JUNEAU - The state would save about $258,000 next year and about 100 fewer Alaskans would get state-funded medical care under a bill moving through the Legislature.
The measure, introduced by Gov. Frank Murkowski, freezes the income guidelines that determine whether a person is eligible for some programs paid for by Medicaid. Instead of going up with inflation, the income limits would stay at the current level indefinitely.
The result would be that over time, fewer Alaskans would qualify for Denali KidCare, which provides health insurance for children in moderate-income families.
Also, over time, fewer Alaskans would be able to get Medicaid to pay for their nursing home care or for services provided as an alternative to nursing home care.
"This is a policy decision by the administration that the current eligibility levels are what the state can afford," said Health and Social Services Commissioner Joel Gilbertson.
"There is a desire by the administration not to roll back coverage," Gilbertson told the House Health Education and Social Services Committee last week. "However, we do have to take steps at this stage to control the growth of the program."
By the 2009 fiscal year, the state estimates the change would save $3.7 million in state funds and $6.5 million in federal funds. That's because 832 fewer Alaskans would qualify for the program.
Denali KidCare provides health care to children and pregnant women in families that do not have health insurance but make too much money to qualify for welfare. Families can make up to 200 percent of the federal poverty level and qualify.
Currently, that means a family of four can make up to $45,264 a year.
The Medicaid program also provides nursing home care for senior citizens and disabled Alaskans whose income is up to 300 percent of a federal standard called the supplemental security income benefit rate.
Currently, that means someone can have an income of $19,872 a year and get Medicaid coverage for nursing home care or for home-based or community-based alternatives to nursing home care.
Kenai Republican Rep. Kelly Wolf expressed surprise at how much money families can make and have their children qualify for Denali KidCare. Since Alaska Permanent Fund dividends are not counted, a family of four could make more than $50,000 a year and still qualify, he said.
But Bethel Democrat Rep. Mary Kapsner said that's not so much money in Bush Alaska, where gasoline may cost $4 a gallon, and a gallon of milk can run $6 or $7.
Kapsner questioned whether the Republican-led Legislature would ever adjust the income limits for inflation in the future.
"Is this just stuck in our books forever?" Kapsner asked. "Because poor people typically don't have the capacity to hire a lobbyist to come down here and change the statute."
Gilbertson said he understood her concern, but said the budget is under tremendous pressure because of increases in Medicaid costs. If the state does nothing, more drastic cuts may be required later that put at risk core health care for people below the poverty level, he said.
Wrangell Republican Rep. Peggy Wilson said the governor's bill is a better approach to controlling costs than a proposal some lawmakers have pushed in the past to reduce eligibility for Denali KidCare to families making no more than 150 percent of the federal poverty level.
"I'm really very pleased that the governor has chosen not to do that and to look at another way," Wilson said.
The committee voted to send the measure on to the Finance Committee. Kapsner and Democratic Anchorage Rep. Sharon Cissna voted against moving the bill. Voting in favor were Republican Reps. Carl Gatto of Palmer, Cheryll Heinze of Anchorage, Paul Seaton of Homer and Wilson and Wolf.
A companion measure, Senate Bill 105, comes up for a hearing Wednesday in the Senate Health Education and Social Services Committee.