Why Medicaid Expansion is Wrong for Alaska

EXECUTIVE SUMMARY

In its June 2012 decision to uphold the federal Patient Protection and Affordable Care Act (PPACA), the U.S. Supreme Court also held that states were not required to implement an expansion of Medicaid, which the law initially mandated. This leaves Alaska policymakers with a choice; accept federal funding to expand Alaska Medicaid to cover able-bodied, working-age adults with no children or reject the optional Medicaid expansion called for in the PPACA. The wisest course is for Alaska to reject the Medicaid expansion for the following eight reasons.

1. Able-bodied childless adults have never been—and were never intended to be—eligible for taxpayer-funded Medicaid.
Medicaid was created to be a health care safety net for the most vulnerable: the elderly, individuals who are blind or disabled, and low-income families. A recent poll found that 77 percent of Americans oppose providing Medicaid for working-age adults without kids.

2. Alaska lawmakers have no reliable cost estimates.
A series of projections have been released predicting the cost of expanding Alaska Medicaid, but modest differences in enrollment assumptions and costs to provide care for the newly-eligible populations have resulted in a wide-range of estimates. Because of the lack of agreement among these projections, no reliable estimate of the true cost of Medicaid expansion exists.

3. Medicaid costs are already growing rapidly and expansion would jeopardize other state priorities.
Between 2000 and 2011, Alaska’s Medicaid welfare spending grew from $481 million to more than $1.3 billion. Even without expanding Medicaid, costs for the program are expected to grow to $2.5 billion by 2020.

4. Medicaid is already failing Alaska’s most vulnerable patients.
Medicaid patients already face a declining number of doctors who are accepting new Medicaid patients, primary care doctor shortages in 25 of Alaska’s 35 boroughs and census areas, poor access to specialists and worse health outcomes. Dumping tens of thousands more people into the program will make these problems worse for truly vulnerable Alaska Medicaid patients.

5. Expanding Medicaid is unlikely to reduce hospitals’ uncompensated charity care.
Although supporters of the PPACA’s optional Medicaid expansion promise a reduction in uncompensated charity care, actual experiences of other states that previously expanded Medicaid confirm expansion has little impact, and those promises are unlikely to be kept.

6. Medicaid expansion crowds out private health coverage.
PPACA proponents promise a reduction in the number of Alaskans without health coverage if policymakers expand Medicaid. But other states saw a huge number of individuals drop their private insurance to enroll in Medicaid after previous expansions, while the rate of uninsured residents was essentially unchanged.

7. The federal government is unlikely to keep its funding promises to Alaska.
PPACA promises to fund 100 percent of Alaska’s Medicaid expansion costs for three years, and 90 percent thereafter, indefinitely. With the federal debt already standing at more than $17 trillion, and expected to grow to more than $26 trillion in the next decade, and a poor record of keep past funding promises to the states, it is highly unlikely Washington will be able to keep its funding promises to Alaska, and probable that expansion costs will be passed down to the states.

8. It is unlikely Alaska will ever be able to scale back the size of its Medicaid program if it decides to expand.
Expanding Medicaid to able-bodied childless adults may turn this group of people into a “mandatory population” for Alaska, and make it difficult, if not impossible, to discontinue providing taxpayer-funded Medicaid to those childless adults unless policymakers exit the Medicaid program entirely.

PPACA supporters want Alaska policymakers to overload the state’s broken Medicaid system with tens of thousands of able-bodied, working-age adults with no kids, but doing so poses too great a risk to the most vulnerable patients Medicaid was created to protect. A more responsible approach is for Alaska to reject Medicaid expansion, and instead refocus their efforts on fixing the current program so that it works for patients and taxpayers.

INTRODUCTION

Under the PPACA, Alaska policymakers may choose to expand Medicaid eligibility to cover all individuals earning up to 138 percent of the federal poverty level (FPL). Although Alaska is permitted to expand Medicaid eligibility in this way, the U.S. Supreme Court ruled in June 2012 that the state is under no obligation to do so and no deadline exists to express interest.

