Washington's health care system has been struggling financially, faced with ongoing pandemic burnout and inflation-related challenges. Attempting to combat those trends, state lawmakers closed this year's legislative session with moves aimed at building up the health care workforce, addressing delays in finding patients long-term care, and creating more sustainable ways to care for the lowest-income Washingtonians.
"Health care, like other industries, has challenges with rising labor costs and supplies and pharmaceuticals that are not often in the control of those entities trying to deliver those services," said Chelene Whiteaker, senior vice president of government affairs with the Washington State Hospital Association. "We're very pleased to see many of those areas recognized."
The state's hospitals lost about $2.1 billion in 2022, largely due to a rise in costs for travel nurses, permanent employees and supplies, according to a hospital association survey released last month.
While health care leaders are pleased about many aspects of the Legislature's final budget, which was released Saturday, much of the funding just represents a first step, Whiteaker said.
"Now, let's see how some of this works out," she said this week.
Updating Medicaid rates
The Legislature's final budget fully funds an expanded directed payment program that would close some gaps in many hospitals' Medicaid reimbursement rates by implementing a new tax system for them. The approval of the program means many of the state's hospitals will receive bumps in their Medicaid reimbursement rates for the first time in decades.
"It's a huge deal that was passed by the Legislature," said WSHA communications director Beth Zborowski. "It's a huge step forward."
The new system, called a safety net assessment program, is a larger-scale version of a similar setup created in 2010 to tax hospitals and put aside revenues for various increases in hospital payments, according to the bill language. The expanded program will do the same thing, allowing the state to receive matching federal dollars to help fund its Medicaid program.
Starting in 2024, the hospital association estimates Washington will receive nearly $1 billion annually from the program, with the first payment likely arriving around this time next year, Whiteaker said.
While health care systems are welcoming the extra revenue, the additional federal funding only plugs about half of overall losses of hospitals across the state, she added.
"What are hospitals doing to address the other billion dollars?" Whiteaker said. "They are going to need to negotiate with commercial insurers to help pay for those cost increases."
Other ways hospitals are looking at lowering expenses are letting go of staffers and, in some cases, cutting services, she said.
The Legislature also included increases in Medicaid rates for long-term care providers, including $215.3 million for skilled nursing facilities and $116.9 million for assisted living facilities.
"They were badly needed," Whiteaker said. "While it's not specific to the most complex [cases] that are stuck in the state, we need long-term care to function and increase its capacity to be an important and necessary element of the health care system."
In addition, lawmakers put aside $45.7 million to create a "Medicaid-like" program for undocumented immigrants — granting access to Apple Health for all Washingtonians with incomes below 138% the federal poverty level but without federal immigration status in what the Washington Immigrant Solidarity Network called a "pivotal moment for the state."
The program will start in July 2024, later than advocates hoped, and includes about half the funding that was included in the House budget, which had proposed about $99 million.
People under the "five-year bar" (which requires many qualified immigrants to wait five years before becoming eligible for Medicaid) will still not be eligible for the new program, but they will have access to federal subsidies for qualified health plans, said Lee Che Leong, policy analyst with Northwest Health Law Advocates.
"The reality is that this amount of funding likely only allows for thousands of people to gain coverage, while tens of thousands of people will still lack coverage despite meeting the Apple Health income guidelines," Leong said. "And that's a really painful reality."
Health care staffing
One of the biggest legislative health care debates in recent years has been around whether to mandate staffing levels of nurses to patients, which health care unions say would make nurses' jobs more sustainable and help recruit and retain more staffers.
This year, state lawmakers approved a bill that increases hospital accountability when it comes to enforcing staffing plans — though it didn't go as far as to mandate strict ratios for how many nurses they should have on duty at any given time.
Instead, the approved legislation is seen as a compromise that allows hospitals some freedom in staffing during emergency situations when they're caring for more patients than usual, but also imposes penalties if they're chronically understaffing units.
The budget also allocates about $24.3 million in state funds for programs that would help expand Washington's health care workforce, including funds to implement a multistate nurse licensure compact and a traveler agency transparency bill.
The nurse licensure compact would speed up the licensure process for nurses moving to Washington, while the latter bill would require nurse travel agencies to send annual reports to the state on pay rates, number of travelers they place and other "labor-related" costs.
"But I think we still need more," said Ashlen Strong, WSHA's senior director of government affairs. "While we're excited about the data collection that will take place as a result of [the hospital staffing bill] ... we need to focus on policies that will continue to address the workforce shortage."
