The House and Senate released their proposed supplemental budgets on Sunday, Feb. 22. The state is facing a projected $2.3 billion budget deficit for the remainder of the biennium (through July 2027) and is required to have a balanced budget. WSHA is very pleased to report that there are no direct cuts or new taxes targeting hospitals in either proposed budget. Both chambers addressed the budget shortfall with tax changes, transfers of funds from other programs, sweeping unspent program funds, and targeted non-health care program cuts.

WSHA members’ combined advocacy efforts and many conversations with legislators made a difference. The House and Senate budget proposals reflect an understanding that hospitals cannot bear the burden of additional taxes or funding cuts. 

Revenue increases offset by caseload growth
The February revenue forecast anticipated increased revenue of $827 million for the FY 2025-2027 biennium. However, a large portion of that revenue will be used to cover increased caseloads for the same period— as more residents than originally forecasted are using government services. The Health Care Authority, for example, projects an additional $1.1 billion in spending through FY 2029 just to maintain current services.  

The budgets propose to spend one-time dollars from the budget stabilization fund of more than $750 million and $880 million respectively.  

Both budgets also assume a new tax on individuals who earn more than $1 million a year (SB 6346/HB 2724). If implemented, the revenue from the new tax would start in January 2029. The budgets also include an early repeal of the 0.5% B&O surcharge on business revenue over $250 million per year; with the B&O surcharge ending when the income tax begins. 

No direct cuts to hospitals
This year, the proposed House and Senate budgets are similar to each other but differ from the Governor’s proposed budget in important ways, which WSHA strongly supports. The Governor’s proposed budget included two cuts that would have significantly impacted hospitals, neither of which are included in the House or Senate budgets:

  • “Site Neutral” payment policy that would have reduced Medicaid hospital outpatient funding by $38 million annually; and 

  • Shifting the Medicaid pharmacy benefit from managed care to fee-for-service that would have had an estimated $20 million annual impact primarily on hospitals that operate retail pharmacies. WSHA expressed concerns about the impact of this cut on Federally Qualified Health Centers and Medicaid access to primary care. 

WSHA and hospital member advocacy played a crucial role in ensuring those cuts were not included in the House and Senate budgets and have not been proposed as policy bills. 

Impacts to health care
The most significant budget items included in both budgets that will impact health care and hospitals include: 

  • State funds to continue premium assistance for Washingtonians purchasing insurance through the Washington Health Benefit Exchange. The House funds this at $25 million and the Senate at $47.5 million.  

  • Caseload reduction and moving from managed care to fee-for-service in the Apple Health Expansion program for undocumented residents of Washington State to comply with HR 1. These changes result in state budget savings of $35.1 million in the House and $36.8 million in the Senate.  

  • Sizable funding to address impacts of federal changes to Medicaid eligibility and the eligibility verification process due to HR 1.  

The House proposed budget includes one significant cut that the Senate version does not:  

  • Elimination of coverage for most adult physical therapy, occupational therapy, and speech therapy services beginning in July of this year at a cost of $8.7 million state and $40.8 million total. 

Summary budget table 
WSHA staff compiled a summary table outlining the areas of the budget related to health care and comparing the three proposals.  

Next steps
Each chamber will hold a hearing on their proposed budget today, Feb. 23. The budgets will be passed out of committee on Wednesday, Feb. 25, and they will be voted on the floor of each chamber on Saturday, Feb. 28. Then, a conference committee will be appointed to negotiate a compromise budget that must be enacted by both chambers before March 12, the last day of the legislative session.

WSHA is weighing in on the following bills Feb. 23-27:    

Monday, Feb. 23

Senate Labor & Commerce  
ESHB 1155 Prohibiting noncompetition agreements and clarifying nonsolicitation agreements. (Remy Kerr) 

House Appropriations  
HB 2289 Making 2025-2027 fiscal biennium supplemental operating appropriations. (Ashlen Strong) 

Senate Ways & Means  
SB 5998 Making 2025-2027 fiscal biennium supplemental operating appropriations. (Ashlen Strong) 

Tuesday, Feb. 24

House Finance  
ESSB 6346 Establishing a tax on millionaires. (Ashlen Strong) 

Thank you for testifying!

Thank you to everyone who testified in support of WSHA’s legislative efforts last week:   

  • Eric Moll, Mason General Hospital  
  • Kelly Thompson, Forks Community Hospital  
  • Shane McGuire, Columbia County Health System 
  • Shawn Ottley, Lake Chelan Health