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Vote for governor likely to decide fate of Medicaid expansion in Alaska

  • Author: Tegan Hanlon
  • Updated: May 31, 2016
  • Published October 17, 2014

The future of the health care program that covers some of Alaska's poorest residents hinges largely on who voters elect governor in November.

Republican Gov. Sean Parnell refused to extend Medicaid last year under the Affordable Care Act, what he called Obamacare. In a recent interview with Alaska Dispatch News, Parnell said expansion is "overly costly" and would put "an even greater burden on an already unsustainable system," though he said he is open to other means of Medicaid reform.

Parnell's independent challenger, Bill Walker, said that if elected governor he would immediately accept Medicaid expansion, extending health care coverage to Alaskans who earn up to 138 percent of the federal poverty level, or about $19,800 for a single adult. But Walker, an attorney and former mayor of Valdez, said that once federal funding for the expansion dips below 100 percent -- it is set to decrease to 95 percent in 2017 -- the state will have to re-examine its decision.

"If it helps Alaskans, then we should do it," Walker said in an interview Wednesday with ADN.

Coverage gap estimates vary

The Medicaid decision would affect from 10,000 to 41,000 uninsured Alaskans, depending on who frames the statistic.

A coverage gap didn't exist under the original Affordable Care Act. But in a 2012 decision, the Supreme Court struck down mandatory Medicaid expansion, leaving the decision up to the states. So far, 27 states and Washington, D.C. have opted for expansion.

Without expansion, Alaskans only qualify for discounts on their health insurance premiums if they earn between one and four times the federal poverty level -- about $14,400 to $57,400 for a single adult. Some who make less must pay full price if they don't qualify for Medicaid. Low-income Alaskans currently covered by Medicaid include parents, children, pregnant women and individuals in foster care up to age 26 -- leaving out childless adults.

Parnell said there are between 10,000 and 15,000 Alaskans in that health insurance coverage gap, citing a study released in June by the Alaska Department of Health and Social Services.

"(The report) said under Medicaid, as far as expansion, much of the dollars would be going to already-existing medical services -- just compensating providers more than what they're already getting for the same services," Parnell said.

The Alaska Native Tribal Health Consortium commissioned two studies on Medicaid expansion in 2013. Both found that about 41,000 Alaskans would benefit. That number includes Alaska Natives, American Indians and veterans who have access to federally funded health care through Indian Health Services and the U.S. Department of Veterans Affairs.

But Andy Teuber, president and chair of ANTHC, said IHS covers less than 50 percent of health care bills and billing Medicaid helps cover the unpaid costs. ANTHC was one of multiple health, advocacy and business organizations that pressured Parnell to accept Medicaid expansion in 2013.

Parnell said the inadequate IHS funding represents a failure of the federal government that "breached their duty, breached their trust with Indian Health Services."

Walker said he "doesn't get tangled up in arguing about numbers." If expanded Medicaid would benefit 10,000 or 41,000 Alaskans, it doesn't matter, he said.

When asked if Alaska Natives and American Indians should be included in the coverage gap, he said yes, because Medicaid money would free up IHS dollars for other services.

"They should be funded, but to me that's not even on the decision tree," Walker said. "You know, my goodness, so you say no to 10,000 Alaskans -- I'll give (Parnell) the benefit of the doubt on those numbers. That still cannot be justified in my mind."

In fiscal year 2013, there were 151,797 Alaskans enrolled in Medicaid. The state paid about $606 million for the program while the federal government chipped in about $836 million, according to data from the state Department of Health and Social Services.

Feds fund at least 90 percent indefinitely

Under the Affordable Care Act, the federal government would pay 100 percent of costs to expand Medicaid for three years, starting in 2014. By 2020, the federal portion would drop to 90 percent and remain there in the years following.

ANTHC has said the federal government would have paid $1.1 billion for Medicaid expansion in Alaska from 2014 to 2020. The state would pay $90.7 million but would see at least $67.3 million in savings, it said. A state-commissioned study by the Lewin Group put the cost for Alaska at more than $200 million over the same time frame.

Parnell described funding for Medicaid expansion as an inefficient use of taxpayer dollars. "There's no reason to put our kids and grandkids into deeper debt, paying for care that already exists," he said.

