Dunleavy's $714 million Medicaid meat axe puts Alaska health care system in jeopardy
The biggest of the Dunleavy budget cuts, and the one that has been least examined, is the proposal to cut Medicaid spending by $714 million.
Like many other ill-conceived elements of the Dunleavy budget, the Legislature won’t accept this one, but the governor has the power to veto and the Legislature may have enough contrarians to prevent an override.
It’s clear that there is no Dunleavy Medicaid plan, just a blind 32 percent cut chosen to preserve his fiscal fantasy—no taxes, bigger dividends and pretending that massive reductions in public services will not harm Alaskans.
We don't know the impact of the $714 million cut on patients, doctors, nurses, clinics, hospitals and nursing homes. We don’t know how much private insurance rates for those not on Medicaid would rise by this massive financial shift. We don’t know what the Dunleavy Medicaid meat axe means to health care in Alaska.
We don’t know how many doctors would refuse to see Medicaid patients under the Dunleavy approach because no one has asked them. We don’t know what it would mean to Alaskans struggling to make ends meet or those who have private insurance and have no clue about what is coming.
The governor wants to cut state funding for Medicaid by $250 million, which would force the loss of $465 million in federal funds. There is no net “savings” to Alaska in this deal. Returning $465 million to the federal government, money that is now keeping a variety of health care operations afloat in Alaska, is idiotic.
(We will leave aside, for the moment, the odd position this creates for our Congressional delegation, who spend most of their waking hours pleading for more federal money for Alaska.)
The proof that there is no Dunleavy Medicaid plan came this week when Adam Crum, the commissioner of the health department, released a plan detailing about one-quarter of the reduction, leaving about a half-billion dollars of cuts to the imagination.
Calling it Phase One, as he does, is a bureaucratic reflex action, taken when you are unable to identify Phase Two.
The Phase One scheme would cut about $187 million from Medicaid, with about $80 million of that in the form of lost federal funds.
Here are key parts of Phase One:
Reduce payments to doctors, clinics, hospitals, nursing homes and other entities by about $100 million. (About $60 million of that would be from lost federal funds.) The 5 percent reduction, along with no increase for inflation, puts added pressure on health care facilities.
Reducing payments to skilled nursing facilities is a $5 million part of Phase One. About 85 percent of the patients in skilled nursing facilities are on Medicaid, which does not cover all costs. “It is impossible to maintain operations when most of your patients don’t pay he full cost of care,” the Alaska State Hospital and Nursing Home Association responded. The closing of some facilities is a potential result of this move.
Exempting small critical care hospitals—some of which are in precarious financial condition—from the 5 percent cut, leaves them vulnerable. They would face the nursing facility cut and they rely on those Medicaid patients to help keep their doors open.
Reduce patient services by $37 million, with $25 million of that loss coming from federal funds that would disappear. (The loss of preventative dental services is the big item there. What is not clear is whether the bill for emergency dental services would exceed the cost of prevention.)
Cut administrative expenses by about $50 million. Given the lack of details, this seems like a guess.
Crum, who appeared before the press, said he sees no reduction in eligibility standards for poor people.
"As we put together this plan our main goal was to make sure that we maintained access for Alaskans as well as took a responsible look at the budget," Crum told reporters Monday, according to KTUU.
He is in no position to make that statement, not only regarding Phase One, but also about the half-billion-dollars in whatever turns up in Phase Two.
The state is apparently hoping that the federal government will cut a deal, so that the potential loss of $465 million in federal funds is eliminated or sharply reduced.
None of this should give anyone confidence that the state has a clear direction forward.
Someone, somewhere is going to take an enormous hit in services and operations if the governor proceeds.
State officials could not answer the most important question, which is how many providers will stop treating Medicaid patients under Phase One.
The hospital and nursing home association said the cuts have been made without enough analysis or consultation with people in health care.
“This plan is not well thought out, realistic, or achievable. It is simply a blunt instrument developed in response to the mathematical exercise required by the Office of Management & Budget,” said ASHNHA President Becky Hultberg.