Subcommittee suggests $89 million in Medicaid cuts

Posted: Friday, February 20, 2004

Proposed cuts in the Department of Health and Social Services budget could mean the state no longer pays for eyeglasses, hearing aides, speech therapy and emergency dental care for low-income adults, a department official said Thursday.

A House Finance subcommittee is recommending cutting $89 million from Medicaid, a state and federally funded program that pays medical bills for low-income Alaskans.

"I think you'll see devastating impacts," said Janet Clarke, the department's administrative services director.

The proposal, which is for the budget year that starts July 1, could change as it moves through the Legislature.

Lawmakers are scheduled to take up revenue-generating measures in mid-March that could relieve pressure to cut spending, but it's not clear if any of those measures have enough support to pass.

"This is the consequence of doing nothing," said subcommittee chairman Mike Hawker, R-Anchorage. "There's clearly an impasse in the Legislature."

Besides vision, hearing and dental cuts, Clarke said home health care might have to be reduced for people who otherwise would be eligible for nursing home care. She said the department also might cut personal care attendant services for those with disabilities.

Rates to doctors, hospitals and pharmacies also would need to be cut by 10 percent, which Clarke said could jeopardize the survival of small hospitals and cause some doctors to quit accepting Medicaid patients.

Hawker said the department must try to control Medicaid costs, which are rising faster than inflation and will come close to $1 billion in combined state and federal spending next year.

"This is the beast that's about to eat our entire state budget," Hawker said. He put $500,000 in the budget for a department study on controlling future Medicaid growth.

Rep. Reggie Joule, D-Kotzebue, whose district includes a large Alaska Native population, objected to the proposed budget. He said the state should not ignore the problem he sees as underlying much of the Medicaid spending - substance abuse and a history of oppression of Alaska Natives that has led to social problems.

Some Republicans who voted along party lines for the proposal also were not happy with it and blamed the cuts on lack of a plan to bridge the state's gap between spending and revenue.

"We're past the point of finding cuts and we're into the point of dismantling," said Rep. Dan Ogg, R-Kodiak. "We need to find those revenue sources to fund the things that are important to us."

The subcommittee cut about $35.6 million in state Medicaid funds, which triggers a corresponding cut of $53.5 million in federal funds. That's a little less than 10 percent of the $969.7 million the department proposed spending in state and federal funds on Medicaid.

Rising prescription drug costs and disabilities associated with an aging population are among the factors driving the budget up, Clarke said.

The department is already trying to control that spending, partly through developing new rules on prescription drugs for Medicaid patients and the use of personal care attendants.

The department has also tried to structure programs so the federal government picks up more of the tab. The department's budget counted on saving $66 million in state funds through such measures.

Hawker contends in a time of tight budgets, the department needs to consider cutting services. He said 57 percent of Medicaid costs are for services or groups of people the federal government does not require the state to cover.

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