Research & Commentary: Alaska Medicaid Expansion

Published December 29, 2014

The Alaska State Legislature opposed expanding Medicaid under the Patient Protection and Affordable Care Act, with many arguing it is an expensive endeavor that would not provide better or more affordable health care for Alaskans. Although no official proposals to expand Medicaid have been offered, Gov. Bill Walker (I) made Medicaid expansion a central part of his campaign.

According to the Alaska Policy Forum, Alaska currently spends roughly $1.5 billion per year to provide health coverage for nearly 140,000 Alaskans. Under expanded Medicaid, an additional 40,000 low-income Alaskans, including 12,000­ to 14,000 able-bodied, single adults, would receive new taxpayer-provided or -subsidized health care coverage. Legislators in Republican states such as Indiana, Tennessee, Utah, and Wyoming have attempted to address the concerns of conservative legislators by adding “free-market” components to expansion proposals like using Medicaid funds to purchase private insurance or imposing premiums or copays to give the recipients “skin in the game.”

Despite private-market components of these programs, they still represent an expansion of a failed Medicaid system, one 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 federal provision called “Maintenance of Effort.” This provision 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 any 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.

Jonathan Ingram, research director at the Foundation for Government Accountability, says Medicaid expansion in any form distorts medical markets and drives up costs: “Medicaid expansion, no matter how you want to brand it, is going to completely distort the local healthcare economy. Any expansion will critically reduce access to limited care doctors. Expansion will also drive up the cost of private healthcare insurance premiums for the non-Medicaid population, as those healthcare providers begin to compensate for the low-paying Medicaid population.

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, 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 reforms, 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 articles examine state Medicaid reform from several perspectives.

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.

Existing Problems Need Fixing before Medicaid Expansion Moves Forward, State Says
Laurel Andrews of the Alaska Dispatch News notes Alaska’s new governor, Bill Walker (I), has made expanding Medicaid a top priority of his administration, and she discusses how this may be difficult 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 have repercussions beyond state budgets and the health care industry and notes better options exist: “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.”

Beware of Funding Promises Made by Medicaid Expansion Proponents
Brandon Hershey of the Idaho Freedom Foundation questions the ability of the federal government to cover the costs of Medicaid expansion: “Expanding Medicaid in Idaho relies on federal funds and the promise that the federal government will pay 90 percent of the costs. Really? With a debt of more than $17 trillion? The federal government rarely follows through with funding promises to the states. Medicaid expansion will bring the state’s hospitals a pile of reimbursements, but at what cost to state’s taxpayers and future generations?”

Idaho’s Emergency Room Costs Could Climb Under Medicaid Expansion
Dustin Hurst of Idaho Reporter writes about the increased costs created when Medicaid expands. Hurst focuses on the increases in emergency room costs. “Idaho’s emergency room costs for the state’s Medicaid population grew last year, though the increase is nothing compared to what could happen if the state swells the health care program. A records request delivered to reveals the state spent $53.8 million on emergency room services for Medicaid recipients in fiscal year 2014, which ended June 30. That’s up from $53.6 million just a year before,” Hurst wrote.

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 offer better care at a lower cost to taxpayers.

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

The Private Option: Medicaid Expansion by Another Name
Nicole Kaeding of Americans for Prosperity forecasts the effects of the decision to expand Medicaid in Arkansas.

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 fit coverage expansion.

Research & Commentary: Utah Medicaid Expansion Update
Gov. Gary Herbert’s (R) “Healthy Utah” Medicaid expansion plan awaits approval by the Obama administration, but it remains unpopular with many Utahans. The plan would provide assistance to citizens making less than $15,500 per year in order to help them pay for health insurance in private markets, and it includes the state’s recommendation that able-bodied applicants who receive insurance subsidies be required to work. In this Research & Commentary, Matthew Glans discusses the Healthy Utah plan, where it currently stands, and why the program is not the best option for the people of Utah.


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

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Logan Pike, Heartland’s state government relations manager, at [email protected] or 312/377-4000.