Governor Walker’s DHSS Budget Saves Only $1 Million, not $47 Million as Stated

Although there appear to be many savings in the FY17 budget, much of these savings are through shifting the payment for Medicaid services from the state government to the federal government. These transfers are implemented through “Medicaid reform” initiatives, such as 100% federal payment for travel of Alaska Natives, and increased use of federal funding for home and community waivers. There are other “hard” savings projected through management of super utilizers and prescription drug use reform.

One problem with the forecast savings in the FY17 budget is that the projected savings of $24 million for 1915(i) and (k) plans will not occur until July 1, 2017 which is FY18.  Even if these programs are approved by CMS in the latter part of FY17, the total of $24 million will not be achievable.

Many of the 27 Optional Services in Alaska’s Medicaid program should be terminated.  Alaska Medicaid provides more health services than Medicare, VA care (for non-service connected) and many private health plans.  This is a disincentive for those who work and serve their country.  And Alaska cannot afford it.

In FY 2014 the cost to the Alaska General Fund for these Optional Services for Medicaid adults was an unsustainable $222,503,688.  This does not include the costs of other optional Medicaid waiver services for adults.   Alaska is on the path of unsustainability for Medicaid which may deny the truly needy vital health care services.

Because the price of oil appears not to be rebounding to the former levels in the past few fiscal years, the economy will probably weaken, unemployment will rise, and there will be even more individuals/families enrolling in Medicaid. This will eat up even more of the General Fund and may even rob funds from constitutional requirements such as K12 education and public safety.

Tough choices must be made. It won’t be easy, but it will be necessary.

Read the entire report on Governor Walker’s FY17 Department of Health & Social Services here.