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Parnell says 'no' to an Alaska-run health insurance exchange

Affordable Care Act allows states to opt out; feds will now create exchange

Posted: July 18, 2012 - 12:03am

Gov. Sean Parnell said Tuesday that Alaska will not develop its own health insurance exchange, but will instead rely on the federal government to do that.

Alaska had been one of the plaintiffs in a failed lawsuit attempting to block President Obama’s health care reform efforts, a key part of which was establishing locally run health insurance exchanges where Alaskans could go online to compare and purchase insurance.

Parnell had earlier rejected federal planning money to begin developing the state’s exchange, but held out the possibility that Alaska would still create its own exchange.

Tuesday, Parnell cited cost to the state in explaining his decision to let federal government develop Alaska’s exchange.

“It doesn’t make sense to spend Alaskans’ dollars to set up an exchange when so much uncertainty exists about how to implement it and how to gain federal approval,” Parnell said in a press release announcing the state action.

“Federally mandated programs should be paid for by federal dollars,” he said.

Sen. Bettye Davis, D-Anchorage, chair of the Senate Health, Education and Social Services Committee criticized the governor’s action Tuesday.

“I’m very sorry to hear him say that,” she said. “I think it’s a terrible mistake on our part.”

She said it would be better for Alaskans if Alaska had a locally operated exchange, or developed one together with other states in which it could have a say.

She called Parnell’s statement about the cost of the exchange a “virtual lie,” saying he turned down $1 million in planning money and that future money would be provided as well.

Parnell spokeswoman Sharon Leighow said “it would cost the state tens of millions of dollars” to do what was required to get an exchange running by 2014 if it were to do so on its own.

Leighow cited a page in the 95-page consultant’s report that said it would cost the state $35-$70 million to replace the state’s entire Medicaid eligibility system, a 1980’s era computer system used to determine eligibility for Medicaid, Denali KidCare, food stamps and other programs, so that it would work with the new exchange.

“The federal government will not pay 100 percent of this exchange,” she said.

The report, created for the state by the consultant firm “Public Consulting Group” provided a number of options for exchange development.

Elsewhere in the report it estimated the cost at $6 million to $7.5 million, with an estimated usage by 38,000 to 115,000 people. That cost estimate did not include possible revenues from the exchange.

While the consultants said the cheapest alternative for the state was to let the federal government handle the exchange, that’s also the option with the most uncertainty, it said, because it isn’t clear how the federal exchange would work with state programs.

The State Department of Health and Social Services said Tuesday that it would continue to try to have input in what is done in Alaska.

“Through our analytical review and deliberative process, we will continue to pursue the best solution for Alaska,” said Josh Applebee, deputy director for health care policy in a press release. “The report will be an integral part of the policy analysis in the coming days and weeks ahead.”

The consultants’ report also raised concerned about whether the exchange would be self-supporting by 2015, as required by federal law, given the cost of operation and the small Alaska operation.

Davis said that while the Legislature has in the past stepped in and accepted federal money rejected by a governor, that’s unlikely to happen in this case. She said she hoped the state would consider taking over and operating an exchange once the federal government has established it, however.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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