Alaska Gov. Bill Walker’s (I) efforts to use executive power unilaterally to expand Medicaid in his state deserve a strong response from the State Legislature, not timid deference to the courts— an equal, not superior, branch of government. Alaska’s Medicaid program is in dire need of reform, not expansion. It has grown at an unsustainable rate, increasing by 150 percent over the past decade. State costs have increased by 300 percent since 2000.
When Walker first introduced his expansion plan, he claimed it would be a starting point for reform, but his current proposal does little to reform the program. Like many of the expansion plans being considered in other states, Walker’s proposal relies on federal waivers that have failed elsewhere.
Medicaid expansion, at its core, builds on a failing model. It’s a system where the federal government dictates multiple aspects of the insurance plan and the beneficial aspects of real market competition are lost. Once expansion occurs, it will be extremely difficult to roll back. Federal law blocks states from backing out of the expansion through a provision called “Maintenance of Effort,” which requires states to fund a program at the initially agreed-upon level regardless of the amount of federal funding received.
Contrary to expansion supporters’ depiction of new federal funds as “free money,” Medicaid expansion is expensive, creating new costs the federal government may not always cover and leaving state taxpayers on the hook for new liabilities. Medicaid is currently the largest category of state spending. According to the National Association of State Budget Officers, Medicaid consumes 23.6 percent of state government expenditures.
According to the Alaska Policy Forum, Alaska currently spends approximately $1.5 billion per year to provide health coverage for nearly 140,000 Alaskans. Walker’s plan for expanded Medicaid would include Alaskans with incomes up to 138 percent of the federal poverty level, which amounts to about $20,000 a year for a single adult. An additional 40,000 Alaskans, including 12,000 to 14,000 able-bodied single adults, would receive new taxpayer-provided or taxpayer-subsidized health care coverage. Walker’s administration expects about 20,000 eligible Alaskans to enroll within one year of the expansion.
Alaska faces serious problems with Medicaid spending, payments, and eligibility that need to be addressed before expansion is fiscally possible. The state has been unable to keep up with the number of new applicants in recent years, and the new Medicaid payment system implemented in 2013 has been plagued by glitches, causing delayed payments to health care providers, which reduces Medicaid clients’ access to health care.
Without significant reform, Medicaid will remain fiscally unsustainable. Alaska should not expand a flawed model that is costly, delivers subpar health care, and shifts additional power to the federal government.
Although any bill passed to stop expansion would likely meet a Walker veto, Alaska legislators should remember they hold the purse strings. The two recent Supreme Court rulings in favor of the Affordable Care Act prove critics of expanded Medicaid cannot and should not rely on the courts to save them from Walker’s unauthorized expansion of the program. They should instead reform Medicaid now and dump Walker’s expansion plan where it belongs: the medical waste bin.
Matthew Glans ([email protected]) is a senior policy analyst for The Heartland Institute.