Scoop: Accounting error could cost Washington state $654M, staff says
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Years of accounting errors involving children's health care funding could cost Washington state hundreds of millions of dollars, according to an estimate from legislative staff.
Why it matters: The potential costs come as Washington lawmakers are already preparing for a multibillion-dollar budget shortfall.
Zoom in: From 2020 to 2025, the state Health Care Authority underreported to the federal government how much it spent on the Children's Health Insurance Program (CHIP), agency spokesperson Katie Pope wrote in an email to Axios.
- CHIP provides health coverage to children whose families earn too much to qualify for Medicaid.
- Because of the reporting error, the U.S. Centers for Medicare and Medicaid Services began reducing Washington's CHIP funding allotment in fiscal year 2024 — from roughly $250 million a year to about $133 million today, state Senate staff estimate.
- Yes, but: The state continued drawing enough federal funds to cover its actual CHIP expenses, exceeding the reduced allotment.
The result? Federal overpayments, plus a potential funding shortfall for the program going forward.
By the numbers: The financial hit could reach $654 million through 2031, according to an Oct. 28 email from nonpartisan state Senate staff obtained by Axios.
- That estimate includes past overpayments and accounting adjustments, as well as losses of future federal funding.
- The state Health Care Authority disputes that estimate, saying it overstates future costs in part because federal funding allotments are recalculated annually.
- The agency projects a potential $54 million federal CHIP funding shortfall this fiscal year, but did not provide a comparable estimate through 2031.
What they're saying: State Sen. June Robinson (D-Everett), the Senate's lead budget writer, told Axios she thinks the Legislature might have to spend about $100 million in its upcoming two-year budget to address the issue.
- "Obviously we want to insure kids," said Robinson, adding that lawmakers will "have to figure it out" when they convene in January.
- She said $654 million is a very rough estimate of what the state could be responsible for over five years, not what lawmakers must address immediately.
Pope said the state Health Care Authority is working with the federal government to try to correct the state's CHIP allotment, which she said may eliminate much of the projected shortfall.
- "There may be little or no impact in future years once that process is complete," Pope said.
State of play: Even if lawmakers only have to come up with about $100 million in the coming legislative session, that's a big problem when the state is already facing a multibillion-dollar deficit, state Sen. Chris Gildon (R-Puyallup), the Senate GOP budget leader, told Axios.
- Gildon and Robinson declined to predict the exact size of the upcoming shortfall, saying they want to wait for the state's updated revenue forecast later this month.
- Gov. Bob Ferguson also declined to give a number at a Nov. 4 press conference, but said it's "more than fair to say that number is going to start with a 'B.'"
- The state's current two-year operating budget is $79.4 billion.
What's next: The budget picture will become clearer with updated caseload estimates for state programs Nov. 12 and a new revenue forecast Nov. 16.