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Chorus of disappointment over Alaska Medicaid rejection

Alex DeMarban
During a Friday morning press conference in Anchorage, Gov. Sean Parnell and Health and Social Services Commissioner Bill Streur announced the state's decision against expanding Medicaid in Alaska. Loren Holmes photo

Calling Obamacare a "hot mess" that should not be supported, Alaska Gov. Sean Parnell on Friday refused to expand Medicaid in Alaska under the federal health care law, a move that opened him up to stinging criticism from leading business organizations, a faith-based group and others.

Studies, including one commissioned by the state, have shown that expansion would have provided substantial economic benefits to the state -- largely from the influx of federal dollars -- while granting Medicaid to up to 40,000 poor and uninsured Alaskans.

Supporters of Medicaid expansion, including the Anchorage and state Chambers of Commerce, said it would boost the economy in part because the federal government has pledged to pay for at least 90 percent of the additional coverage costs. Both groups suggested the state consider backing out of the expansion if the federal government failed to meet that promise.

Condemnation of the decision was swift, with some saying it illustrated Parnell's indifference to the poor and needy. Others blasted the administration for keeping secret a state-commissioned report on the topic.

The specifics of that report differed a bit from other studies of Medicaid expansion in Alaska, but the conclusion was generally the same: Tens of thousands of uninsured Alaskans would receive Medicaid.

And while the state would expend something in the low hundreds of millions of dollars over the next seven years, the federal match would bring Alaska billions of dollars.

Yet Parnell said he could not commit the state to expanding the debacle that has been Obamacare -- with its oft-changing requirements and fumbled roll-out. The federal funds that would come with the expansion are enticing, he said, but the increased federal debt will come with huge costs for future generations that he could not accept.

The mess-ups raise doubts about whether the federal government will continue to fund the program as pledged, he said.

"The decision comes down to this: can states trust the federal government to not cut and run on its share of the costs?" he asked.

Skyrocketing through the cracks

If Parnell had expanded eligibility, it would have covered those Alaskans who fell through the cracks of the health care law and couldn't afford its premiums. To cover those people, the law initially required that states, with significant federal funding, expand Medicaid to people earning 138 percent of the poverty level. However, the Supreme Court in 2012 ruled that states could opt out of the expansion.

Alaska currently doesn't provide Medicaid to single people or married couples without children. But expanding Medicaid would have included them and provided the entitlement program to Alaskan individuals making less than $19,803 or $40,627 for a family of four.

Instead of the expansion, Parnell said that Alaska would work on its own to combat rising Medicaid and health care costs. As it is, Medicaid already serves 140,000 Alaskans at a cost of $1.5 billion per year to the state. By 2020, without the expansion, that cost is expected to increase to $2.5 billion.

Parnell said that with the Obamacare Medicaid expansion, Alaska’s Medicaid costs would "skyrocket" even further.

Parnell said the poor already get health care services at some 25 community health care clinics, which are federally funded. They also have access to mental health care services, substance abuse treatment services and emergency rooms. But a big question is how much of their costs are not paid for and are therefore picked up by other users.

To help answer that, he's tasking the state's Health and Social Services commissioner, currently Bill Streuer, with developing a report "defining the current status of Alaska’s safety net" for non-Medicaid-eligible Alaskans that are at 100 percent of the poverty level, such as single people or married couples without children. That represents about 20,000 Alaskans.

The commissioner will also study the link between uncompensated care and higher health care costs and premiums.

Parnell in his press conference also called for the creation of a task force to reform Medicaid with an eye on such things as improving health care access and bringing down costs. Alaska's Medicaid program, currently paid for with a 50-50 split between the state and federal governments, is already one of the largest parts of the state budget.

Andrew Halcro, president of the Anchorage Chamber of Commerce, said on Friday that he was perplexed and frustrated that Parnell is only now saying he wants to determine how to address gaps in health care and to bring down the state's rising costs of Medicaid.

This is something that should have been done long ago, Halcro said.