The population in the coverage gap, he said, already has access to free primary care at community health and public health centers and emergency care at hospitals, but he said there is a "great gap of chronic care that is hard to find when you're a member of the non-eligible population."

After he rejected Medicaid expansion, Parnell created the Medicaid Reform Advisory Group and tasked it with making the existing Medicaid system more sustainable and addressing the population that falls into the gap in health care service, he said.

Nancy Merriman, executive director of the Alaska Primary Care Association, said Alaska's 28 federally qualified health centers charge patients a sliding-scale fee based on their incomes. Merriman said patients must pay a minimum of $20 to $30 for services. Of the 100,000 or so patients seen at the health centers in 2013, 37 percent were uninsured, she said.

Merriman said the health centers receive annual grants from the federal government to fund health care costs, as well as project-specific grants from the state, but the grants don't fully cover the bills, she said.

"Part of (the cost) gets covered by the community health center grants and the other is the burden of the health center," she said.

The Alaska Primary Care Association passed a resolution in February 2013 in support of Medicaid expansion.

Walker said Alaska already pays the federal taxes that fund Medicaid expansion throughout the country. Despite a federal deficit, he said, the state continues to accept federal dollars for other projects.

"My concern is that we accept matching funds from the federal government all the time to build a road or to do this, to do that. Why is health care all of a sudden something we can't accept even though it's at 100 percent?" he said. "It's sort of interesting priorities that we have."

Walker called Parnell's decision "pure partisan politics that has caused people to not have health coverage." He said Medicaid expansion would give Alaskans access to preventive care so they wouldn't have to go right to the hospital emergency room, driving up uncompensated care costs.

"The (Parnell) administration has turned every dial possible to keep the cost of health care as high as possible to make a political point about the Affordable Care Act," Walker said. "Would I have voted for the Affordable Care Act? No, I would not have. But that doesn't make a difference. As governor of Alaska, I don't get to go in and say, well, I didn't personally believe in this so therefore thousands of Alaskans won't have health coverage."

Susan Johnson, Alaska's regional director for the U.S. Department of Health and Human Services, said that in Washington and Oregon, states that have expanded Medicaid, hospitals have reported saving millions of dollars in uncompensated care costs, and the increase in dollars paid for Medicaid patients has allowed some facilities to expand staff.

Johnson highlighted the importance of expansion's impact on the health of the formerly uninsured. "I think focusing on the lives right now is a good place to start," she said.

Bill Streur, the commissioner of the Alaska Department of Health and Social Services, said of the Medicare expansion: "Bill Walker keeps talking about how its all free, but it's not."

Streur said Alaska would have to spend about $5 million in general funds during expansion's first year to adapt infrastructure, including making software changes and adding enrollment and processing clerks for Medicaid applications.

To expand Medicaid, the governor would need approval from the Legislature for adjustments to the state budget, Streur said.

What's next

The Medicaid Reform Advisory Group is scheduled to release recommendations for the Medicaid program on Nov. 15, the same day the health insurance marketplace opens for its second enrollment period and 11 days after the midterm election.

Parnell said the state is discussing alternatives to Medicaid expansion including purchasing insurance for the Alaskans in the coverage gap. It is still undetermined what mix of state and federal dollars would be used or what that cost would be, Parnell said.

"Another alternative is to attach this pool of people and the services that they need to another insurance pool. Then there's ... creating a new public program," Parnell said. "So there's a range of options, but I'm not ready to say we're going to land on one at this point before we do a complete analysis."

Teuber with ANTHC said he has waited since November for Parnell to announce a plan for Medicaid.

"(Parnell) had promised a better plan for Alaska," Teuber said. "It's a year later now and a plan has yet to be announced and we're still waiting and while we're waiting on Medicaid expansion, there are 41,000 Alaskans that are going without health care."

Johnson said there is no deadline for states to accept Medicaid expansion if they choose to do so.

"(Alaska) can do expansion now or later but the percent of federal dollars decreases after 2016 and goes down to 90 in 2020," she wrote in an email.

"As we said repeatedly to Alaska, it starts with a conversation," she said.

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