Cuts to health care hit home

Economy: Could be months before full effects are known from budget reductions, providers say

May 31, 2009 

  • Who is affected

    Statewide, 40,000 or more people who rely on the state’s subsidized Basic Health Plan insurance will lose coverage in the next half-year, and job layoffs over the past year are adding to the ranks of the medically uninsured, according to the state insurance commissioner’s office. The agency now predicts that statewide, nearly 866,000 people will be without insurance by year’s end. That is 13 percent of the population, up from 11 percent a year ago, spokeswoman Stephanie Marquis said last week.

    The biggest cuts

    Lawmakers bridged a $9 billion budget shortfall with more than $4 billion in cuts to programs or payments for services, about $3 billion in federal aid and one-time fund raids or skipped pension payments. The health care cuts total nearly $1 billion and include these reductions in state dollars:

    $255.2 Million: Basic Health Plan (eliminating 40,000 enrollments)

    $84.1 Million: Pharmacy payments

    $75 Million: Hospital rate cuts

    $55 Million: Vaccine program cuts

    $40.5 Million: Administrative efficiencies of 1 percent

    $40.1 Million: General Assistance Unemployed

    $37.7 Million: Nursing home rates (state only dollars)

    $33.1 Million: Mental health/Regional Support Network allotments

    $32.6 Million: Value of in-home hours for disabled, long-term care

    $32.6 Million: Healthy Options vendor premium

    $30.7 Million: Restructured hospital payments

    $25 Million: Reduced payment to federally qualified health centers

    $19.3 Million: Adult day health centers

    $18.4 Million: Residential rates for disabled, long-term care

Health care services in Washington are set for a shake-up as the state’s medical safety net shrinks this summer.

About 40,000 people who rely on the state’s subsidized Basic Health Plan insurance will lose coverage in the next half-year as part of nearly $1 billion in health care spending cuts that the Legislature authorized. The cuts will hit hospitals, clinics and vaccination, drug treatment, public health, elder care and nursing home programs over the next two years.

Meanwhile, job layoffs over the past year are adding to the ranks of the medically uninsured, which could reach 866,000 this year, according to state Insurance Commissioner Mike Kreidler’s office. That boosts the estimated rate of uninsured to 13 percent, or more than 1 in 8 residents.

South Sound hospitals, community clinics and county health offices are bracing for the change – especially at community health clinics such as Sea Mar on Olympia’s west side and Providence St. Peter Hospital, which often sees the uninsured at its emergency room and Family Medicine clinic.

“Right now we’re trying to figure out how deeply that goes. On top of the Basic Health Plan cuts, all the (community) health centers have seen an increase in the number of uninsured they are seeing,” said Rebecca Kavoussi, director of governmental affairs for Community Health Network of Washington, a Seattle-based umbrella group for community clinics that operate in Washington.

“There are no surprises here. We’ve said what impacts we thought would happen; now it’s coming true,” Kavoussi added recently. “There will be longer wait times for services for people. No health center wants to say that, because they are designed to meet the needs of people.”


Statewide, hospitals are expected to see funding reductions of nearly $310 million, according to an analysis by the Washington State Hospital Association.

In Thurston County, the cuts likely will mean $8 million less for Providence St. Peter Hospital, which runs a 2,200-employee hospital, a major regional emergency room and the Providence St. Peter Family Medicine clinic. Nearly half of the clinic’s patients are on Medicaid or other state-funded programs that expect smaller state payments for care, adding to the hospital’s squeeze.

Nick Wagner and his 6-month-old daughter, Serenity, were among the lucky ones last week. His family’s state-subsidized health insurance coverage was intact, and the baby, miserable from nasal congestion, was getting a checkup from Dr. Paul Knouff at the Family Medicine clinic.

Wagner described the state health cuts as foolish.

Foolish or not, lawmakers such as Democratic Sen. Karen Keiser of Kent said other options were not available this year, because there was not enough support for tax increases that might pay for the health care programs being cut.