In February, Governor Sean Parnell announced his opposition to expand Medicaid eligibility under the PPACA. Citing concerns over the federal government’s ability to uphold its financial commitment to Alaska should the state expand Medicaid, Gov. Parnell committed to further studying the issue, but concluded that expanding Medicaid was not in the best interest of Alaska. Although Representative Andy Josephson (D-Anchorage) introduced a resolution urging the governor to expand Medicaid eligibility, the resolution never made it out of committee. Gov. Parnell’s decision whether or not to ask the legislators to support Medicaid expansion is expected to accompany his 2015 budget proposal in mid-December.

The wisest course for Alaska policymakers is to reject Medicaid expansion and instead refocus their efforts on fixing the current program. At the very least, policymakers should delay any decision until there is a clear understanding of how it will impact patients and taxpayers. There are at least eight major reasons why lawmakers should take this course:

1. Able-bodied childless adults have never been—and were never intended to be eligible for taxpayer- funded Medicaid.
2. Alaska lawmakers have no reliable cost estimates.
3. Medicaid costs are already growing rapidly and expansion would jeopardize other state priorities.
4. Medicaid is already failing Alaska’s most vulnerable patients.
5. Expanding Medicaid is unlikely to reduce hospitals’ uncompensated charity care.
6. Medicaid expansion crowds out private health coverage.
7. The federal government is unlikely to keep its funding promises to Alaska.
8. It is unlikely Alaska will ever be able to scale back the size of its Medicaid program if it decides to expand.

In light of the obvious failures of the current Medicaid system and the daunting unknowns associated with expansion, Alaska policymakers should assess the results of Medicaid expansion in other states before obligating their patients and taxpayers to a final decision.

1. ABLE-BODIED CHILDLESS ADULTS HAVE NEVER BEEN — AND WERE NEVER INTENTED TO BE — ELIGIBLE FOR TAXPAYER-FUNDED MEDICAID.

Nearly every person who would be newly eligible for Alaska Medicaid under the PPACA’s optional expansion are non-disabled working-age adults without children. Alaska’s Medicaid program already covers children in households earning up to 203 percent FPL and pregnant women in households earning up to 200 percent FPL. Parents and 19 to 20 year-old young adults earning up to 129 percent FPL are also covered under the current Medicaid program.

Medicaid was created to be a health care safety net for the most vulnerable. It was never intended to be a welfare program for adults without children and without any disabilities keeping them from meaningful employment. The groups generally considered most vulnerable are the elderly, individuals who are blind or disabled, low-income children and, to a lesser extent, low-income parents. A 2012 poll conducted by Reuters found that most Americans want to preserve safety net programs for the truly needy, with 77 percent opposing non-cash assistance, such as food stamps and Medicaid, for working-age adults without children.

Because non-disabled adults without children have never been considered among the most vulnerable, they have generally been ineligible for other types of taxpayer-funded welfare. For example, childless adults are not eligible for cash assistance under the Alaska Temporary Assistance Program (ATAP). Only low-income pregnant women and families with children qualify for cash assistance under Alaska’s ATAP.

The PPACA’s optional Medicaid expansion would create an entirely new population in Alaska that would become eligible for Medicaid welfare benefits. This expansion would redirect limited state and federal resources away from the elderly, from children and from disabled individuals in order to fund Medicaid welfare coverage for working-age, able-bodied adults without children. Alaska policymakers should carefully weigh their options before extending Medicaid benefits to an entirely new class of individuals who have never qualified for other types of welfare, particularly given the fact that they have no reliable estimates of the true cost of expansion.

2. ALASKA LAWMAKERS HAVE NO RELIABLE COST ESTIMATES

A number of groups have produced cost estimates associated with Medicaid expansion. However, these projections lack consistency and use assumptions that vary widely from one analysis to the next. This should be a red flag to policymakers and taxpayers.

