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Director's Message January 8, 2004To: DHS Employees From: Jean I. Thorne, Director Re: First draft of Measure 30 recommended budget cuts As a follow-up to Tuesday's message, I'd like to give you details of the preliminary plan we have submitted to the Governor, outlining recommendations for budget cuts if Measure 30 fails on February 3. Our approach. In preparing our recommendations, we started with House Bill 5077, approved by the 2003 Legislature. The bill specified amounts to be cut from our various clusters' budgets if voters reject the measure, with the largest cuts coming from Health Services. To those targets, we first applied savings that we are currently projecting for the rest of the 2003-2005 budget period within each cluster. We then looked to potential reductions that could allow us to meet each cluster's target. This resulted in our main list of recommended reductions, including major cuts in the Oregon Health Plan (OHP). Because cuts in the OHP often result in increased costs elsewhere in the department, we then outlined other reductions necessary to cover those increased costs. Finally, we suggested some measures that could be used to reduce some of the more significant OHP cuts. Here is our main list of recommended reductions to achieve each cluster's target: Cuts in medical assistance programs. These are the largest of the reductions, reflecting the amount set in HB 5077, plus a loss of tobacco tax money that would occur if Measure 30 fails. — Do not implement a planned expansion of the Children's Health Insurance Program that would have covered 4,000 low-income children between 185 percent and 200 percent of the federal poverty level. — Do not implement expanded prescription drug assistance for about 6,700 low-income seniors and people with disabilities through the MEDS program, which was scheduled to replace the former Medically Needy Program if approved by the federal government. — Eliminate OHP coverage for the "Standard" population. This population consists of adults who are below the poverty line but who don't qualify for conventional Medicaid. About 50,000 adults now receive Standard coverage, a figure projected to grow to more than 60,000 during this biennium. — Eliminate OHP coverage for about 2,000 low-income pregnant women and 1,700 newborns in households between 133 percent and 185 percent of the poverty level. — Eliminate coverage for dental and vision care, and for physical and other therapies, for the 125,000 adults in the OHP "Plus" population. This population consists of people on public assistance and others who are covered under federal Medicaid rules. — Eliminate coverage for mental health and addiction services for adults in the Plus population. — Eliminate health coverage for 25,000 low-income children that is not required by federal law. — Reduce coverage for prescription drugs for adults in the OHP Plus population. Elsewhere in Health Services. — Reduce funding for longer-term acute psychiatric in-patient care for adults. — Reduce mental health and addiction services for families under the Children's Plan. — Discontinue gambling addiction treatment programs. — Discontinue funding for a data system on children's diabetes, and reduce funds for a program focusing on emergency medical services for children. Children, Adults and Families. — Discontinue the Regular Emergency Assistance program, which helps families avoid the need for long-term assistance. — Discontinue day care assistance to students, affecting about 325 low-income families each month. — Reduce System of Care funds, which provide a variety of services for families in the child welfare system. Our next step: dealing with "offsets." As I mentioned, reductions in the Oregon Health Plan often cause other programs to bear additional costs, or offsets. To meet these costs, we have recommended these additional cuts: — Further reduce or eliminate System of Care funds. — Establish an income test, at 150 percent of the federal poverty level, for households that receive Temporary Assistance for Needy Families (TANF) benefits for children living with adults other than their parents. — Restrict funding for various support services for TANF families. Additional recommendations. Our plan then suggests some options for transferring funds from other parts of DHS to reduce some of the cuts in critical OHP services. Since the current budget period began last July 1, we've seen substantial savings in the Seniors and People with Disabilities (SPD) budget. These are due to factors such as lower-than-expected caseloads and changes in matching rates for federal dollars. Because of this, SPD did not need to propose any program actions to meet its Measure 30 target, and in fact had additional savings beyond that. We recommend transferring available SPD savings to the health plan. We also suggest that services for seniors and people with disabilities at care levels 12 and 13 not be restored. Although the 2003 Legislature did provide money to restore services in levels 12 and 13, which had been previously cut, this change has not received the required federal approval. As a result, the estimated 1,200 people who might benefit from this coverage are not currently receiving services. We believe it is more important to try to preserve some key services for the OHP Plus population, which includes many seniors and people with disabilities, than to add coverage for those not currently receiving it. Some reminders about the process. Remember that all of these recommendations are very preliminary. We will continue to refine our estimates of the savings and costs that go along with the actions we have recommended. In addition, Governor Kulongoski must approve any actions that we would take should Measure 30 fail. If the measure is rejected and we implement reductions, they would go into effect in May at the earliest. OHP changes, which would require negotiations with the federal government, likely would not occur until August. I appreciate your patience and your commitment to serving Oregonians during these unpredictable times, and I will keep you informed as the process unfolds. Back to top |
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