Keiser was the chairwoman of the Senate’s health committee and has taken a lead role in health care reform at the Legislature. She told The Olympian’s editorial board last week that the cuts caused many sleepless nights for legislators as they tried to close a $9 billion budget gap with more than $4 billion in cuts that affected public schools and corrections.

Even with the cuts, St. Peter hospital does not plan to cut back on the 11,000 patients it sees at the clinic. The clinic is partly staffed by doctors in their residency training, and hospital officials said they are committed to blunting any effects on patients at their facilities, which also provide radiology and lab services as needed.

“The whole point is for the public not to notice,” St. Peter chief executive officer Jim Leonard, said in an interview, outlining a do-no-harm approach the hospital wants to follow. “We would go out of the way to minimize anything the public would see or experience.”

Even so, the hospital system is tightening up its outlays by reducing spending on “literally hundreds of things” in an operation that has 130 departments, Leonard said. Savings should come from sending nurses and staff members home when business lags in certain departments; reducing overtime; top-level review before job openings are posted; reorganizing management; delaying equipment purchases; reducing energy use; and using video-conferencing instead of travel.

The hospital also is trying to boost revenue through its new and growing anti-coagulation clinic that serves orthopedic patients and others in recovery. It also is expanding a surgery area and attracting revenue through its highly rated heart program, spokeswoman Deborah Shawver said.

All the while, the nonprofit Catholic hospital is seeing an increase in bad debts from patients and in requests for charity care. The charity-care costs were nearly $8 million through just the first four months of the year; that included hospital costs not covered by state Medicaid and other care given to people who are uninsured, Shawver said.

Patients such as Wagner and his daughter are not likely to notice the cuts. St. Peter is sticking by its mission to cover state-paid patients, even as state reimbursements in Medicaid and related programs are reduced.

The clinic also is accepting a limited number of uninsured pregnant patients and referrals from the Thurston-Mason Medical Society’s Project Access, which helps uninsured patients who have more urgent needs.


Community health clinics don’t have reserves or profitable surgery units to rely on as Providence does, so funding is shrinking at operations such as Sea Mar Community Health. The agency operates a network of 16 health centers in Western Washington with one clinic in west Olympia, a dental clinic in Tumwater, and it hopes to open another clinic near Lacey.

Sea Mar’s regional deputy director, Mary Bartolo, said Sea Mar officials have tried not to close off access to patients who might need care. But her network of clinics faces funding cuts of $3 million to $5 million statewide, because about 40 percent of patients at the clinics are in state-paid programs such as the Basic Health Plan and Healthy Options.

“We’re hoping that by planning and not filling vacant positions and finding efficiencies, we will not have to close our doors anywhere,” Bartolo said. “I think the effects will take a while to come into play. ... It could be a few months before we start seeing the real impact. I think it’s going to be significant.”

No final decisions have been made, but if needed, the clinics might reduce supplemental services that include social workers, care coordinators, health education and behavioral health services. That will make doctor exams more complicated.

Sea Mar also is expanding some services, taking over the Women Infants and Children nutrition program for Thurston County’s public health agency, which no longer can afford to operate it. Bartolo said Sea Mar is one of the largest WIC providers in the state and is adding Clark County.

David Flentge, chief executive of Tacoma-based Community Health Care, said his agency already has closed a dental clinic in the past year. The agency has cut 30 positions and hopes to avoid more reductions, but care will be delayed for some patients and new patients might not be added.

“We have limited resources, so not everybody who calls is able to get an appointment. What we will do is give them an appointment in six weeks,” Flentge said of uninsured people who call for services that are offered on a sliding scale tied to income.


Despite cuts, many people who qualify as needy under the law will not see their access to care reduced – provided they are able to find a doctor willing to take a state-funded patient. That is because Congress gave the state nearly $2 billion in economic-stimulus money for health care and related uses, averting cuts to programs such as Medicaid.

