Gov. Sean Parnell announced Friday that Alaska will not participate in Medicaid expansion. Instead, he plans to create an advisory group to reform Medicaid in Alaska.
"I believe a costly Medicaid expansion, especially on top of the broken Obamacare system is a hot mess," Parnell said. "The president knows that."
The expansion would have allowed anyone with an income of up to 133 percent of the federal poverty level to qualify for Medicaid. A single person in Alaska making $18,580 or less would've qualified, or $38,330 for a family of four.
The Alaska and Anchorage chambers of commerce, the Anchorage NAACP, the Alaska Federation of Natives, the Alaska Native Tribal Health Consortium and democratic legislators have all recently expressed support for the expansion.
Parnell has said previously that he has "serious concerns" about accepting additional federal dollars to expand Medicaid under the Affordable Care Act.
Parnell said the decision came down to whether states could trust the federal government to "not cut and run on its share of the cost."
"All those federal dollars are really enticing, they are, but they're not free," Parnell said. "And in fact they're paid for by debt and by printing more money. They're paid for by our kids and grandkids and they also come with the price of financial dependence on the federal government to a greater extent than we are today. It's not my intention to create an economy here that revolves around federal dependence."
Alaskans will still finance the expansion for other states through federal taxes.
A report by the ANTHC released in February estimated that 41,500 uninsured Alaskans, including 15,700 Alaska Natives, would have access to Medicaid coverage as a result of the expansion. Parnell said because Alaska Natives are eligible for tribal health benefits — which to some extent, are funded by the federal government — that Medicaid expansion could directly benefit about 26,000 people.
"But Medicaid expansion does not necessarily address the poor’s actual access to health care," Parnell said. "It does affect their eligibility to have it covered financially through this means."
A report commissioned by the state examining Medicaid expansion was also released during the press conference. Despite numerous Freedom of Information Act requests from Alaskan media outlets — including the Juneau Empire — the Parnell administration had refused to release the report until now, citing reasons related to "deliberative process." Parnell said he received the report only two weeks ago as it was being analyzed by the Department of Health and Human Services.
According to the Lewin Group report, "about 19,900 individuals will remain uninsured who would have otherwise gained coverage under Medicaid expansion."
"The real issue in Alaska is, and always has been, access — not insurance," Parnell said. "Insurance is one means to that access. Where do poor Alaskans who are not eligible for Medicaid now get their health care?"
Increased Medicaid costs
Regardless of Parnell's decision against accepting federal Medicaid expansion costs, the state will face increased costs as a result of the ACA, according to the report.
The total cost of the Alaska Medicaid program "rose steadily from $1.0 billion in 2008 to more than $1.3 billion in 2012," according to the report. The federal and state portions of that cost fluctuated because of changes in the Federal Medical Assistance Percentage and a temporary increase under the American Reinvestment and Recovery Act, the report states.
The report uses a "trending factor" based on Alaska's Medicaid demographics and history to predict eligibility counts. Using that trending factor, the report states 151,213 Alaskans would be eligible for Medicaid, "precluding effects of the ACA."
The reports states that Medicaid spending will still increase by $11.1 million to $39.9 million from 2014 to 2020. The state would also spend about $6.6 million less for the Denali KidCare program during that same time period.
"However, this would leave about 20,000 residents that are below poverty without health insurance since they would not be eligible for federal subsidies in the Health Benefit Exchanges," the report states.
The individual mandate will require all U.S. citizens to have health insurance or pay a penalty. The estimated 9,869 Alaskan children and adults who currently qualify for Medicaid, but are not enrolled, will cause what the report refers to as the "woodwork effect." Of those, the report says an estimated 1,810 will enroll in Medicaid to satisfy the mandate. Because these people are already qualified for Medicaid under current guidelines, even though they're not enrolled, the federal government will not cover their costs.
Simplified Medicaid procedures will also factor in increased enrollment, the report states. In 2014, about 2,400 adults and children will leave Medicaid in favor of employer-provided health care, the report states. The state may also save about $6.6 million over six years by moving children below 133 percent of the federal poverty level away from the Children's Health Insurance Program, a Medicaid program paid for with matching state funds, to the traditional Medicaid program.
The report estimates that the state will incur $39.9 million in additional Medicaid costs as a result of the ACA.
"The federal government will only contribute an estimated $40.5 million to Alaska’s Medicaid program over this period if the state chooses to forgo Medicaid expansion," the report states.
If Parnell had accepted the Medicaid expansion, the report says the state would pay an additional $240.5 million to $305.7 million from 2014 to 2020.
"Delaying implementation by two years would reduce the cost by $22 million," the report states. "However, the federal government will be paying nearly 100 percent of the cost for the newly eligible adults during this period and implementing these options would reduce federal funding by $388 million with a one year delay and $783 million with a two year delay."
Reforming Medicaid in Alaska
"Instead of expanding Medicaid at this time, we will work to address the issues within our control," Parnell said. "The president and the Congress have the rest."
Parnell said he wants to create an Alaska Medicaid reform strategy "to address Medicaid’s structural issues, and bend the cost curve while meeting Alaska’s needs." he said the strategy will be done in collaboration with the Legislature, health care providers and consumer groups. He said he would create a Medicaid reform advisory group comprised of one member of the state House, one from the Senate, and three of his own appointees.
Commissioner of Health and Human Services Bill Streur will be responsible for developing a report on the current status of Alaskans who do not qualify for Medicaid.
"Clearly, we need to know more about the people in this category, and their health care needs, what current services available to them are being utilized, and if different services need to be accessed," Parnell said. He added, "If additional analysis is required from an independent party, I’ve let the commissioner know I would seek additional funds from the Legislature for that purpose."
A reporter at the governor's press conference asked Parnell if he would reconsider his decision if the federal government were open to a different Medicaid solution for Alaska.
"I would have to reconsider the decision, of course," Parnell said. "That's something I'm always open to. If there's new information and a change in circumstances that would make a difference to Alaskans, of course I would revisit that.
Read the report that the State of Alaska commissioned here: http://dhss.alaska.gov/Documents/Lewin_Final_Report.pdf.