Medicaid, Health Care Reform, Alaska – what is the impact?

When the Supreme Court upheld health care reform legislation last month they allowed a caveat for Medicaid.  This departure from the proposed legislation said that the federal government cannot withhold Medicaid funds from states that do not expand their program. 

States are now faced with a tough decision.  Either they expand their program by increasing the income threshold up to 133 percent and receive additional federal funding, or they keep their program the same and, while they won’t lose their current funding, they risk not receiving future money.  So far, six governors have elected not to expand; five governors and the District of Columbia have already implemented the expansion.  Alaska hasn’t decided, though a recent report indicated that Governor Parnell is “leery” and that a decision is “likely weeks if not months away.”

This is a difficult issue.  Most Alaskan’s are concerned about access to health care services, the cost of health care and the future of the Alaskan economy. There is a lot the Governor has to consider.  For example:

• Medicaid payments are increasing by $100 million per year.
• A state report, released in January 2011, indicated an expansion would cover an additional 32,000 people with a price tag of approximately $220 million.
• The Congressional Budget Office (CBO) estimates the additional cost to the states represents a 2.8 percent increase in what they would have spent on Medicaid in the absence of health reform.
• However, this amount does not reflect the savings that state and local governments will realize in other health care spending for the uninsured, which is estimated by The Urban Institute to total between $26 and $52 billion, or the uncompensated care, which is estimated by The Lewin Group to total $101 billion.

The Governor is doing what every good business does before expanding - studying the financial implications so Alaskans know what the impact will be. What we can never see in the numbers is the heart of the matter and how it affects people’s lives.  What do you think the Governor should do?  Tell us you opinion in the comments below.

Mike Humphrey is a Sr. Advisor at The Wilson Agency, a full service strategic employee benefits consulting firm, helping Alaskan businesses to develop an organized approach to complex employee initiatives.