Health Department Says Medicaid Expansion Can Save State Money

Health Commissioner Valerie Davidson and Alaska Governor Bill Walker announce the state's plan for Medicaid expansion and reform. (Photo by Annie Feidt, APRN - Anchorage)
Health Commissioner Valerie Davidson and Alaska Governor Bill Walker announce the state’s plan for Medicaid expansion and reform. (Photo by Annie Feidt, APRN – Anchorage)

Health Commissioner Valerie Davidson unveiled two new reports Friday at a press conference in Anchorage she hopes will help make the case for Medicaid expansion.

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They show Alaska can actually save money by expanding the program, even as the federal match drops below 100 percent. But whether Republican state lawmakers skeptical of expansion will agree with the analysis is an open question.

Health Commissioner Valerie Davidson never misses a chance to promote Medicaid expansion. Even when that chance comes in the form of a cell phone ringer that someone in the press conference crowd forgot to silence:

“Maybe it’s somebody calling saying they’re ready to sign up! Which would be great. We’ll be ready this summer,” she said.

A lot has to happen between now and this summer – July specifically – when Davidson hopes to role out expansion. The health department is devoting extra resources to fix big problems with the systems that enroll new Medicaid members and pay providers for services. The biggest obstacle, though, will be Republican state lawmakers, who have to approve the receipt of federal Medicaid expansion funds in the budget. Many say the state can’t afford to expand the Medicaid program, which is already one of the biggest drivers of the state budget. But Davidson says the new analysis shows Medicaid expansion won’t cost the state, even when the federal match drops to 90 percent in 2020.

“We’ve… identified some pretty significant savings and Alaska actually saves general fund dollars by covering this new population,” Davidson said.

State prisoners, for example, would be eligible for Medicaid expansion, saving the state $4-7 million a year, according to the report. The health department would also be able to redirect millions of dollars in grant money that is currently used to help the population who would be eligible for expansion. Davidson also wants expansion to spur the process of reducing the cost of the entire Medicaid program. She thinks the cost savings combined with reform will convince lawmakers to approve it:

“Quite frankly I think there are some legislators who aren’t necessarily so hot on expansion but they’re interested in reform and if the two go hand in hand and we can show that there are savings to the state at a time when we are looking for those savings opportunities in our general fund, then I believe they’ll come on board,” Davidson said.

Republican legislators declined to comment until they had more time to review the reports. Earlier Friday, Senate President Kevin Meyer, of Anchorage, said he was open to Medicaid expansion if it didn’t cost the state any money.

In the coming weeks, they will be hearing from a long list of organizations that support expansion, including the Alaska Mental Health Trust Authority. The organization is pledging $1.6 million for the first year of expansion to cover the state’s share of administrative costs. Jeff Jesse is chief executive office with the trust, which serves Alaskans with substance abuse problems, mental illness and cognitive disabilities. He says it makes sense for the trust to help out because expansion will benefit Alaskans the group serves.

“The Trustees certainly had to think about the cost issue, but the purpose of the Mental Health Trust is to be a catalyst for change and assist in enhancing our service system for our beneficiaries, so this is a very appropriate project for the trust,” Jesse said.

The Trust is also giving $300,000 to the health department to pay national experts to study successful Medicaid cost reform efforts in other states.

About 40,000, mostly childless adults, would be eligible for Medicaid expansion. But in the first full year of implementation, according to the new report, only half of those who are eligible would sign up.

This story is part of a reporting partnership between APRN, NPR and Kaiser Health News.