There is no agreement on the number of people who will actually sign up for Medicaid if expansion occurs. The Urban Institute, for example, predicts that just 73 percent of uninsured individuals who would be eligible after expansion will eventually enroll. comparison, the RAND Corporation estimates 82 percent participation nationally. Actuaries for the federal Centers for Medicare and Medicaid Services predict participation rates of 95 percent.

The Urban Institute also predicts enrollment will increase by just 0.5 percent per year, despite the historical enrollment growth averaging three to five percent per year.

Perhaps the largest concern policymakers should have regarding these projections is the apparent misunderstanding of Alaska’s eligibility rules built into various groups’ cost estimates. As noted earlier, Alaska’s Medicaid program currently covers parents and young adults earning up to 129 percent FPL.

However, the models used to estimate the effects of the Medicaid expansion assume Alaska’s upper limit on adul eligibility is between 77 and 81 percent FPL. If those creating these “black box” models cannot be trusted to get even basic eligibility levels for the current Medicaid program correct, lawmakers should be wary of relying on the estimates for any purpose.

Another giant red flag for policymakers should be that groups in Alaska producing cost estimates predict that providing Medicaid coverage for the expansion population will cost less than coverage for low-income parents. According to the Urban Institute’s projections, the Medicaid expansion population, which consists almost entirely of childless adults, would cost roughly $4,267 per person in Alaska.

However, each non-disabled adult currently enrolled in Alaska Medicaid costs approximately $6,998 per year. Even worse, Urban Institute’s projections fall far below what Alaska spends on children, which is by far the cheapest eligibility group to cover in the Medicaid program. In 2010, state officials predicted the expansion population would cost $6,751 per person. But even this state estimate likely grossly underestimates the actual costs of expansion.

It is unclear how the Urban Institute’s model arrives at a cost prediction for the childless adult population that is far less expensive than costs for covering low-income parents and children. This may be caused, in part, by the fact that the Urban Institute uses national data, which it later attempts to readjust to better fit Alaska costs.

The results are clearly questionable. After all, states that have already expanded Medicaid eligibility to cover childless adults found that the childless adult population costs much more than low-income parents.

In Arizona, which expanded Medicaid to childless adults in 2000, coverage for the new expansion population cost more than twice as much as coverage for low-income parents. Similar cost differences exist in other states that have expanded Medicaid to include childless adults, including Delaware, Maine and Oregon. Indeed, research published by the Centers for Medicare and Medicaid Services found that coverage costs were an average of 60 percent higher for childless adults than they were for low-income parents to provide the same benefits package.

Flawed assumptions like the ones currently being used in Alaska have a huge impact on cost estimates. When Arizona expanded Medicaid eligibility, for example, it used many of the same assumptions now being used in Alaska. These flawed assumptions have resulted in Arizona’s Medicaid expansion costing four times what was originally projected.

Unexpected cost increases force policymakers to make painful choices. Arizona, unable to reduce eligibility levels for the expansion population, was forced to eliminate coverage for life-saving organ transplants in its Medicaid program.

Lawmakers should not expect taxpayers to sign a blank check, nor jeopardize funding for other state priorities, in order to provide Medicaid to a group of able-bodied, working-age adults without children who have never before qualified for other types of welfare.

3. MEDICAID COSTS ARE ALREADY GROWING RAPIDLY AND EXPANSION WOULD JEOPARDIZE OTHER STATE PRIORITIES.

Alaska’s Medicaid welfare spending is spiraling out of control and has nearly tripled since 2000. In 2000, Alaska spent roughly $552 million on its Medicaid program. By 2011, Medicaid welfare spending spiked to more than $1.4 billion. Even without expanding Medicaid, costs are expected to grow to $2.5 billion by 2020 and triple from current levels by 2030, when spending is expected to skyrocket to $4.5 billion. At a time when policymakers are concerned with Alaska’s pension liabilities and recent budget shortfalls, expanding Medicaid to cover an entirely new class of able-bodied adults should not be a priority.

