Alaska Watchdog: State considers cost of medicaid expansion

The health care reform bill passed earlier this year included significant expansions of state medicaid programs. Officials are still adding up the costs.

By Kirsten Adams

May 28, 2010
Even though the federal government reimburses more than 65 percent of Alaska’s medicaid expenses annually, officials project the State will spend more than half a billion dollars on the government welfare program in 2011.

The 2011 operating budget, approved by the House at slightly more than $8 billion, includes more than $1.7 billion for various medicaid related expenses. Rebecca Wells, a research analyst with the Department of Health and Social Services, said the federal government usually funds about two-thirds of medicaid expenses but there was no way to know exactly how much the State would have to fund.

“It’s hard to say with medicaid, it’s a little bit different that way, we can only do our best projections,” Wells said, referring to the State’s funding obligation.

While some medicaid-covered groups, like Alaska Natives, are usually covered fully by federal funding, other groups rely heavily on State monies. Wells said the overall cost to the State is also dependent on what types of claims are filed.

“We do [funding] projections based on history,” Wells said. “They’re all really going to be a mix; it depends on what services are covered.”

Besides a $681 million allocation for “medicaid services,” the operating budget includes numerous multi-million dollar allocations for administrative costs, school-based claims, and services for children, seniors, the disabled and behavioral health claims.

medicaid expenses are not limited to the operating budget, however. Sarana Schell, Public Information Officer for DHHS, said the 2011 capital budget includes $15 million for the completion of the Medicaid Management Information System, the statewide computer system used to track medicaid beneficiaries and providers in Alaska.

Schell said the automated medicaid claims processing system is a federal requirement. The new system, called the Alaska Medicaid Health Enterprise and designed by Affiliated Computer Services, would be the first new system in 20 years.

While State medicaid costs may be high now, Division of Insurance Director Linda Hall speaking to the Anchorage Chamber of Commerce on 24 May, said the recently passed health care reform bill and medicaid expansion included with it would increase expenses for the State by millions.

“This is probably the largest challenge I’ve ever seen or could ever imagine,” Hall said.

The recently passed health care reform bill would require hundreds of pages of new regulations dealing with State medicaid administration, but Hall said they are still unsure of the total cost to the State or the extent of the regulations.

The medicaid expansion also includes a nationwide increase in eligibility levels for medicaid recipients. The income level for benefits for a family of four would increase to 133 percent of the Federal Poverty Level (FPL). Hall said this increase would cost the State almost $15 million per year beginning in 2020. Preliminary estimates show more than 23,000 additional Alaska residents enrolling in medicaid annually. Hall said more accurate estimates on the cost and the number of new enrollees would be available later this year.

Deborah Erickson, Executive Director of the Division of Public Health, said the State is responsible for determining its own eligibility standards for medicaid. Prior to passage of the health care reform bill, Alaska eligibility standards covered pregnant women and children up to 175 percent of the FPL, and 100 percent of the FPL for all others.

“Originally it wasn’t intended for adults, it was a safety net for children, but it has grown over the years and now it’s affecting almost everyone,” Erickson said.

The State is also prohibited by federal law from reducing contributions to the program, Hall said.

“It’s difficult to really know what this will mean; there will certainly be fiscal issues for the State.”

Kirsten Adams is an investigative reporter with the Alaska Watchdog. She can be reached at