The Consequences of Ballooning Medicaid Enrollment

A recent update by Health Management Associates (HMA) shows that Alaska’s Medicaid and Children’s Health Insurance Program (CHIP) enrollment remains disproportionately high, and enrollment is maintaining a high growth rate more than five years after Medicaid expansion began in Alaska. Disproportionately large growth in Medicaid enrollment may contribute to Alaska’s rising health care costs. Dr. Benedic Ippolito, a nationally renowned health care economist, discusses a key reason why in his recent report:  Alaska’s Medicaid spending per full-benefit enrollee is 56 percent higher than the national average. Managing Medicaid enrollment is one of the keys to controlling Alaska’s climbing health care costs.

HMA reports that since 2019, 17 states saw increased growth in Medicaid and CHIP enrollment, and 33 states saw year-over-year declines in enrollment. Alaska has experienced 3.5 percent growth in Medicaid enrollment since 2019, behind only Idaho (20.3 percent) and Utah (9.8 percent). Idaho and Utah both began Medicaid expansion in January 2020, making their large growth rates expected. Alaska, in contrast, adopted Medicaid expansion in September of 2015, making it one of the few expansion states that has maintained a high growth rate in Medicaid enrollment five years later.

Alaska also has the dubious distinction of being third nationwide in terms of percentage growth of Medicaid and CHIP enrollment since the pre-open enrollment period, which was July 2013 through September 2013. Alaska has seen 83 percent growth since then, exceeded only by Kentucky (97.5 percent) and Nevada (88.6 percent).

It’s possible this near doubling of growth in enrollment since the pre-open enrollment period could have impacted the price of health care in Alaska, especially when the cost of Medicaid spending per enrollee is considered.

Controlling Health Care Costs in Alaska, the report by Dr. Benedic Ippolito, takes an in-depth look at why Alaska’s spending on health care is so high. One crucial finding: Medicaid payments to physicians are 26 percent higher than Medicare payments to physicians. This is extremely unusual nationwide – 48 states have lower fee-for-service rates for Medicaid than Medicare. Nationally, Medicaid reimbursement rates are 28 percent less than Medicare payments.

Given Alaska’s disproportionately and continuously high Medicaid enrollment rates combined with above-average Medicaid reimbursement rates compared to Medicare, is it any wonder that Alaska’s per-capita health expenditures are the highest of any state?

Nearly 20 percent of Alaskans are enrolled in Medicaid, and there is no sign of enrollment growth slowing anytime soon. By the end of March 2020, nearly 224,000 Alaskans were enrolled in Medicaid and CHIP, and by the end of April 2020, nearly 227,000 were enrolled.

The combined impact of high Medicaid enrollment rates, year after year, with far above average Medicaid reimbursement rates, is certainly contributing to Alaska’s highest-in-the-nation health care spending, and could also be significantly affecting the high price of health care services. If Alaskans want to see themselves and their government spend less on health care, reconsidering Medicaid expansion and renegotiating reimbursement rates with the federal government are the first steps.