SALEM — Memories can be short in politics, goodwill a fleeting commodity. Just ask Oregon’s hospitals.

They called out Oregon Gov. Kate Brown earlier this month after she unveiled a budget blueprint that would cut hospitals’ Medicaid reimbursements, costing them hundreds of millions of dollars. They blasted the governor for even thinking about paring back state support when they’re facing the worst pandemic in a century.

The budget flap came barely a month after hospitals spent $10 million on a successful drive for higher tobacco taxes to fund health care. They did so at the governor’s behest and assumed they’d earned substantial brownie points with Brown as a result.

But it didn’t work out that way.

On Dec. 1, the governor floated her budget plan. It slashed at least $245 million per biennium from various programs that support hospitals.

Tina Edlund, Brown’s health care adviser, said the governor had little choice but to pencil in the reduced reimbursement rates and other cuts. Enrollment in the Oregon Health Plan, the state’s health insurance plan for the low-income, has increased by more than 110,000 since the pandemic derailed the state’s economy.

“We can’t protect the Oregon Health Plan and not pursue any cost savings in the health care system all at once,” said Brown spokesman Charles Boyle. “Gov. Brown needed to balance a budget now.”

The whole mess could just go away if Brown gets her way and a wave of new federal money flows into the state.

When she introduced her budget proposal she called on Oregonians to push their congressional representatives to pass another federal aid package. She repeatedly called for the federal government to increase funding for Oregon’s version of Medicaid, the Oregon Health Plan. Between the big increase in caseload and the way she structured her budget blueprint, it faces a $400 million-plus shortfall in 2021-23.

A funding shortage to care for Oregon’s neediest residents during a pandemic makes a stark political case for federal funding. The same can’t be said for the state of Oregon’s overall budget, which doesn’t make for a sob story to present to Congress. The state’s revenue stream has continued to grow, albeit more slowly than before the pandemic, and its robust rainy day funds can fully cover any hit to schools.

There have been no widespread layoffs in Oregon government, no big cuts to services or even pay freezes, and Brown isn’t proposing any.

Spurring hospitals, which have proven to be deep-pocketed powerhouses in Oregon lobbying and electoral politics, to throw their weight behind a federal lobbying effort could be Oregon Democrats’ best hope for a federal lifeline.

Perhaps not surprisingly, Brown is not the only Democratic leader in Oregon making the projected Medicaid shortfall a centerpiece of their appeal to Congress for more COVID-19 aid.

Senate President Peter Courtney, D-Salem, sent a letter to Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi on Dec. 11 also citing Oregon’s Medicaid budget problems as the top reason to pass “a large economic relief package.”

“The need to invest in health care has never been more urgent,” Courtney wrote. Courtney’s letter painted the situation as even more dire than Brown’s proposal actually is, since he neglected to note the state will receive approximately $300 million from the increased tobacco taxes, leading him to cite a $718 million budget gap.

Pandemic’s toll

Joe Sluka has little interest in or patience for the political intrigue.

He’s got a pandemic response to manage.

Sluka is CEO of St. Charles Medical Health Systems, which operates hospitals in Bend, Redmond, Madras and Prineville. Its Bend hospital is treating 34 COVID patients, the most ever. His ICUs are nearly at capacity, his staff is emotionally and physically exhausted.

The hospital system is hurting economically as well. Pandemic expenses and the hospitals’ cancellation of all elective surgeries earlier this year have taken a toll. St. Charles will likely lose money in 2020, its first loss in more than a decade. Sluka doesn’t expect the first half of 2021 to be any better.

Against that backdrop, Sluka said he was stunned to hear Brown had proposed cutting state funding of hospitals. At a time when the state should be rallying to support its health care workers, Brown is nickel-and-diming them.

“She’s chosen to try and decrease support of this state’s hospitals in the middle of an unprecedented public health crisis,” he said. “I’ve been in this business for 28 years and I’ve never seen anything like where we are now. Any reduction in revenue would be extremely difficult for St. Charles and all the hospitals in the state.”

While the timing of Brown’s announcement may have surprised Sluka, it’s clear that change is in the offing. Hospitals as well as labor and other interests were at the table as the governor and her advisers worked out budget outlines in the weeks and days before Brown made public her proposal, said Melissa Unger, head of the powerful Service Employees International Union Local 503.

The state is desperately searching for a strategy to control health care costs and maintain quality. The state’s Medicaid budget topped $17.7 billion in the current biennium, more than double from a decade ago.

“Our goal was to get people access to good health care,” Unger said. “We don’t want that money to line the pockets of enormous health systems that are sitting on billions of dollars.”

Hospitals, which earned big profits in the past several years, knew Brown was going to prioritize keeping all members of the Oregon Health Plan insured and would ask the hospitals to do their part to keep patients whole amid the pandemic, the union leader said.

Becky Hultberg, CEO of the Oregon Association of Hospitals and Health Associations, said Brown and Unger are wrong to pit poor patients against the medical professionals and institutions that care for them.

“We should be coming together as a community to respond to this pandemic to serve all Oregonians,” Hultberg said. “But this budget does not reflect that spirit of collaboration.”

It’s undeniable that Oregon hospitals are suffering financially and will continue to until the pandemic is over. Second-quarter net patient revenue plummeted by more than half-a-billion dollars, or 15.6%, as the pandemic forced the cancellation of elective surgeries and people simply avoided hospitals.

In many years, the state’s larger hospitals earn big profits. Net patient revenue at Oregon hospitals was $13.7 billon in 2019, marking more than 10 consecutive years of growth. Revenue exceeded expenses by $700 million.

“Without additional emergency funds or a steep increase in net patient revenue, the financial situation of community hospitals in Oregon may become more precarious in the months ahead,” Hultberg said. “”If enacted, the governor’s budget will exacerbate an already uncertain financial situation for many hospitals. Reductions of this magnitude are likely to cause hospitals to cut services, impacting access to care for vulnerable Oregonians.”

This article was originally published by The Oregonian/OregonLive, one of more than a dozen news organizations throughout the state sharing their coverage of the novel coronavirus outbreak to help inform Oregonians about this evolving heath issue.