Drastic cuts planned for the state’s health and human services will be partially alleviated after the Oregon Health Plan’s declining enrollment generated about $103 million.
The Oregon Department of Human Services announced the savings before the Legislative Emergency Board on Thursday, receiving approval Friday to use the savings and $8 million in reserve money to preserve some services.
The agency was slated to cut $179 million from its budget after the defeat of Measure 30 in February. However, with the unexpected savings, the department will cut fewer services than previously planned.
DHS Deputy Director Cindy Becker said the savings are a result of decreased enrollment in the OHP Standard plan, which provides health insurance and services to low-income Oregonians. The OHP Standard population dropped from an expected 85,000 people to about 49,000. The Standard plan provides medical and dental benefits for working adults who fall below the poverty line but don’t necessarily qualify for Medicaid.
Becker said new policies have had a “significant impact” on enrollment in the Standard plan. Enrollment is quickly decreasing because of eligibility changes and people who have not paid new monthly premiums or who have decided not to re-enroll in the reduced plan, Becker said.
The savings will allow the department to extend full services for the 300,000 children and other people covered by the OHP Plus plan. However, insurance for the Standard population will still likely be cut to compensate for about $40 million of the shortfall, Becker said. Preserving the Standard plan hinges on potential revenues from a provider tax, paid by hospitals and managed care organizations.
Becker said the savings is not a surplus. Instead, the funds will prevent more dire cuts from taking effect.
“Essentially, if the savings had not been realized, we would have had to cut another $100 million from the budget,” Becker said.
Becker said she first became aware of the savings about a month ago.
Lane County Health and Human Services Director Rob Rockstroh said the 35,000 people covered by the OHP in Lane County could have all been cut from the program after Measure 30. With the savings, Rockstroh predicts that about 30,000 will still be covered after August.
“The whole system is sort of ratcheted down,” Rockstroh said.
Rockstroh added that the county is still feeling the effects of Measure 28.
Hospitals are also being affected by post-Measure 30 cuts. More people now use emergency room services as their primary care because they lack health insurance, and hospitals are required to treat all emergency patients and absorb costs of those patients who do not have insurance.
“There’s a shift to hospitals, too, no doubt about that,” Rockstroh said. “One of the things that the Oregon Health Plan was good at was … eliminating some of the losses they were taking in emergency rooms.”
PeaceHealth Spokesman Brian Terrett said insurance cuts have affected the hospital.
“We’ve had a dramatic increase in the emergency department of people who were previously covered by the Oregon Health Plan,” Terrett said.
Terrett said hospitals pass on the costs of charity care to other paying patients, although many people don’t think the cuts affect them. Last year Sacred Heart Medical Center administered just more than $16 million in charity care.
“People who have insurance will end up covering most of the cost,” Terrett said.
The increase in emergency room care slows down emergency staff and is inefficient for patients, he said.
“(Emergency room treatment) is some of the most expensive care that someone can get,” Terrett said.
Becker said the department’s current financial situation is a combination of many cuts.
“The other thing people need to know is that we’ve been taking cuts over the last several years,” Becker said.
Sen. Floyd Prozanski, D-Eugene, expressed his disappointment with the unexpected savings.
“That’s the frustration, because I as an elected official have to rely on the staff of the various agencies to do their best efforts in providing us with information we need for policy,” Prozanski said.
He added that the savings look bad for government.
“The real concern for me is the credibility that the state government has with the voters,” Prozanski said. “For many people who are opposed to state government … or who are suspicious to what accountability we have in place, they can basically look at this and say, ‘See, I told you so,’” he said. “It’s almost like we cried wolf again, but the reality is that it was not necessary or proper.”
Prozanski said he expects DHS to appear before the Legislative Audit Committee at its next meeting to explain what went wrong.
“It’s a credibility issue not only for the voters or the citizens, it’s also a credibility of us dealing with the agencies in question,” he said.
He added that the Legislature may need to meet more frequently than the current biennium schedule in order to prevent such situations in the future.