The Legislature's emergency budget board approved an additional $10.6 million for the Department of Human Services, and $23.4 million for the Oregon Health Authority this December, to help the agencies meet the needs of rising caseloads and other costs.
The approved amounts are less than desired for both agencies -- DHS asked for $13.1 million while OHA wanted $38.6 million. Some of those deficits may still be filled after the Legislature convenes its next legislative session in February.
The late Sen. Alan Bates, D-Medford -- who presided over the health and human services budgets -- sought to keep the state agencies on a short leash by diverting some of money they said they needed into a special fund to be allocated over two years, which forced them to be more efficient.
The special purpose appropriation set aside $40 million if the agencies ultimately do need it, but to get that money, the agency heads must first make a persuasive case.
As a result, the Department of Human Services did find $8.8 million in savings in its Aging & People with Disabilities Division, primarily by gradually moving people away from the live-in caretaker system to paying caretakers by the hours. Federal labor law changes forced the state to start paying caretakers overtime, which proved impossible when they were on-call 24 hours a day.
Costs in the Intellectual and Developmental Disabilities Division seem to have stabilized, but the agency still asked for $26.2 million from the special fund to pay for higher-than expected rolls.
The Health Authority saved money by delaying payment increases for certain providers and culling its Medicaid rolls of people who did not renew their eligibility.
Heightened Scrutiny
Budget scrutiny of both agencies is inevitable given the $1.8 billion budget deficit facing the state in the 2017-2019 biennium and the unfettered growth of these two agencies.
Even the most moderate of Republicans, Rep. Greg Smith, R-Heppner, joined the conservative members of his caucus in criticizing the unsustainable growth of the state health and human service bureaucracies and their programs.
“With the continued growth of the OHA, we will have a difficult situation,” Smith said. “These dollars cannot be used for education and public safety. The growth of this one entity is coming at the expense of K-12 and community colleges.”
Sen. Elizabeth Steiner Hayward, D-Portland, defended the growth, noting that a healthy population improves the economy and sick children cannot learn, even if more money is diverted to education. The investment the state has made in providing a richer safety net of healthcare to poor and disabled Oregonians has also created jobs, which have fueled increases in state tax revenues. “Our healthcare inflation is lower than any other state in the nation,” she said.
But while spending on healthcare through Medicaid is indeed capped at 3.4 percent a year, Brown’s budget increases government administration. The governor has requested that employment at the Oregon Health Authority be increased by an additional 7 percent over two years, and salaries alone have ballooned by $60 million, or 29 percent, at the agency in the past three years. Just the number of managers making $99,000 or more has spiked from 75 to 126 since Director Lynne Saxton took over from Dr. Bruce Goldberg.
FamilyCare Dispute
Another big reason for the Oregon Health Authority deficit is $25 million spent to settle a dispute with the Portland coordinated care organization FamilyCare over adequate and fair funding.
FamilyCare CEO Jeff Heatherington complained Monday that the state continues to pay his organization inadequately and arbitrarily lower than other CCOs, including his direct competitor, Health Share of Oregon. He also insinuated the low ball rates for 2017 were a way for the state to recoup the $25 million.
The Oregon State Hospital in Salem was also forced to open an additional ward at a cost of $5.3 million as the state and counties have failed to stop the escalating use of the hospital as a holding center for people with mental illness awaiting trial -- the so-called “aid and assist” population.
Rep. Mitch Greenlick, D-Portland, pressed Oregon Health Authority Director Lynne Saxton for an explanation, but instead she repeated the same thing she had said several months ago: “We’re working intensely with the six largest counties” to redirect and reduce the number of these individuals.
While this population did dip over the summer, the problem is worse now than it was this spring. The number of people county authorities have sent to the state hospital so they can be stabilized to face criminal charges hit a record of 241 in October.
Greenlick said the Legislature will attempt to intervene in the situation next year, as several bills are on the docket to address the problem posed by what he sees as the counties’ misuse of the state hospital. He said Gov. Kate Brown’s plan to close the Junction City psychiatric hospital and its 80 to 100 psychiatric beds was precipitated on reducing this population. “The easiest way to get 100 beds is to get 100 out of Salem,” he said. “We have to do something with aid and assist.”
OHP Enrollment Falls
The Health Authority has also seen a large reduction in the number of people who were on the Oregon Health Plan after the Affordable Care Act expansion, based on their low incomes, but the enrollment of more traditional Medicaid members has grown, for which the state receives a lower subsidy from the federal government.
The state lost a budgeted $96 million in federal funding as the first group left the system, and the state claims a $13 million overall shortfall from the general fund for the health systems division, which includes Medicaid.
The state recertified half of its Oregon Health Plan members, purging one-third of this group (or one-sixth of the entire program) who failed to re-apply or qualify for Medicaid.
The high number of disenrolled members comes as the economy improves and the state only now catches up on its recertification process. OHA delayed culling Oregon Health Plan enrollment due to the slow rollout of its new ONE enrollment technology system.
Saxton told Greenlick that the other half of the Oregon Health Plan membership would not see such a large drop, but Greenlick said she did not adequately provide evidence to assure him.
About 185,000 people were taken off the rolls, meaning the state could lose 370,000 members. New enrollees can come into the system at any time, buttressing enrollment. Even as 185,000 people lost coverage, the state gained about 40,000 new people. But overall enrollment still declined from almost 1.2 million to just more than 1 million people between March and November.
Chris can be reached at [email protected].