About 960,000 people in Washington qualify for Medicaid, children’s health and other programs for the “categorically needy,” and they should not see reductions in services, said Roger Gantz, director of legislation and policy for the state’s Health Recovery Services Administration.

These patients – of whom there are more than 27,200 in Thurston County – might have to wait longer to see a doctor, Gantz said.

Also, he said, the state’s Apple Health program serving children will expand to cover children in families earning up to 300 percent of the poverty level. This is part of the state’s push to cover all children, which extra federal money helped make a reality; a family of four could qualify with an income of a little more than $63,000.

But payments to pediatricians who take Medicaid and state-supported child patients are being cut 37 percent. Gantz said that comes after a 48 percent increase that took effect in January 2008.

Finding a doctor who will see a government-paid patient is becoming more of a problem in Thurston County, according to Kristen West, executive director for the CHOICE Network, which helps patients find insurance and care in a several-county area of southwest Washington. CHOICE also works with hospitals, which cannot turn away emergency room patients, to find “medical homes” or clinics for people who show up with more routine care needs.

More doctors are limiting the number of Medicaid patients they accept, West said. She has heard of challenges that commercially insured patients have to be seen by a doctor, too.

She also is seeing patients who lost jobs, are age 50 to 60 and have homes that disqualify them from most charity care.

“There is almost nothing we can do for them,” West said.

But Gantz said he thinks the cuts have been structured to protect those who qualify for the entitlement programs based on income levels.

“Clearly, without getting the stimulus package money we did to support the Medicaid program, we would have seen a much greater collapse in our Medicaid program,” Gantz said.

But he acknowledged that 4 percent funding cuts to hospitals and other cuts to rural hospitals will make it more difficult to serve the uninsured in those areas.


Lawmakers also cut $55 million in funds for vaccinations, which means the state no longer will provide reduced-cost vaccines to doctors and clinics. Sherri McDonald, director of the Thurston County Public Health and Social Services Department, said it mainly affects vaccinations against human papillomavirus, which is linked to cervical cancer.

Those vaccines will be available through private doctor offices, but at higher costs to patients.

Funding problems at the county level already led to the transfer of the WIC program to Sea Mar and, as of June 30, an end to family-planning and reproductive-health programs. This means an end to sexually transmitted disease testing at the county clinics.

Friday was the final day of work for eight laid-off county health department employees, and the county plans to cut 10 more June 30, potentially adding to the ranks of uninsured.

The county also is bracing for reductions in mental health and drug-treatment funding, which it awards through contracts to private providers. McDonald said the actual cuts should be clearer in a couple of weeks.


Behavioral Health Resources, a Thurston County nonprofit agency that provides drug-treatment and mental health care to the poor through state contracts, also expects jarring cuts in July.

The agency, which operates in Thurston and Mason counties, still awaits word from those holding the purse strings at the Thurston-Mason Regional Support Network and at Thurston and Mason county governments.

In turn, RSN leader Mark Freedman still was waiting on the Department of Social and Health Services to say how much it intends to cut before Freedman can renegotiate contracts with providers such as BHR.

Freedman said he is bracing for a 10 percent cut, or about $2.2 million.


Some elder-care services will be cut, including $17 million from day health programs, which provide health services to the disabled or elderly. The cuts spare those who live at home with help from family members but eliminate services for those in adult family homes. This raises the risk that they would have to move into more expensive nursing homes, activists said.

But the state also is cutting about $75 million – half of it state dollars – from direct payments to nursing homes. Nursing homes will be looking for ways to absorb the 4 percent reduction through staffing cuts, said Lauri St. Ours, director of governmental affairs for Washington Health Care Association. It represents 420 nursing homes and assisted-living centers around state, including six in the 22nd Legislative District around Olympia.

St. Ours said the cuts are not sustainable and thinks nursing homes might again ask lawmakers in January to put a bed tax or fee on nursing homes as a way to capture extra federal matching money.

“The rates go in effect July 1. ... That’s when they’ll start to feel the pain,” she said.

Brad Shannon: 360-753-1688

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