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As Congress eyes Medicaid cuts, rising costs for elder care are on Alaska’s horizon

  • Author: Erica Martinson
  • Updated: December 2, 2017
  • Published June 21, 2017

WASHINGTON — The number of Alaska's senior citizens is rising at a steady pace, which could mean significantly higher Medicaid costs for the state's aging population.

In just over a decade, the eldest in the massive baby boomer generation will turn 85 years old, an age beset with the highest of health care costs throughout the United States. The number of Alaskans over the age of 85 is expected to rise 135 percent by 2030 — the biggest boost in the country, according to an analysis by the Kaiser Family Foundation.

This impending cost increase comes as Congress mulls legislation to alter the Affordable Care Act and ratchet down the rising federal spending on Medicaid, potentially by capping the amount of funding that states receive from the federal government.

There is also consideration of tightening the Medicaid cap on home and community-based service funding, which could affect Alaska more than any other state, according to Steve Kaye, a professor at the University of California San Francisco Institute for Health and Aging.

Medicaid isn't the central health care mechanism for seniors, but it does handle some of the most expensive aspects of health care. Just about everyone over the age of 65 is eligible for Medicare, which pays for most medical services. In Alaska, where 185,000 people were on Medicaid last month, just over 10,000 — 5.4 percent — were over the age of 65, according to Jon Sherwood, the Alaska Department of Health and Social Services' deputy commissioner in charge of Medicaid.

But Medicaid comes in for low-income people to cover what Medicare doesn't pay for — vision, dental care and long-term care.

It's the long-term care that really digs into the coffers: During the state's 2016 fiscal year, Medicaid paid for 777 people in nursing homes at a cost of $119 million. More than 6,000 adults — including but not limited to seniors — received in-home services costing more than $140 million, Sherwood said.

Currently, long-term care support — for those who are elderly and those who aren't — totals about one-third of Alaska's Medicaid budget.

"So a peak that puts this kind of pressure on nursing homes and our long-term service and support for seniors is definitely going to have the potential to have a significant impact on the total Medicaid budget," Sherwood said.

The "growing elderly population is a risk factor for Medicaid in general," said Robin Rudowitz, who works on the Medicaid research program at the Kaiser Family Foundation.

Few people who make it to the point of needing nursing home care can afford to pay for it. In fiscal year 2016, the average per-person cost for nursing home care in Alaska was $153,000.

In fiscal year 2015, the state spent 63 percent of its long-term care dollars on home and community-based services, as opposed to nursing home care, according to the Kaiser Family Foundation.

But more expensive nursing home care could rise with a much older population.

Alaska, anticipating the growth in elderly populations, has sought ways to lower those costs by using in-home care. The average cost last year for an adult needing nursing home level of care, but receiving it at home, was about $33,000, according to Sherwood.

That includes home help with activities like feeding, bathing, dressing, shopping and laundry.

"So as folks get older, they're more likely to need nursing home or home-community-based waivers or personal care services," Sherwood said.

"It's inevitable that it's going to put upward pressure on our costs," Sherwood said of Alaska's growing elderly population. But it's unclear whether the state will be able to constrain costs any more than it already has, he said.

There are alternative, private sources of long-term care insurance, but they have historically been costly and scarce. And people headed toward octogenarian status in the next decade would have to have purchased those plans 10 or 20 years earlier.

Given the changing demographics, if Congress chooses to tighten available funding for Medicaid, the state could have to choose where to cut its costs, choosing between the elderly and disabled and those who can't otherwise afford insurance.

Alaska is one of 32 states that expanded Medicaid under the Affordable Care Act, to include families that make wages 138 percent of the federal poverty level. The federal poverty level is $15,060 for an individual in Alaska and increases with each additional member of a family.

Alaska has added 33,945 individuals to Medicaid through expansion. The state also faces other risk factors for increased Medicaid costs — high unemployment, high health spending per capita, and the high costs of employer-sponsored insurance premiums.

Correction: This story previously misstated the number of Alaskans added to Medicaid through the expansion. There are 33,945 new Medicaid consumers, not 14,400. 

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