"That to me is information you should already have before you make a decision," Halcro said. "We should know more than we currently know. This challenge with Medicaid didn't show up overnight."

Huge benefits

Supporters of expansion have touted the huge economic benefits to the state.

The Alaska Native Tribal Health Consortium, after commissioning two studies on the topic, reports that the expansion would cost the state $90.7 million up front over the next seven years. But the plan would result in $2.5 billion in additional economic activity and 4,000 new jobs, the consortium said.

That's because the state would receive $1.1 billion in new federal revenue, if the federal government covers no less than 90 percent of the costs of the expansion.

Also, as health care costs fall, the state's up-front costs would be offset to the tune of $67 million in savings, resulting in a net state expense of $23 million, the Native health consortium found.  

The long-secret Lewin Group Report said about 43,000 new Alaskans would receive Medicaid under the expansion -- a figure that includes 17,000 Alaska Natives who can already access government-subsidized health care.

Meanwhile, the state would spend between $200 million and $300 million over the next seven years to expand Medicaid. It would receive between $2.1 billion and $3.7 billion in federal support.

Up to another $40 million would be saved in offset costs as people rely less on state-funded assistance programs.

Reaction to the decision

State Senate Majority Leader John Coghill, R-North Pole, sent a prepared statement saying he applauded Parnell’s decision.

“Considering the failure of the Affordable Care Act, the Governor is wise to refuse Medicaid expansion at this time," he said. "It’s a matter of dollars and cents – America can’t afford it.  They don’t have the money to pay for this and they’ll take it from future generations."

Other reactions were more critical.

The Anchorage Chamber of Commerce supported the expansion, with the organization’s president, former gubernatorial candidate Andrew Halcro, previously noting that the decision would boost the economy by some $2 billion and improve community wellness by insuring thousands of working families in the city.

Rachael Petro, president of the Alaska State Chamber of Commerce, called Parnell's decision "disappointing." But she said he offered glimmers of hope in his promise to address Alaska's safety net and the rising health care costs and premiums in Alaska.

"We are disappointed with his decision today, but we are encouraged that he seems to be focused on the overall cost of doing business, including the health care costs that are ever increasing," she said.

She said she understood Parnell's concerns with the botched rollout of the plan, and said she's hopeful that Alaska businesses and insured residents won't get hit hard by increased premiums needed to support the expansion of Medicaid elsewhere in the country.  

"With any luck, Alaska businesses won't get that double dip in the short term while discussions (to fix rising health care costs) continue," she said.

The American Association of Retired People of Alaska (AARP) also blasted the decision in a prepared statement, saying Parnell chose to go against groups representing a large number of Alaskans, including business owners as well as Alaska Natives represented by the Alaska Federation of Natives, who supported expanding Medicaid.

“Equally as disappointing is the fact Gov. Parnell chose secrecy over transparency as he made his decision,” said Director Ken Osterkamp. “In doing so he is giving away the federal tax dollars already paid by Alaskans to the dozens of other states that have chosen, and continue to choose, to expand Medicaid to help those most in need."

Pastor Julia Seymour with Anchorage Faith in Action Congregations Together said faith-based organizations who make up the group were "deeply grieved." As Parnell was making his announcement on the 17th floor of his downtown office, the group sang in the lobby below, praying Parnell would make the right choice.

"With his rejection of that plan, we believe that for political reasons Parnell is not considering the plight of the poor and vulnerable throughout Anchorage and Alaska," Seymour said. "It's forcing them to choose between the necessary parts of life: rent or medicine or food."

But what about the governor's decision to seek improvements to the state's safety net for the poor, a group he said he cares for?

"In this governor's time, we at AFACT have pushed for an increase in Denali KidCare, and he has rejected that," she said. "We have supported increased awareness for seniors and elders and things the state could do to get more doctors for those populations here, and the governor has not taken steps toward that."

"If he was really interested in those things, today was something tangible and real he could have done to help those people and he has chosen not to do it," she said. "So he can say he wants to help, but his actions to date show that he doesn’t care."

Contact Alex DeMarban at alex(at)alaskadispatch.com