The federal government is stepping back from requiring that Washington change how it spends mental-health money.
A letter received last week confirms what the Inslee administration had heard informally from Washington, D.C.: that some $500 million in federal mental-health funding that had been in jeopardy now appears secure.
A warning from the federal Centers for Medicare and Medicaid Services last year prompted Gov. Jay Inslee to propose giving private insurance companies the chance to compete for regional mental-health contracts.
The contracts are now held by county governments everywhere but in Pierce County.
The head of a unit within the federal agency told Washington this month it would approve the contracts as long as the state provides "assurance" that it uses the same contracting policies for federal funds as for state funds. Inslee policy adviser Andi Smith said the state can provide those assurances.
With the federal mandate removed, counties will continue to get first dibs on the contracts under a proposal by Inslee that is making its way through the Legislature.
But his plan would set new requirements to be met under the contracts, mainly centered on integrating different kinds of medical care.
House and Senate budget committees this week overwhelmingly approved the overhaul, which would merge mental health treatment with drug-addiction treatment. It would also move those two kinds of treatment toward sharing a common regional structure with primary care.
A full merger is possible in the long term and could one day expand the role of private insurers in mental health, but that's not mandated in the bill.
The federal decision allows the overhaul to move forward cautiously with guidance from a task force that would include county governments, Tacoma Republican Sen. Steve O'Ban said.
"Before," O'Ban said, "we kind of felt like we had a gun to our head and we couldn't really study that in a deliberative way."
"Its a big sigh of relief," said Abby Murphy, a lobbyist for county governments, "to be able to work through integration at a local level rather than having a federal mandate."