As the Alaska Senate considers new regulations for Alaskans receiving government-funded health care, state officials are warning that the changes will not save money.

In a Tuesday hearing of the Senate Finance Committee, leaders of the Alaska Department of Health and Social Services told lawmakers that enforcing the requirement will require millions of dollars and more than 40 new employees.

“It would result in an increase in the general fund budget,” said Jon Sherwood, the department’s deputy commissioner.

Senate Bill 193, proposed by Senate President Pete Kelly, R-Fairbanks, would require able-bodied adult Medicaid recipients to be employed or volunteer a specified number of hours in order to receive benefits.

There would be exemptions for caregivers, those who are pregnant, injured, undergoing a family crisis, or being treated for substance abuse.

According to the latest available figures from the state, 202,000 Alaskans — more than one in four state residents — are covered by some form of Medicaid.

On Tuesday, Senate Majority Leader Peter Micciche, R-Soldotna, reiterated his belief that the accessibility of Medicaid is deterring Alaskans from seeking an alternative.

“We’ve made it too easy,” he said.

Kelly, in a March “My Turn” column submitted to the Empire, said cost savings aren’t the bill’s goal: Shifting people away from government services is.

“I am willing to spend some money if that’s what it takes to help Alaskans move away from the debilitating effects of dependency and forward toward self-sufficiency. We’ve spent billions on dependency — I’m willing to spend a small fraction of that to encourage Alaskans on a path toward independence,” he said.

A poll commissioned by the Alaska Chamber of Commerce found broad support for the idea of work requirements.

The Department of Health and Social Services estimates that the work requirements in SB 193 would apply to about 10.5 percent of the state’s Medicaid recipients, or about 25,000 people.

The state would pay an additional $13.9 million per year (after the first few years), in order to require those people to work, according fiscal notes provided by the department.

That figure includes $18.8 million in spending and $4.9 million in savings. Included within the cost is $6.1 million for changes to the state’s computer benefit system, and $12.3 million in employee costs.

Kelly and other lawmakers dispute that cost.

“I don’t really trust the fiscal notes from the department,” Kelly said.

In Tuesday’s hearing, members of the finance committee pushed back on the department’s estimates.

“I don’t believe I’ve ever seen this much of an ask with this many employees, and I’m concerned that the department is requesting support beyond the actual need to implement the program,” said Sen. Anna MacKinnon, R-Eagle River.

Sherwood responded to the criticism from MacKinnon and others: “We do our best to come up with what we think are reasonable assumptions and avoid making highly speculative guesses, and that’s the position we found ourselves in when making these fiscal notes.”

Sen. Natasha Von Imhof, R-Anchorage, asked if the department could save money by outsourcing enforcement of the work requirement.

Unlikely, replied Monica Windom, director of public assistance for the Department of Health and Social Services. She offered the example of the state’s Temporary Assistance for Needy Families program, which already has a work requirement.

In Anchorage, the state pays $3 million to a firm to oversee mandatory work requirements for 1,500 people.

“It appears it would likely cost more if we did that,” she said of outsourcing.

Sen. Click Bishop, R-Fairbanks, asked whether the department has investigated why some healthy Medicaid recipients don’t have jobs.

Alaska’s unemployment rate is the highest in the nation, and the state is losing jobs on a year-over-year basis, according to figures from the Alaska Department of Labor.

Sherwood and Windom said they didn’t have the data to answer Bishop’s question.

“We’re trying to fix a problem and we don’t even know if we did do the data dump to see if they’re employable at all,” he said.

Bishop, a past commissioner of the Department of Labor, suggested that department should be involved in this effort as well.

Hearings are expected to continue Wednesday morning in the finance committee.

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• Contact reporter James Brooks at jbrooks@juneauempire.com or 523-2258.

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