Skyrocketing enrollment has contributed to ever-increasing Medicaid costs. The number of Alaskans on Medicaid has grown by more than 31 percent since 2003, reaching more than 109,000 people in 2012.33 For comparison, private non-farm employment grew by just 16 percent during that same time period. Additionally, the number of Alaskans who were unemployed actually dropped by roughly 2 percent.

Medicaid is already depleting resources for other state priorities, such as investments in education and public safety. Expanding Medicaid will not only make this worse, but it will also strain resources relied upon by existing groups covered by Medicaid, including the elderly, individuals with disabilities, pregnant women and children. For example, resources that may otherwise be used to pay for programs focused on children, such as Denali KidCare, may ultimately be redirected to pay for the additional costs of Medicaid coverage for able-bodied adults without children.

Alaska has already deemed the existing Medicaid population a priority. Policymakers should beware unintended consequences of expanding a program already struggling to provide quality care to the most vulnerable.

4. MEDICAID IS ALREADY FAILING ALASKA’S MOST VULNERABLE PATIENTS.

Alaska’s Medicaid program is already failing to meet the needs of the state’s most vulnerable citizens, calling into question the wisdom of expanding a broken program even further. Overloading an already-failing Medicaid program with thousands more people will only make problems worse for truly needy patients. Roughly 18 percent of Alaska doctors refuse to take new Medicaid patients. Even among those doctors still able and willing to participate in the Medicaid program, many limit the number of Medicaid patients they will accept to just a few.

Alaska’s severe physician shortage makes the situation even more troubling. According to federal data, Alaska has a primary care doctor shortage in 25 of its 35 boroughs and census areas. Facing a continuing decline in access to physicians, Medicaid patients are turning to emergency rooms for treatment of preventable conditions more than any other group, including those with no insurance at all.

Worse yet, a quarter of Alaska’s physicians are 60 or older, while just 14 percent are under the age of 40. Alaska ranks 48th in the nation in the number of residents and fellows in accredited medical programs.

Dumping thousands of additional people into Alaska’s Medicaid program will only make these access problems worse. Massachusetts experienced this firsthand after expanding its Medicaid eligibility. The number of family physicians accepting new patients dropped to 50 percent by 2012, down from 70 percent in 2007. This has resulted in Medicaid patients experiencing longer wait times for care. The average wait time to see an internal medicine physician in Massachusetts spiked to 52 days in the year following expansion, up from 33 days in 2006. times have remained high, averaging 49 days since 2007. The current Medicaid program already has a massive problem with wait times, with Medicaid patients often waiting weeks or even months to see specialists.

Huge access problems inevitably lead to poor health outcomes. Medicaid patients frequently suffer worse health outcomes than the privately insured and, in some cases, fare worse than patients with no health coverage at all. Indeed, the only randomized controlled trial studying the effects of Medicaid expansion found that it produced “no significant improvements” in clinical health outcomes.

Given Medicaid’s dismal track record at improving health, overloading the program with tens of thousands more people is unlikely to produce positive health results. Medicaid expansion is likely to hurt not just the most vulnerable patients currently in the Medicaid program, but other groups as well. The medical workforce shortages will force seniors and others with Medicare, as well as active-duty military personnel and veterans with TRICARE, to compete with this new group of able-bodied adults on Medicaid for fewer and fewer available doctor’s appointments.

5. EXPANDING MEDICAID IS UNLIKELY TO REDUCE HOSPITALS’ UNCOMPENSATED CHARITY CARE.

Proponents of the PPACA’s Medicaid expansion argue that expanding Medicaid will reduce uncompensated charity care and cost-shifts to private insurance. But the experiences of states that have already expanded Medicaid tell a much different story, and are instructive for Alaska lawmakers. In those states, these same promises of reduced uncompensated charity care and cost-shifting were made by expansion supporters. Those expansion supporters were unable to keep their promises in those states and will likely fail to keep them in Alaska if lawmakers ultimately decide to expand.

