Research & Commentary: Alaska Medicaid Expansion Update

Published May 13, 2015

Alaska Gov. Bill Walker (I) made Medicaid expansion a central issue even though the Alaska State Legislature has opposed expanding Medicaid under the Patient Protection and Affordable Care Act (ACA). Many have argued this is an expensive endeavor that would not provide better or more affordable health care for Alaskans. 

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 in the program, 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 -subsidized health care coverage. Walker’s administration expects about 20,000 eligible Alaskans to enroll within one year of the expansion. 

Alaska’s Medicaid program is in dire need of reform. 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 the bill would be a starting point for reform, but the legislation now being considered does little to reform the program. The bill would rely on federal waivers, a path the Alaska Policy Institute notes has failed in many states

The proposed reforms featured in the bill are minor. Alaska Department of Health and Social Services Commissioner Valerie Davidson told Alaska Public Media the bill would promote telemedicine to bring costs down and begin the process of implementing a provider tax of up to 6 percent on medical services to create revenue for the state. This tax, which would be placed on top of existing business taxes, would create an unnecessary burden on an already beleaguered state health care market. The provider tax would require legislative approval. 

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 under 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. 

Laurel Andrews of the Alaska Dispatch News notes Alaska already faces serious problems with Medicaid spending, payments, and eligibility that need to be addressed before expansion is possible. The state has been unable to keep up with new applicants in recent years, and a new Medicaid payment system implemented in 2013 is plagued by glitches, causing delayed payments to health care providers. 

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. 

Without significant reform, Medicaid will remain fiscally unsustainable. Alaska should avoid expanding a flawed model that is costly, delivers subpar health care, and shifts more power to the federal government. 

The following documents examine state Medicaid reform.

Answer These Questions Before Alaska Expands Medicaid 
The Alaska Policy Forum outlines a list of questions from the House Finance Committee to the Department of Health & Social Services that should be answered before Alaska even thinks about expanding Medicaid. 

Why Medicaid Expansion is Wrong for Alaska
Jonathan Ingram of the Foundation for Government Accountability argues the wisest course for Alaska policymakers is to reject Medicaid expansion and instead refocus efforts on fixing the current program. Ingram outlines eight major reasons why lawmakers should avoid expansion. 

Medicaid Expansion Hurts Medicare Seniors and Tricare Families 
The Alaska Policy Forum discusses Medicaid expansion and the very serious adverse impact it will have on Medicare recipients and veterans and their families enrolled in Tricare, the HMO for military retirees and active-duty families. 

Existing Problems Need Fixing before Medicaid Expansion Moves Forward, State Says
Laurel Andrews of the Alaska Dispatch News notes Gov. Bill Walker (I) has made expanding Medicaid a top priority of his administration, and she discusses why this may be problematic given the major problems plaguing the existing system. 

Research & Commentary: States Should Innovate, Not Expand Medicaid 
Matthew Glans of The Heartland Institute discusses how expanding Medicaid can cause problems that extend beyond state budgets and the health care industry, and he notes better options are available: “It is important to remember government spending creates little or no income or economic growth; it is merely the redistribution of tax dollars taken from the pockets of taxpayers.” 

A Cure for What Ails Us 
Justin Owen, Trey Moore, and Christina Weber of the Beacon Center argue the U.S. health care system is broken and politicians in Washington, DC have consistently failed to deliver on promises to repair it. Health care costs continue to grow while access to care shrinks. Many industry leaders say the Patient Protection and Affordable Care Act amounts to reform in name only. 

Policy Tip Sheet: Medicaid Expansion  
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways that would offer better care at lower costs to taxpayers. 

Healthy PA Can’t Cure Obamacare Disease
Elizabeth Stelle and Nathan Benefield of the Commonwealth Foundation argue the Healthy PA proposal falls short of providing meaningful reform in exchange for putting more people and more money into Obamacare’s house of cards. 

The Empty Promises of Arkansas’ Medicaid Private Option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Private Option program for Medicaid. It rebuts, point-by-point, direct quotes from supporters, including media interviews, floor speeches, and social media posts. 

A Medicaid Cure: Florida’s Medicaid Reform Pilot
The Foundation for Government Accountability explains the success of its Medicaid Cure program in Florida: “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.” 

Why States Should Not Expand Medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to better fit coverage expansion using states’ needs, resources, and budgets.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at 

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