled spending growth.)


• Enrollment of other low income children and adults: A growing state and national commitment to expanding access to health care as well as an economic downturn led to enrollment growth, which accounted for 27 percent of total spending growth.


• Per-person spending on other low income children and adults: The significant growth in enrollment was offset by the relatively low per-person cost. Growth in per-person spending on this group was lower than health care spending growth in the economy as a whole and only contributed 9 percent of the total spending growth.

Altogether, nearly two-thirds of spending growth is attributable to the 21 percent of Medicaid recipients who are over age 65 and/or have disabilities. A key factor is the high cost of long-term care (including nursing homes and home health services), which accounted for one-third of total medical assistance spending in 2006.

For many people needing long-term care, options are limited. Private long-term care insurance is often prohibitively expensive. Medicare, a social insurance program that all workers pay into in order to receive health benefits upon retirement, does not provide long-term care benefits. Medicaid becomes the only option for many, although because it is only available to the poor, people have to “spend down” their resources in order to become eligible.

This problem is not limited to the current deficit. The overall population is aging, medical advancements are extending life expectancy, and the cost of health care continues to grow. In addition, the state will bear much of the responsibility for long-term care because the federal government has shifted the costs from Medicare (a federally-funded program) to Medicaid (a program in which the state must pay approximately half the cost). This affects Medicaid’s ability to meet its core mission of providing health care to the poorest Americans.

Long-term care must be comprehensively addressed. A federal modernization of Medicare is required as is a long-term financing model to ensure the affordability of long-term care for middle-income families. In the meantime, Washington policymakers must be cautious about reducing the benefits provided to these vulnerable populations.