The days are ticking off toward adjournment this Sunday for the Alaska Legislature's 2016 session. Just like every year there's talk of an extension or special session if deadlock develops, and given the quagmire this year that may happen.
Most attention is focused on the big issue of the session, which is whether legislators will agree to use Permanent Fund earnings, in a structured way, as a long-term revenue source for the state budget. The days of 90 percent funding by oil are gone.
This would be a historic decision, and I hope lawmakers can step up to it. The Permanent Fund itself can't be spent, but its earnings, which are several billion dollars a year, have always been available. That's what people mean when they say our state doesn't really have a financial problem -- we have a political will problem to use all the resources that are available.
The Permanent Fund decision is weighty enough but what's really unusual about this session is that the Legislature has taken on three other important issues, any one of which would be a real achievement in a single year.
Here they are: Senate Bill 74, introduced last year by Fairbanks Republican Sen. Pete Kelly, will accomplish a major revamp of the state's Medicaid program, the state-federal health care program for low-income Alaskans; in Senate Bill 91 we would reorganize our criminal justice system to put fewer people in prison for low-level, nonviolent crimes. We would also be cutting recidivism, or a return to crime, by helping inmates coming out of the correctional system.
These are not only the right things to do, but there will also be hundreds of millions of dollars in savings to the state budget because keeping people in prison costs money, about $55,000 a year. Let's credit Fairbanks Republican Sen. John Coghill and Rep. Charisse Millet, Republican of Anchorage, for leading on this.
Another major undertaking in the Legislature this year is in needed changes in our oil and gas exploration tax credit incentive program, proposed by Gov. Bill Walker. This program is actually working because more wells are being drilled and more oil and gas is being found, but the cost to the state is high, and many including Walker feel we can no longer be afford it. The objective is to scale down the cost of the program but preserve parts that are working.
These initiatives are each huge undertakings, and when they are combined with the gorilla in the Capitol -- the Permanent Fund question -- it's easy to see why legislators, who are just ordinary citizens, feel overwhelmed.
Lots of ink has been devoted to the Permanent Fund revamp and the oil tax credits, so I won't expend more here, but I do want to explain why Medicaid overhaul is so important.
The primary thrust of Sen. Kelly's bill is cost reduction. The state's 50 percent share of Medicaid will soon be pushing a billion dollars a year (the federal government pays the other 50 percent) and it is already the second largest state expenditure behind support for schools.
We've got to get control of these costs or they will eventually bankrupt us.
Senate Bill 74 passed the Senate unanimously a few weeks ago and is now in the state House. It will accomplish many many reforms including coordinated health care, with the focus on primary care, for Medicaid patients who now frequent hospital emergency rooms with ailments that could be treated by physicians in less-costly primary care clinics.
Kelly's bill goes farther, though, in requiring demonstration projects for types of managed care -- which accomplishes the right care at the right time -- that will certainly improve health outcomes and will likely lower costs.
We don't have wide-scale managed care in Alaska now except in the very successful tribal health organizations. Managed care, by the way, doesn't mean the kind of heath maintenance organizations common in the Lower 48, which seem mostly focused on cost-control.
A new concept, "accountable care," seeks improved health outcomes as well as lower costs, but there are other models too.
Although the demonstration projects required in the legislation are aimed at Medicaid there will likely be ripple effects of this felt through the entire Alaska health care industry.
Another objective of SB 74 is the state harnessing of its purchasing power with bulk buys of things like prescription drugs, which could reduce costs. The state controls about 20 percent of health care spending in Alaska, which is roughly estimated at $10 billion a year (university economists estimated it at $7.5 billion five years ago).
With this kind of market clout decisions made by the state have real impact and might help slow our annual increases in medical costs. We've not used the state's purchasing clout as a tool and it's time we did.
Tim Bradner is co-publisher of Bradners' Alaska Legislative Digest. He writes a regular column for Alaska Dispatch News.
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