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Parnell refuses federal money to expand Medicaid in Alaska

Pat Forgey
Loren Holmes photo

JUNEAU -- Alaska will align with states declining federal money to expand Medicaid when it becomes available next year, possibly costing the state hundreds of millions in federal funding and denying health-care coverage to tens of thousands of low-income Alaskans.

The move by Parnell puts Alaska in the company of a shrinking number of states rejecting an expansion of Medicaid, the federal health care program for the poor. In the last week, Florida Gov. Rick Scott and New Jersey Gov. Chris Christie, both Republicans, have announced support for expanding Medicaid in their states.

While some legislators called the action "a mistake," they said it was unlikely to be challenged.

'Very concerned about expanding Medicaid'

Parnell told reporters Thursday that he met with U.S. of Health and Human Services Secretary Kathleen Sebelius to voice concerns about the expansion and he said Alaska would not accept the money when it becomes available.

"I told the secretary that I was very concerned about expanding Medicaid --where the federal government could renege on its promise to fund the lion's share of any Medicaid expansion," Parnell said.

The federal Affordable Care Act, known more popularly as Obamacare, includes a provision intended to provide health care to a larger number of poor, boosting Medicaid eligibility to 133 percent of the poverty level, which for a family of four stands at $29,440 in Alaska. That expansion would be funded fully by the federal government for the first three years, according to the act.

A legal challenge by Obamacare opponents was rejected by the U.S. Supreme Court, with the exception of the mandatory Medicaid expansion. The courts said that it was up to states to decide whether or not to agree to the federally funded expansion.

'Broken and broke'

Expansion in Alaska would likely mean an additional $300 million being paid to Alaska health care providers per year to cover those who are not now eligible for coverage. After three years, the federal reimbursement level would drop to 90 percent, costing the state about $30 million a year.

Parnell said he's concerned that the federal government is careening from crisis to crisis and may not live up to its obligations. Calling the federal government "broken and broke," Parnell said battles over the fiscal cliff, sequestration and budgets cast doubt on its ability to meet its commitments.

"That's a big mistake," said Sen. Hollis French, D-Anchorage, citing a host of Republican governors who have opposed the Affordable Care Act but chose to accept the Medicaid expansion.

"The ACA is now the law of the land, it is not going to be overturned. Mitt Romney lost the election, you've got to deal with this," French said.

Sen. Bert Stedman, R-Sitka, said there was little the Legislature could do if the governor chose not to accept the federal money, but it hoped to hear Bill Streur, Parnell's commissioner of Health and Social Services, explain the decision in committee.

"It's really up to the governor what he wants to do,” said Stedman, who chairs the Senate Health and Social Services Committee. “It is not a legislative decision, from what I see."

Parnell may reconsider

Parnell said the decision on whether to accept the money might be reconsidered in the future if the federal decision-making process improves in the next several months. The changes to Medicaid would begin on Jan. 1, 2014, so it would be at least six months during which Medicaid expansion could not be funded, Streur said.

Parnell said he'll continue to study the issue, and would decide by the time next year's budget is submitted whether to include Medicaid.

Contact Pat Forgey at pat(at)alaskadispatch.com