Alaska officials cautious on Court ruling

Gov. Sean Parnell and state Health and Social Services Commissioner Bill Streur are cautious in their assessment of effects on Alaska of the U.S. Supreme Court’s 5-4 ruling on the federal health insurance reform act.

“The federal health care act will be implemented. The Supreme Court said so. But we do not intend to see Alaska saddled with costs,” Parnell said in a press briefing June 28, the same day the court’s decision was announced.

The court upheld a basic tenent of the federal Patient Protection and Affordable Care Act, a requirement that individuals purchase health insurance, but struck down a section requiring states to expand Medicaid coverage to cover more lower-income people or suffer penalties.

A number of states are saying that, given the choice, they will resist expanding Medicaid rolls because of added expense to state budgets that are already hard-pressed.

Parnell said he is still undecided. Alaska can afford the expansion, for now, but the governor and Streur are focused on the longer term, with continuing declines in oil production and state oil revenues.

Streur said that if the state decides to expand coverage, adding an estimated 36,000 lower-income Alaskans to state Medicaid rolls in 2014, the federal government would pick up most of the cost. However, administration of the program, the enrolling of new people and the processing of the claims, would be paid for under the existing Medicaid program of which the state pays 50 percent.

It will probably be a number of months before a decision is made on expanding Medicaid, Parnell and Streur said.

Even if the state pays only a small part of the cost, “this is still real money,” Streur said.

Parnell said he is also concerned about the federal government continuing to pay the larger shares of the cost of expanded Medicaid coverage, given the government’s longer-term financial situation. Alaska has already seen the federal government reduce funding from 60 percent of the program costs to 50 percent, Parnell said.

Another decision that will have to be made is whether to implement a state version of a health insurance exchange in 2014. The Affordable Care Act requires the creation of exchanges, which will be web-based systems intended to help people find more affordable insurance, but gives states the option of creating and running their own exchange instead of having an exhange created by the federal government.

Parnell said the state has contracted with a consulting firm to study the creation of a state exchange that would be fine-tuned to Alaskan conditions but said the consultant’s report is being finalized and that he hadn’t seen it. The governor also said it is possible the state may decide not to create the exchange, and just let the federal government do it.

One of Streur’s concerns, expressed previously, is the health condition of people who would be added to Medicaid rolls in 2014. These are people in lower-income ranges who are now just above the level at which they would be covered or are single males, who are mostly not now eligible for Medicaid.

Many of these people may be coming into the program with untended health issues, which could lead, to a short-term spike in utilization and costs

Reactions from Alaska’s political leaders generally took on a partisan tone, with Parnell and Alaska’s U.S. Sen. Lisa Murkowski, both Republicans, focusing on the individual health insurance mandate and its noncompliance penalty being interpreted by the Supreme Court as a tax.

Alaska’s Democratic U.S. Senator Mark Begich pointed out the benefits of the act, such as the ban on denials of insurance for pre-existing conditions.

For their part, Parnell and Murkowski agreed the law has some good points, including the extension of insurance coverage.

“There are benefits to individuals who have not had health coverage before,” the governor said. “But this is also about who pays the benefit and whether it can be sustained. If there are less costly ways to do this, we will explore them.”

Murkowski said she will work with other Republican senators in efforts to repeal the federal health care law or change parts of it. Parnell said he would like for the law to be altered to give states more flexibility on the administration of Medicaid, so that lower-cost options can be explored.

States are already given some latitude to pick specific services that will be paid for by Medicaid as well as the reimbursement rates for health care providers. Because it is a wealthy state Alaska has always had a relatively generous suite of services paid for by Medicaid in comparison with other states, and also reimbursed health providers at rates higher than the reimbursement rates of most other states.

Streur has said previously that Alaska’s higher rates of reimbursement for Medicaid helps ensure that Medicaid patients get care, while in many other states Medicaid patients have difficulty getting care because of the low reimbursements.

Insurance companies generally support the new law, but express reservations. “Federal health care reform will significantly expand access to coverage in 2014. We believe that’s a good thing. Yet, the law unfortunately does little to address the critical issue of rising medical costs, which remains the largest driver of the rising cost of health care coverage, Premera Blue Cross, a major provider of health insurance in Alaska, said in a statement.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.