In Maine, expanding Medicaid had little effect on reducing uncompensated charity care. In 2000, charity care provided by Maine hospitals amounted to roughly $40 million per year. By 2011, after Maine’s Medicaid expansion in 2002, uncompensated charity care costs had risen to $196 million. Although Maine made a slight adjustment in classifying charity care in 2007, the growth trends before and after the adjustment remained relatively the same.

Likewise, Medicaid expansions have not reduced the cost shift to private insurance. In Arizona, hospitals charged people with private insurance 125 percent of the actual cost to provide medical services in 2003. But by 2007, hospitals were charging individuals with private insurance 140 percent of the actual cost of services. This means that the cost-shift to private insurance increased following the expansion of Medicaid eligibility, rather than decreased as expansion supporters promised.

This is because Medicaid has created a cost-shift all of its own. Arizona hospitals were reimbursed approximately 104 percent of the cost of providing medical services to Medicaid patients in 2003, but were paid just 80 percent of the cost of medical services by 2007. Alaska hospitals report losing $37 million from treating Medicaid patients in 2009, and $100 million from treating Medicare patients.55 Combined, the losses from Medicare and Medicaid totaled more than the entire $109 million of uncompensated charity care Alaska hospitals provide to the uninsured, meaning that it costs hospitals as much to treat patients with government-run insurance as it does to treat patients with no insurance at all.

Of course, it’s not surprise that uncompensated charity care savings never materialize, given the fact that many of the people who ultimately enroll after expanding eligibility were not uninsured, but previously had private health insurance.

6. MEDICAID EXPANSION CROWDS OUT PRIVATE HEALTH COVERAGE.

While preliminary estimates predict that 37,000 newly-eligible Alaskans would enroll following a Medicaid expansion, the incremental reduction in the uninsured would be just 27,000. The remaining 10,000 Alaskans represent individuals who would otherwise have health insurance, but will be shifted to Medicaid as a result of expansion. Because individuals between 100 percent and 138 percent FPL would lose eligibility for federal subsidies if policymakers expand Medicaid, even more Alaskans could be diverted from private insurance and instead pushed into Medicaid.

States that have already expanded Medicaid eligibility have seen a huge number of individuals shifted from private insurance to Medicaid. In Arizona, for example, the share of non-elderly individuals with private insurance dropped to 56 percent in 2011, down from 62 percent in 2002. During that same time, the share of non-elderly individuals enrolled in Medicaid grew to 19 percent in 2011, up from 13 percent in 2002. Despite this massive increase in Medicaid enrollment, the expansion did not reduce the rate of uninsured. Similar patterns played out in other states that expanded Medicaid eligibility.

Economists, including PPACA architect Jonathan Gruber, estimate that Medicaid expansions in the late 1990s and early 2000s produced a crowd-out effect of 60 percent. This means that for every ten new Medicaid enrollees, six were previously covered with their own private insurance.

Research focusing specifically on the populations targeted by the PPACA predicts a substantial crowd-out effect resulting from Medicaid expansion. Economists predict that expanding Medicaid eligibility under the PPACA will produce a crowd-out rate of 82 percent for working adults, suggesting that the optional expansion will merely “shift workers and their families from private to public insurance” rather than reduce the number of individuals without insurance. This means that for every ten new Medicaid enrollees classified as working adults, more than eight will have come from the ranks of the privately insured.

Ultimately, Alaska policymakers are being asked to gamble that the federal government will keep its funding promise to provide Medicaid for a group of able-bodied adults who will come not from the ranks of the uninsured, but from the privately insured.

7. THE FEDERAL GOVERNMENT IS UNLIKELY To KEEP ITS FUNDING PROMISES TO ALASKA.

Congress has promised to provide enhanced federal support for Medicaid expansion. For the first three years, the federal government has promised to pay the full cost of providing Medicaid coverage to the newly eligible population, with federal support phasing down to 90 percent thereafter. The federal government will not provide enhanced funding for individuals who were previously eligible for Medicaid who enrolled as a result of the PPACA, nor for the additional administrative costs of the Medicaid expansion. For individuals currently eligible for Medicaid that will enroll as a result of the PPACA, Alaska will receive its typical 50 percent matching rate from the federal government. This means that Alaska policymakers will already be struggling to pay for its current program, even before considering the Medicaid expansion decision before them.

