Illusionary budget savings from Mike Dunleavy, Part 2

Republican gubernatorial candidate Mike Dunleavy says he has a three-part efficiency plan to cut $450 million from the state budget without reducing services.

He made this claim last Tuesday during an interview on the public radio show "Talk of Alaska."

All three parts are based on illusions.

I wrote here Saturday that the first part of his plan was based on a false interpretation of state budget numbers. I am waiting for Dunleavy to admit that his claim of a $200 million slush fund in state personnel spending is bogus. If he stops mentioning this as a pot of easy money to be spent elsewhere, that will amount to the same thing.

The second part of his three-piece efficiency plan was an alleged savings of $100 million he claimed could be had by allowing school districts to consolidate their health insurance plans.

"What we found, and a study actually backed this up, that there could be upwards of $100  million in cost savings if that were to occur. So we may have a discussion in the future to see if school districts want to voluntarily be part of a larger pool to drive down costs. If so, the potential is $100 million there," Dunleavy said last week.

But the 2013 study, conducted by the Hay Group, does not back up the claim that the state can save $100 million by putting all school districts into a single health care plan. Sen. Kevin Meyer, now Dunleay's running mate, arranged for the report.

The study recommended a plan that the authors said could reduce health care costs by anywhere from $22.6 million to $33.7 million a year by consolidating school districts under a new system. At the time, school districts were spending nearly $300 million a year on health insurance.

The study said that if participation was voluntary, as Dunleavy now proposes, the savings would be less than identified in the analysis.

But the measure Dunleavy backed five years ago did not propose the action suggested in the study. His bill, SB 90, would have placed school districts under the existing state health care plan.

"One of the possible outcomes is that it saves money for the state, but the burden is thrown back onto the communities," state Sen. Bert Stedman, R-Sitka, said at the time.

The study on consolidating health care coverage said this option for schools could have led to anything from an increase in health care costs of $8.7 million to a decrease of $34.9 million.

The $100 million Dunleavy now describes as easy money just waiting to be cut from the budget is not there.

The third element in the Dunleavy efficiency plan is to save $150 million on Medicaid. He hasn't said exactly how this would happen, only that "if those programs are run more efficiently, if more of our programs are moved off of the state funding onto the federal funding that the state is receiving, we could save upwards of $150 million there per year."

"So between those three moves with no cuts at all you're looking at potentially $400 million plus, $200 million in the vacancy factor issue, $100 million in the health insurance and the $150 million in efficiencies, just in those three areas," Dunleavy said.

And if a pig had wings it could fly.

There is no evidence that the $150 million is any more realistic than the other two illusionary pots of money. So don't count on any of it.


Dermot Cole1 Comment