In the 2023 supplemental operating budget, as passed by the Legislature, maintenance level changes (the cost of continuing current services, adjusted for enrollment and inflation) increase appropriations from funds subject to the outlook (NGFO) by $400.7 million. The bulk of that ($373.8 million) is from mandatory Medicaid caseload adjustments.

However, that is offset by policy level savings of $653.0 million from the enhanced federal match for Medicaid. The enhanced match has been in place since the beginning of the pandemic and it will phase down by the end of calendar year 2023. The federal funding supplants state funds for Medicaid; as a condition of the enhanced match, states could not disenroll people from Medicaid. The NGFO savings from the enhanced federal match account for 54.9% of the total policy level reductions in the supplemental.

The 2023–25 budget saves another $106.7 million from the enhanced federal match. Altogether, beginning with the 2021 supplemental, operating budgets have assumed NGFO savings from the enhanced match totaling $1.905 billion.

Now that the enhanced match is winding down, the state can again disenroll people from Medicaid if they are no longer eligible. According to data in the February caseload forecast, Medicaid enrollment in Washington increased by 24.5% from fiscal year 2020 to 2023. With the ability to reevaluate eligibility, enrollment is estimated to decrease by 17.0% in 2024 and 6.1% in 2025.

Removing clients who are no longer eligible for services will save state and federal Medicaid dollars. But budget writers will surely miss the enhanced match, which has allowed them to spend money that would otherwise have gone to Medicaid on other things.

Meanwhile, in May 2022, the Health Benefit Exchange submitted a Sec. 1332 waiver asking the federal government for permission to expand access to the plans on the Exchange for Washington residents who would otherwise qualify but for their immigration status. The waiver application was approved in December.

Consequently, the 2023–25 budget includes $52.9 million (and the outlook assumes $156.9 million in 2025–27) from the general fund–state (GFS) to provide health coverage to residents, regardless of immigration status, with incomes at or below 138% of the federal poverty level. The coverage begins in FY 2025. Additionally, the budget requires the Caseload Forecast Council to forecast the number of people who will be eligible, beginning in July 2024.

The waiver also allows these individuals to participate in the state’s premium assistance program. Legislation in 2021 created a premium assistance and cost-sharing reduction program for the Health Benefit Exchange. It also created the state health care affordability account (SHCAA), to be used for premium and cost-sharing assistance. The 2022 supplemental appropriated $55 million from the GFS to the SHCAA and appropriated the full amount from the SHCAA for the premium assistance program.

The 2023 supplemental reduces the 2021–23 appropriations from the SHCAA by $30 million, as “appropriation authority is shifted between FY 2023 and FY 2024.” Then, the 2023–25 budget appropriates $85.0 million from the GFS to the SHCAA and appropriates $110.0 million from the SHCAA for the premium assistance program. (For 2025–27, the outlook books NGFO savings of $10 million, assuming lower GFS appropriations for the SHCAA.)

Additionally, the 2023–25 budget includes $260,000 GFS for a study (due Dec. 1, 2023) of how the Sec. 1332 waiver “could be amended to generate federal pass-through funding to support the affordability programs.”

Finally, the 2023–25 budget includes $600,000 ($100,000 from the GFS and $500,000 from the insurance commissioner’s regulatory account) for the Office of the Insurance Commissioner and the Attorney General to study “approaches to improve health care affordability,” including provider price or rate regulation policies and regulatory approaches to address “any anticompetitive impacts” of consolidation and integration in health care. A preliminary report is due Dec. 1, 2023 and a final report is due Aug. 1, 2024.