What is the Impact of Medicaid Expansion on Alaska?

Health Care — By on October 29, 2014 at 5:35 PM

In November 2013, Governor Parnell decided not to expand Medicaid to cover able-bodied, childless working age adults, a population which has never been covered before under the Medicaid program. Alaska already spends about $1.5 billion to cover nearly 140,000 Alaskans. If Medicaid were expanded, an additional 12,000 to 14,000 able-bodied, single adults would be covered. The proponents of expanding Medicaid argue that the federal government will fully fund it for the first 3 years. This is the same government that is in debt $17 trillion as of today. Unfortunately, if Alaska were to expand Medicaid and the federal government went back on its promise to fund, then we Alaskans would be left holding the bag. Once these individuals are covered in Medicaid, the State cannot back out due to a federal requirement called Maintenance of Effort. This requires the State to fund a program at the previous level regardless of federal funding. This could become another “unfunded federal mandate”.  Here is a graph which shows Alaska’s Medicaid spending annually from 2000 to 2011:

 The big “blue whale” above is the Medicaid spending, which is eating the remainder of the health care spending in the state. It dwarfs spending for PERS/TRS health care costs (red and green in graph). And this is for the current Medicaid population. Even the current spending is likely unsustainable.

The supporters of Medicaid state that the costs of uncompensated care will decrease and have no factual data to back up this position. What we do know is that Medicaid does crowd out Medicare and Tricare patients due to the physician reimbursement rates. For primary care, Medicaid reimburses at 147% of Medicare; Tricare reimburses at 137% of Medicare. Because Medicaid patients are reimbursed at a higher rate than both Medicare and Tricare, Medicaid patients would be first in line and be seen first by a provider (if it were strictly a business decision).

To read the entire report by the Foundation for Government Accountability and the Alaska Policy Forum, click here.

 

 

 

 

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