Evergreen Health CEO warns Medicaid cuts will strain regional care, cites local investments

Dr. Ettore Palazzo, chief executive officer of King County Public Hospital District No. 2 (Evergreen Health), briefed the Woodinville City Council on July 8 about financial pressures on hospitals and what a recent federal budget change could mean locally. Palazzo said Evergreen Health has turned a corner financially after pandemic-era losses but warned that projected Medicaid funding reductions will force difficult decisions across the state and region.

Palazzo told the council that estimates project multi‑billion dollar reductions in federal Medicaid support over the next decade and that “this is a disaster for Washington State hospitals,” a comment he attributed to regional hospital leaders and repeated in his presentation. He explained the changes will be phased in after the start of the 2026 fiscal year and could lead to longer emergency‑room wait times and closure of services at some facilities.

Why it matters: Evergreen serves roughly 330,000 residents in its district and provides a range of services — including more than 4,500 births last year, inpatient hospice care and new pediatric partnerships — that, Palazzo said, are at risk when reimbursement falls. He said the district’s small local levy (about 14¢ per $1,000 of assessed value) accounts for a small share of revenue but is reinvested in community programs such as youth mental‑health supports and senior services.

Council members asked how changes could affect Harborview Medical Center, the state’s only level‑1 trauma center. Palazzo said Harborview and other providers “will do everything possible to be here for the community,” but added that reduced Medicaid reimbursement could lengthen triage and transfer times and place pressure on first responders who cannot release transported patients until higher‑level care is available.

Palazzo outlined how Evergreen and other systems are responding — consolidations, partnerships and service prioritization — and emphasized the hospital’s local governance model and partnerships with institutions including Fred Hutch and Seattle Children’s. He also pointed to Evergreen’s quality ratings, saying Evergreen was an early five‑star CMS‑rated hospital and has maintained strong performance on several measures.

What comes next: Palazzo encouraged continued monitoring of state and federal responses and said the district will post updates on its website. Council members thanked him for the briefing and asked staff and regional partners to track the operational impacts as federal changes are phased in.