Congress has the power to arbitrarily change these matching rates at any time. The federal government’s severe and widely-known fiscal problems make it highly likely that future federal support will be reduced for Alaska and any other state that expands Medicaid.

Federal Medicaid spending already represents one-fourth of the federal deficit and is expected to more than double over the next decade. This spending growth is nearly twice as fast as the expected growth in the economy. Medicaid expansion is expected to cost more than $800 billion during the first ten years. By 2023, federal health care programs will represent more than half of all federal mandatory spending. Should Alaska opt into the Medicaid expansion, federal spending would increase by at least another $1.5 billion, further increasing the federal debt.

Today, the federal debt already stands at $17.1 trillion and is expected to grow to more than $26 trillion within the next ten years. The Government Accountability Office has called this debt trajectory an “unsustainable long- term fiscal path” that must be addressed immediately. Federal Reserve Chairman Ben Bernanke testified before Congress that this unsustainable debt trajectory “cannot actually happen,” as creditors would stop lending to the federal government before such debt levels were ever reached.

The Congressional Budget Office has previously estimated that balancing the budget long-term with tax hikes would require tax rates to more than double on all income tax brackets. It is inevitable, then, the federal government will be forced to reduce budget deficits and substantial spending cuts will be required to balance the budget. Given that entitlement spending is the core driver of the deficit, states must prepare for the likely event that federal support for Medicaid will be greatly reduced from promised levels.

Exploding deficits and debt may explain why President Barack Obama’s last three budgets have proposed shifting more of these costs to state governments and why he has included these cost-shift proposals in debt ceiling and fiscal cliff negotiations. These proposals make clear the president’s willingness to require states to pay more, up to and including changing federal Medicaid matching rates. As one of the two trustees President Obama appointed to oversee Medicare recently warned, it is a “near certainty” that federal support for Medicaid will be cut in future years.

The federal government already has a record of reneging on its funding promises to states. In 1975, Congress enacted what is now known as the Individuals with Disabilities Education Act (IDEA), requiring states to provide disabled children with appropriate educational services. In return, Congress committed to authorizing federal funding for 40 percent of states’ additional costs to educate disabled children. But after almost forty years, Congress has never appropriated the full funding authorized under the law.84 This has become a huge cost shift— essentially an unfunded mandate—that has forced state and local governments to make up the difference. Between fiscal years 1981 and 2010, the federal government fell short of fully funding IDEA by more than $250 billion, despite its promises to the states. In fiscal year 2010 alone, the federal government’s underfunding totaled a whopping $17.1 billion.

States are also beginning to face yet another broken federal promise. In 2009, the federal government asked state and local governments to borrow money through taxable bonds, rather than the tax-exempt bonds they typically used.87 The federal government created these bonds through the American Recovery and Reinvestment Act in order to encourage more state and local governments to invest in capital projects through the stimulus package. Because taxable bonds have higher interest rates for borrowers, the federal government offered to help offset those higher interest charges through subsidies to the states.88 These federal subsidies were meant to bring states’ total interest costs down to slightly below where interest costs would have been had they borrowed with the typical tax-exempt bonds.

Across America, state and local governments issued 2,275 Build America Bonds, worth more than $181 billion. Alaska governmental bodies accounted for 5 of those issues, worth more $358 million. Now state policymakers are beginning to realize the federal government will not keep up its end of the bargain. The Treasury Department recently notified state and local governments it was cutting the federal subsidies it had promised by 8.7 percent, shifting more than $250 million of interest costs onto state and local governments. States were lured into borrowing with more-expensive taxable bonds on the promise that the federal government would offset those higher costs, but are now discovering that some of the promised federal money simply won’t be there. This bait-and-switch is likely to occur with Medicaid expansion funding as well. If Alaska moves forward with expansion, it may be left with the tab and never able to undo its decision.

