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Oregon Health Authority Proposes Ambitious Budget

The two-year proposal which would require an extra $1 billion in state general funding, includes increased spending on behavioral health care and children.
September 3, 2020

The Oregon Health Authority has taken an ambitious approach to planning its next budget. 

The authority’s budget request for 2021-2023 reflects a plan to meet head-on the gaps and public health challenges that only worsened with the arrival of COVID-19.  The authority has 70 proposals tucked into its 3,274-page budget request that was just released that would cost the state another $467 million in state general funding. 

The budget includes an increase to the beer, wine and cider tax to raise money for behavioral health services. The authority also wants to pour money into public health, child welfare and upgrades to the Medicaid system. 

If the authority got everything it wanted, the agency’s two-year budget would total $26.3 billion, with $3.8 billion of that coming from the state’s general fund. The rest would be drawn from other sources, primarily matching federal dollars. 

In comparison, Oregon lawmakers in 2019 gave the authority $2.7 billion in state general funding as part of a two-year $23.5 billion budget. In a special session this summer, lawmakers made some cuts but largely preserved the health authority. Lawmakers delayed the start of some new programs and kept vacant positions open.

The lofty goals in the agency’s budget proposal are just one side of the planning. The authority also had to include a scenario in its budget proposal for Gov. Kate Brown that outlines 10% in cuts. The authority is also working on a second scenario for yet another set of potential 10% cuts, a reflection of the economic downslide during the pandemic.

But it’s too soon to say how much of the proposed cuts -- or the agency’s wish list -- will become a reality. Brown will submit her own budget proposal on Dec. 1 for all agencies. From there, the Legislature will get to work in the 2021 session on the budget and could set something that looks entirely different. 

In the meantime, there are other variables. State revenues could improve or deteriorate, changing the economic outlook even more.

But the agency’s budget request reflects public health challenges that have only worsened during COVID-19 and a renewed focus on equitable health care that doesn’t disenfranchise communities of color, people suffering from addictions or others. 

“The Oregon Health Authority developed our agency’s budget request at a time of profound challenge and change,” Director Patrick Allen wrote in the budget request. 

New Money Proposals 

The authority calls for raising the beer, wine and cider tax and putting money toward behavioral health care, including substance use disorder treatment and prevention.  The proposal doesn’t specify a rate for the increase, but estimates this would generate $293 million for the authority. 

The authority said this would save about $143 million a year in other costs for the state’s economy, including absent employees and lost productivity, health care, motor vehicle crashes and crime. 

That’s not the only proposal in the works. Oregon Recovers, an advocacy organization, is working on a proposal that would generate even more revenue for addiction services. 

Mike Marshall, executive director of the organization, said the OHA’s proposal is a move in the right direction but doesn’t go far enough. Oregon Recovers wants to raise the overall price of alcohol for consumers by about 20% to combat and discourage underage drinking and binge drinking. A price increase mechanism instead of a tax would capture all types of alcohol, not just beer, wine and cider.  

He said the goal is to build a new system for addiction that has more prevention, treatment on demand and a paradigm for intervention that doesn’t rely on the criminal justice system for access. 

That proposal would generate an estimated $746 million for each two-year budget cycle, or more than double the authority’s goal. 

Last year, lawmakers also faced a budget hole but they steered clear of raising beer or wine taxes, saying the industry’s lobby was too strong and had wide support in the state.

Equity is a major part of the authority’s proposal. For example, the authority wants to spend $68 million more on a public health modernization project that would focus on equitable health outcomes and put programs in place in the authority, local and tribal health agencies. 

The agency wants to create a tobacco retail licensing program for more robust enforcement of existing tobacco laws, such as underage sales. The authority noted in its budget document that tobacco use disproprotionately falls to low-income Oregonians, minorities and gay people. 

The state’s also eying prevention services. The authority wants $11 million for a 24-hour children’s mobile response unit that would provide services for children and their parents in a crisis. The goal would be early intervention, with an eye toward averting problems like arrests, placing children in foster care, and emergency room visits. 

The authority acknowledged that the state’s mental health care system is in dire straits and called for help through a variety of other means. For example, there’s nearly $20 million proposed to better coordinate the court system, Oregon State Hospital and providers for “aid and assist” cases. In those cases, a defendant in the criminal justice system needs mental health care in order to reach the point where they can stand trial and aid in their defense. 

Another $30 million would allow the Oregon State Hospital to open up two vacant units at its Junction City campus and add 24 hospital-level beds and 24 secure residential treatment facility beds. 

The authority also wants to convert its Oregon Health Plan members who are served outside of coordinated care organizations in a fee-for-service model, called the open-card plan. The authority wants to make that part of the Medicaid system operate more like a coordinated care organization to help eliminate persistent gaps in coverage and give patients a better health plan. That would cost $12.1 million, the proposal said. Most of the 1.2 million patients in Medicaid are in a coordinated care organization, with  about 100,000 are in the open card plan. 

10% Cut Scenario 

To reach its 10% target, the authority suggested scenarios that would slash $328 million primarily from Medicaid and community mental health services. 

Some of the proposed cuts to Medicaid would pull out built-in increases for providers based on anticipated inflation. But other cuts in the scenario would eliminate services entirely, including certain dental services for adults such as crowns and root canals. Deeper cuts in the scenario would impact coverage for vision and mental health care that children and pregnant women receive. 

The agency warned that those cuts would be devastating and would make it harder to recruit providers and would lead to more serious health problems, such as blindness and aneurysms.

The proposal also included a $22 million cut in community mental health and substance use disorder programs in its scenario, but warned that the move would be “devastating” to the behavioral health system. 

The 10% scenario would not lead to state employee layoffs at the agency, though it would likely force behavioral health providers to lay off staff or shutter. 

“Programs reliant on OHP reimbursement for treating clients may have layoffs and smaller providers impacted by COVID may close,” the scenario said. “Cuts disproportionately hurt the most vulnerable including tribal communities and communities of color, homeless and children.”

The authority spared The Oregon State Hospital, saying that its services already are under pressure to meet the demands of admitting patients from the court system. 

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1.