Oregon Gov. Tina Kotek’s proposed $39.3 budget seeks to close a funding gap in the state’s low-income health plan and address safety and crowding at the Oregon State Hospital while expanding the behavioral health system.
Those are among the more prominent health care-related items in Kotek’s two-year spending plan she unveiled on Monday in anticipation of the upcoming legislative session that starts next month and ends in June.
Kotek’s budget represents a partial to-do list halfway through her first term after campaigning on a promise to fix Oregon’s behavioral health system.
Included are requests for funds to establish additional residential treatment beds and hire workers to staff them even after record behavioral health spending in recent years. The budget also indicates an interest in resolving persistent problems at the state psychiatric hospital that have attracted federal scrutiny, while also shoring up financials for the Oregon Health Plan that covers low-income people.
“Oregonians, in this moment, would be better served by committing time and energy to practical considerations rather than well-meaning hypothetical wishlists,” Kotek, a Democrat, said at a press conference Monday. “Developing my budget was an effort grounded in the reality of our state and our resources.”
New administration could affect funding
Lawmakers will need to sign off on Kotek’s asks. Republican leaders panned Kotek’s proposals. While Democrats enjoy commanding majorities in both chambers, there is never a shortage of demands on the state’s general fund.
“Just like we can’t solve homelessness without building housing, we can’t close our gaps in services without more places to get treatment and more people to provide that treatment."
Complicating the state’s financial picture is Donald Trump’s return to the White House. The president-elect and his Republican allies in Congress are expected to try to cut the low-income Medicaid program, which has been central to Oregon’s efforts to expand health care coverage. Other changes could include work requirements for people covered under the program.
“We’re going to have to be flexible if things are changing at the national level,” Kotek said.
While Kotek did not say she was anticipating any specific changes under a Trump administration, her budget includes $2.5 million in emergency funding for reproductive health care.
Governor wants more money for behavioral health
State health officials have been trying to figure out how many residential treatment beds are available in Oregon and how many are needed to address the state’s behavioral health crisis.
As of October, the Oregon Health Authority expects the state to add 465 beds by the end of 2026 for people in need of mental health or addiction treatment. The number is a fraction of the 3,700 adult beds a state-commissioned study found are needed.
Kotek’s budget includes more than $330 million for mental health services, residential treatment, behavioral health worker training, as well as a program intended to steer people toward treatment instead of the criminal justice system.
“Just like we can’t solve homelessness without building housing, we can’t close our gaps in services without more places to get treatment and more people to provide that treatment,” Kotek said.
Kotek said the funding is part of her strategy to increase spending for treatment beds in tandem with more behavioral health workers. That additional funding will mean another 363 treatment beds, Kotek said. Already, PeaceHealth has cited her attention to Medicaid reimbursement rates as a reason why the health system has proposed a 96-bed behavioral health hospital in Springfield.
But Oregon also faces a shortage of health care workers, particularly behavioral health workers needed to staff beds. In addition to low pay, another reason cited for the shortage has been delays in licensing from state boards.
Kotek’s budget would increase the Oregon State Board of Licensed Social Workers by nearly a third to $3.7 million.
The Mental Health Regulatory Agency, which licenses counselors and psychologists, would see a similar increase bringing its budget to $7.8 million.
Additionally, the Oregon State Board of Nursing would see a 17% increase for a budget of $30 million.
Federally watched state hospital’s budget would rise to $1 billion
As the largest state agency, the Oregon Health Authority is responsible for overseeing health benefits for state employees, Medicaid spending, public health, the state hospital and other functions.
Kotek’s budget would increase the authority’s budget 10% to $39.6 million, boosting its total budgeted employees from 5,750 to just over 6,000.
Included in that is a 20.5% increase for the state hospital, bringing its total funding to over $1 billion.
The Salem-based psychiatric facility provides 24-hour care to over 500 people, who are among Oregon’s most complicated and vulnerable patients. Recently, the state hospital has seen more than $60 million in unbudgeted costs driven by increased staffing, including expensive temporary workers needed to comply with a new staffing law as well as federal orders.
The additional funding in Kotek’s budget is intended to help the state hospital reach a sustainable staffing level and to comply with recent orders from safety regulators and a court order.
Over the last year, federal inspectors have warned state hospital administrators over unsafe conditions at the hospital. Those warnings have included disorganized medical supplies that could interfere with treatment, lax security that allowed drugs to enter the facility and patients dying after not being properly monitored by staff.
The state hospital has seen a sharp rise in the number of patients accused of crimes but deemed unable to aid and assist in their defense. The increase was driven by decades-old litigation intended to prevent severely mentally ill people from languishing in jail.
The state hospital has fallen out of compliance with a federal court order requiring aid and assist patients to be admitted within seven days. Recently, federal District Judge Adrienne Nelson, who is overseeing the case, has suggested the state could be found in contempt if it does not come into compliance with previous court orders.
Budget seeks better footing for Medicaid
Speaking to the Oregon Health Policy Board Tuesday morning, authority Director Sejal Hathi said Kotek’s budget includes funding that supports the agency's priorities.
That includes a stable base of funding for Medicaid, including a new program that would provide coverage to people being released from prison, she said.
The Medicaid-funded Oregon Health Plan covers 1.4 million Oregonians. But that figure has far exceeded what Oregon officials were expecting, leading to $200 million in unexpected costs just this year.
Keeping people enrolled keeps overall system costs down, Kotek said. Her budget seeks to fill the current gap by extending taxes on hospitals and providers that are set to expire. The budget does not include figures on the size of the gap and how much the taxes are expected to generate.
Over the summer, Kotek convened a group to talk about the tax, and she said she will have a proposal soon.
Meanwhile, providers have complained that Oregon Health Plan reimbursement rates do not cover their expenses.
Kotek’s budget calls for roughly $35 million in general fund money to increase the Oregon Health Plan’s hospital maternity rates and another $25 million to help hospitals who take on a disproportionate number of Medicaid and uninsured patients.
Becky Hultberg, president and CEO of the Hospital Association of Oregon, praised Kotek’s budget in a statement, saying that Oregon’s hospitals have struggled to make ends meet for years.
“Adequate funding of the Oregon health plan is not just about access to care for vulnerable Oregonians, but about the availability of services for us all,” Hultberg said.