Alaska advocacy groups push back on Dunleavy’s interest in block grant funding for Medicaid

Some Alaska advocacy groups are pushing back against Gov. Mike Dunleavy’s interest in moving toward block grant funding for the state’s Medicaid program.

Block grant funding for Medicaid means a specific amount of federal money would be allocated to the program, rather than the federal government paying for a percentage of the program like it does now.

In a March 1 letter to President Donald Trump, Dunleavy said Centers for Medicare and Medicaid Services administrator Seema Verma “has urged us” to be the first state to receive Medicaid dollars as a block grant.

“We are eager to do this,” Dunleavy said in the letter, “but your support of her on this ‘first’ will keep the proper focus and speed on the application.”

The way Medicaid funding currently works is that the federal government pays for an open-ended percentage of the program, and pays for a higher percentage in poorer states. In return for the money being open-ended, “states must cover certain services and people — for instance, children, pregnant women who meet income criteria and parents with dependent children,” according to a Kaiser Health News article from 2017.

“Under a block grant, states would have more freedom to decide who qualifies, and for what services,” that article said. Republicans have multiple times proposed block grant funding as a way to manage Medicaid.

There is no formal proposal or request from the governor’s office to shift to block grant funding, said Dunleavy spokesman Matt Shuckerow. Right now, these are “just discussions,” he said, and block grants are just one part of the discussions.

“We as a state are looking to gain as much flexibility as possible in how we effectively spend Medicaid dollars," Shuckerow said. "We recognize we have a certain fiscal challenge here, and the governor has built a budget based on expenditures and revenues. Part of that is making changes.”

The federal government pays for about 70 percent of the cost of Alaska’s Medicaid program.

The Trump administration has shown interest in allowing states to shift to block grant funding for Medicaid, The Washington Post reported last month.

While conservatives say block grants are more efficient, “others say that would mean less funding for the program — eventually translating into greater challenges in getting care for low-income people,” according to Kaiser Health News.

Because there are few details, it’s difficult to comment specifically on how block grant Medicaid funding might affect health care here, said Alaska State Hospital and Nursing Home Association CEO Becky Hultberg. But her group is concerned because of what its members have seen in past block grant proposals.

“Block grants with a hard spending cap are a way to stop paying for the current health care delivery model,” she said. “If the state hit the funding cap, it would have to provide supplemental state funding or cut back services. It just shifts risk to the state.”

Soon after Dunleavy’s administration took office, “early overtures from our federal partners” included ideas such as block grants, Alaska Department of Health and Social Services Commissioner Adam Crum said in a statement. Then Dunleavy mentioned it in his letter to Trump, sent after the two met during Trump’s flight refueling stop in Anchorage in February.

“This opened the door for us to have ongoing conversations with CMS about possible ideas and flexibility we can pursue as a state,” Crum’s statement said.

Representatives from several other advocacy groups also voiced opposition to the possible change.

“Block grants are fiscal handcuffs for states,” said Trevor Storrs, president of nonprofit group Alaska Children’s Trust, in a written statement. “It dangles the promise of flexibility in exchange for cutting federal funds.”

That statement was one of several messages included in a news release this week from health care group Protect Our Care Alaska.

“Block grants would mean that we would lose federal protections that guarantee certain people get coverage and guarantees people get particular services,” Mark Regan, legal director for the Disability Law Center of Alaska, said in a statement.

Annie Zak

Annie Zak was a business reporter for the ADN between 2015 and 2019.