8. IT IS UNLIKELY ALASKA WILL EVER BE ABLE TO SCALE BACK THE SIZE OF ITS MEDICAID PROGRAM IF IT DECIDES TO EXPAND.

Anticipating that the federal government is unlikely to keep its funding promises, policymakers in several states have discussed including a “trigger” or “circuit-breaker” to back out of Medicaid expansion in the event the enhanced matching rate is reduced. However, this trigger is unlikely to be effective. Federal law classifies the expansion population as a new “mandatory population” for states that opt into the expansion, which authorizes the federal government to take away all federal Medicaid funds if a state were to roll back eligibility for that group.

In June 2012, the U.S. Supreme Court held that states could forego Medicaid expansion without placing their existing Medicaid funding at risk. It did not hold that separate federal requirements on maintaining eligibility for mandatory populations would not apply after a state agrees to expand Medicaid.

The Court’s decision rests in a large part on the fact that when states opted into Medicaid when the program was created in the 1960s, it was unforeseeable that the federal government would attempt to expand it in this way. But it is not unforeseeable that the federal government may ultimately reduce its promised funding. This issue came up during Supreme Court oral arguments. Chief Justice John Roberts asked what would happen if the federal government decided to renege on the deal and reduce the enhanced matching rate. As the government explained in its response to Chief Justice Roberts, states only choice at that point would be to exit the Medicaid program altogether. It was also acknowledged by seven members of the Court in the majority and minority opinions.

The federal government has said in non-binding letters that states may enter or exit the expansion as they please, but states should be wary that this non-binding promise has never been codified into law or regulation. This means that accepting the federal government’s enhanced matching rate could tether Alaska to Medicaid expansion permanently, even if Congress later shifted more costs to the states.

Additionally, just as Congress lacks the power to bind the legislative authority of its successors, trigger provisions would still be subject to endorsement by a future Alaska legislature. Even if they could, it is unlikely state politicians would later roll back eligibility for an entitlement, kicking tens of thousands of expansion enrollees off of the Medicaid program. States that have previously expanded Medicaid have had little success doing so, even when facing severe budget crises.

Even politically unpopular expansions have proven difficult to roll back. In 2007, Illinois’ disgraced former governor Rod Blagojevich expanded Medicaid eligibility to families earning up to 400 percent FPL without legislative approval.

The legislature invalidated the administration’s unilateral expansion of Medicaid and the Secretary of State prohibited the Blagojevich administration from proceeding. Nevertheless, the governor’s staff moved forward with the expansion and began enrolling the group into Medicaid.

The Illinois legislature again invalidated the expansion, but the administration continued to proceed with the expansion.105 The administration continued to enroll people in the expansion even after a court issued an injunction to immediately halt the expansion. It was not until fiscal year 2013, with Illinois facing a $2.7 billion Medicaid shortfall, that lawmakers were able to successfully roll back this expansion.

Given the political ramifications of trying to reduce entitlement eligibility and the very real possibility that doing so may not be legally possible, Alaska policymakers should be wary of jumping headfirst into any Medicaid expansion.

CONCLUSION

Medicaid is already failing Alaska patients and taxpayers. Promises of fewer uninsured residents and a reduction in hospitals’ uncompensated charity care are unlikely to be kept. And the combination of a poor track record meeting its commitments to states and a $17 trillion debt make it highly unlikely the federal government will keep its promise to Alaska to cover the cost of expansion.

Alaska policymakers should protect their patients and taxpayers by rejecting Medicaid expansion, and instead refocus their efforts on fixing the current program so that it works for patients and taxpayers.

Medicaid was intended to be an affordable health care safety net for the truly vulnerable. Alaska policymakers should focus on meeting this critical goal instead of undermining it with a short-sighted Medicaid expansion scheme.