Governor reignites Medicaid debate

WASILLA — Gov. Bill Walker waded into arguments about whether Medicaid in Alaska should be expanded this week.

SB 78 was referred to the Health and Social Servies committee in the Senate after its introduction Wednesday. Walker’s bill stipulates that the department contract for no less than 50 audits of Medicaid providers each year. It sets the qualifying line for Medicaid at 138 percent of the federal poverty line ($41,151 in annual income for a family of four, based on guidelines published in the 2014 Federal Register … Alaska and Hawaii have higher federal poverty lines than the other states). It also requires the department to “implement cost containment measures that do not eliminate program eligibility or the scope of services,” according to the bill’s text.

The measure includes several other reforms:

• The department is required to apply for a federal waiver to expand health benefits offered through the Indian Health Service and tribal facilities

• The department is directed to apply for a 50 percent federal match for home- and community-based services and increase that match to 56 percent.

• The department must participate in US Health and Human Services pilot programs.

• The department must create incentives for telemedicine.

A hearing for the bill with the Senate Health and Social Services has not yet been scheduled.

An accompanying fiscal note indicates the bill would eliminate $6.5 million from the general fund budget in 2016. The federal government would absorb $146 million in Alaskan health expenditures, according to the note. Reports by Oregon consultancy Evergreen Economics found state spending under the expansion would approach $20 million per year by about 2021. A study by the Robert Wood Johnson Foundation found the expansion would have cost $147 million over 10 years, but the decision not to expand cost the state $1.5 billion in federal funding and about $600 million in lost hospital reimbursements.

In an op-ed piece for several Sunday newspapers, Walker pointed to a $20-million reduction in his proposed budget as one aspect of his reforms outside the bill.

An expansion would maximize potential gains for Alaskans while federal reimbursement for the expansion was still 100 percent, Walker said.

“Through 2016, the federal government will pay 100 percent of the costs of those newly eligible,” he wrote. “After that, the federal share transitions to 90 percent in 2020. Some say the 10 percent match is too much. I disagree. That’s the same match we pay for federal highway and aviations dollars. If this were money for a transportation project, we’d be doing backflips. Why should Alaskans’ health and wellbeing be less important than our roads and airports?”

At the same time, the specific waivers and programs are designed to give the state optimal flexibility, Walker said.

“These waivers will allow us to save money by tailoring our program to Alaska’s particular needs and circumstances,” his op-ed piece reads in part.

The bill joins two other measures, HB 18, sponsored by several Alaska Democrats and proposing straight-up expansion (133 percent of the federal poverty level), and SB 74, introduced five days earlier by Fairbanks Republican Sen. Pete Kelly, which focuses primarily on reform to existing medical assistance through a combination of privatization studies (Pioneer Homes, the Alaska Psychiatric Institute and “select facilities of the division of juvenile justice”), the establishment of Health Savings Accounts, incentives for telemedicine, and a mandatory annual report on cost savings, as well as the establishment of managed care programs for the state, according to the text.

Expansion (or not) could have big ramifications for the Mat-Su, where the uninsured constitute 20 percent of the population, compared with 15 percent in Anchorage and 17 percent statewide, according to figures provided by the Mat-Su Health Foundation.

Expansion could bring 4,800 Valley residents under Medicaid’s aegis, Foundation figures show.

Reforming and expanding the system at the same time is feasible without being too complicated, said Foundation executive director Elizabeth Ripley.

“Our current delivery system and regulatory environment are complicated,” she said. “Medicaid Expansion gives us an opportunity to take a broader view of the whole system and see how we would redesign it.”

Reforms and expansion both should focus on better individual care better population health, and lower cost, Ripley added.

For example, the state of Washington saved $32 million simply by addressing what are known as emergency room “super-utilizers,” particularly those who suffer from mental health ailments, Ripley said. A Foundation report within the last year found a very small minority of chronic ER users disproportionately affected health care costs.

“We know from our recently published report on Mat-Su’s Behavioral Health Crisis Response System, that people are seeking care in the Emergency Department over and over again for behavioral health emergencies that could be prevented if they were better managed (and paid for) in an out-patient setting,” she said.

The Foundation was examining both Walker’s and Kelly’s proposals, Ripley said.

Officials with the Mat-Su Regional Medical Center also favor expansion, said spokesman Alan Craft.

“Our clinicians see the coverage gap fallout when they treat uninsured ER patients with symptoms that could have been avoided by regular check-ups with a primary care provider,” he said.

Expansion could bring more than $1 billion in federal revenue to Alaska, and create 4,000 new jobs, Craft added.

Some Valley legislators, like Rep. Lynn Gattis (R-Wasilla) said she had not yet reviewed Walker’s bill, and that the idea of discussing Medicaid expansion may prove more important right now than the specifics.

“Here is what the governor’s bill does for me: it starts a conversation that has to happen,” she said.

She cited widespread errors in a health care reimbursement program designed by Xerox as an example of waste pervasive in the system that left contractors unpaid for work they had performed.

In general, Gattis favored reforming the system before expanding it, but said doing both may prove possible.

“We have to fix our problems before we add more to it,” she said. “Can we do it during? I think it’s possible.”

Rep. Shelley Hughes, R-Palmer, was tagged in a Fairbanks News-Miner editorial for saying she thought the expansion could create a disincentive for self-improvement.

Hughes worried that increased eligibility could draw out not only new populations of those now eligible, but also of those already eligible who forego healthcare (known by the slang term “Woodwork Effect”). Hughes also said she worried about the availability for older folks as Medicaid rolls swelled with new enrollees.

Hughes said she briefly relied on publicly funded medicine earlier in her life, and offered a more nuanced view in a Friday interview.

“I was uninsured for nine years,” she said. “For truly vulnerable people, I am fine with a long-term safety net for those folks. If non-profits, community groups and churches want to help out, that’s fine. We have an obligation to the truly vulnerable.”

However, providing health care for healthy individuals was not a good idea, Hughes said.

“For well-bodied individuals, I am OK with a short term safety net, but not for long-term health insurance,” she said. “I had it for a period and I didn’t like it. Had my kids on WIC, used a public health nurse. It was a rough time, but I worked my way out of it. It motivated me to work.”

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.