by Jake Goldstein-Street, Washington State Standard
June 15, 2026
Faced with a budget shortfall this year, Washington Democratic lawmakers relied on spending cuts and other maneuvers to make ends meet.
For one, they trimmed tens of millions of dollars in state funding for assisted living facilities that care for patients on Medicaid.
The state is now being sued over that decision.
Washington’s leading assisted living organizations last week filed the suit. They say it will make it harder to attract caregivers and also reduce access for those on Medicaid, the insurance program for low-income residents.
Although the Washington Health Care Association and LeadingAge Washington oppose the spending cut itself, their legal challenge is on procedural grounds.
They argue the Legislature approved an unconstitutional delay in updating reimbursement rates for their facilities by tucking it into the state’s 600-plus-page budget, instead of in a separate piece of legislation that would require its own approval.
These facilities provide long-term care for adults who need support with daily living activities, like bathing, taking medication and using the bathroom. They generally serve older and lower-income adults.
The organizations argue that, on top of hiring and access concerns, lower funding could also delay discharges of patients from hospitals into assisted living.
This comes as assisted living providers and other medical facilities brace for steep cuts to federal Medicaid spending in the broad tax cut and funding bill congressional Republicans passed last year.
The attorney general’s office was reviewing the legal filing last week, a spokesperson said, deferring comment to the Department of Social and Health Services and legislators. The state agency declined to comment as the litigation is pending.
Rep. Nicole Macri, D-Seattle, said she and other lawmakers work with nonpartisan counsel to ensure the budget is written to withstand legal scrutiny. She acknowledged all of the spending cuts were “very challenging for us.”
“I do think budget reductions have consequences. How exactly those consequences will play out, I don’t know, but we’ll learn,” Macri said.
A wonky budget cut
In 2018, faced with chronic underfunding and a growing elderly population, the Legislature approved a new way to calculate state reimbursement for caring for patients on Medicaid in assisted living and adult residential care.
The rate is updated in even-numbered years and is based on data from two years prior. So the adjustment scheduled for July 1 this year would correlate with statistics from 2024.
Providers expected the new, higher rates this summer would help them deal with significant increases in labor and operating costs, the lawsuit says. Some had already planned on wage hikes for staff.
But facing a budget shortfall, Democratic lawmakers decided to postpone that reimbursement increase a year. Gov. Bob Ferguson had proposed the idea in December, and also pitched extending the delays to nursing homes, as well. The Legislature limited the postponement to assisted living facilities.
The move is expected to save the state $21 million in the current two-year budget that ends next summer. But it’ll also lower matching federal Medicaid funds, bringing the total hit for providers up to roughly $45 million. The overall two-year operating budget is around $79 billion.
The complaint filed in Thurston County Superior Court says the state reimbursement to pay personal care workers, food service staff, housekeepers and others falls below minimum wage. It’s estimated to be $4 to $12 per hour below the actual wages the providers pay, making it harder to recruit and retain caregivers.
When Medicaid reimbursement lags, facilities are left having to charge residents who aren’t covered by Medicaid more to make up the difference, according to the lawsuit.
The legal issue
The assisted living groups argue the way the Legislature carried out this move was illegal. They say it was a policy decision that should’ve been passed via legislation and then incorporated into the budget, instead of handled solely through the spending bill.
“Affected parties were deprived of a meaningful opportunity to participate in that review, and the predictability and transparency upon which providers rely for long-term staffing, budgeting, capital planning, and Medicaid participation decisions was undermined,” the lawsuit reads.
The state constitution looks to avoid so-called logrolling that attaches policy changes to other legislation.
It says: “No bill shall embrace more than one subject, and that shall be expressed in the title.”
The organizations are asking a judge to declare lawmakers’ move unconstitutional so the July 1 reimbursement change can go forward. A preliminary hearing in the case is set for October.
In a letter to state and legislative leaders last week, the heads of the two groups emphasize that the lawsuit “is not intended to undermine the Legislature’s authority.”
“Rather, it is intended to ensure that changes affecting assisted living Medicaid reimbursement are enacted through processes that provide appropriate transparency, accountability, and fairness for both providers and the individuals who depend upon these services,” the letter adds.
It’s unclear what it would mean for the delicate balance of the state’s budget if a judge agreed with the plaintiffs. But Macri noted it would obviously add costs to future budgets. The governor is expected to release his proposed two-year budget in December for 2027-29, ahead of the Legislature returning for next year’s session in January.
Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com.