No, Alaska did not get $272 million health subsidy because of a 'strong application'

Gov. Mike Dunleavy, Sen. Dan Sullivan and Rep. Nick Begich the Third did not reveal the real reason why Alaska received a federal subsidy of $272 million for “rural” health care improvements from the Trump administration, more than any other state except Texas.

Speaking to reporters Monday, Dunleavy made it sound as if Alaska earned this bounty with a “strong application” prepared by the Dunleavy administration and that the total was based on a defensible process.

He claimed that the money is not a subsidy, one of the topics I will deal with in a later blog post. Another one is the claim that the money will be used to reinvent Alaska’s health care system within a few years, though there are no details on what that would mean.

Sullivan gave a circuitous explanation that put him at the center of the $272 million payout, claiming that Alaska simply deserves far more than it has received in the past because it has a lot of land and high costs. He made only a passing reference to Sen. Lisa Murkowski, downplaying her role in securing the money.

The best account that I’ve seen about the real story came in the Wall Street Journal and was published on July 2, when Senate Republicans, who already had a lock on Sullivan’s vote for Trump’s so-called big beautiful bill, revised the measure to buy Murkowski’s vote.

It’s probably true that had Murkowski held out and refused to sell her vote in exchange for benefits for Alaska that were denied other states, Senate Republicans would have cut a deal with some other GOP senator.

“Senate Majority Leader John Thune (R., S.D.) could have chosen to shrink the bill’s debt-ceiling increase to sway Rand Paul (R., Ky.), or adjust the Medicaid provisions to woo Sen. Thom Tillis (R., N.C.) and (Sen. Susan) Collins. Instead, he gave more to Alaska—and it worked,” the Journal reported.

Here is the full story from the Journal.

“No members of the Democratic caucus supported the bill, and the wins for Alaska prompted Senate Minority Leader Chuck Schumer (D., N.Y.) to call the final legislation a ‘polar payoff,’” the Journal said.

“Sullivan, who is up for re-election next year, brushed off the criticism. ‘I can see why he’s jealous of my hard work,’ Sullivan said. ‘If he’s calling it the polar payoff, I’d call it the New York nothingburger.’”

New York, which has a population about 30 times larger than Alaska, received $212 million.

The distribution of the first $10 billion chunk of money is to be followed by four more years of federal subsidies.

Contrary to Sullivan’s claim that Alaska has a lock on a total of $1.4 billion, however, the uneven distribution will create the potential for a federal clawback when the political winds change and some other state becomes a nothingburger.

“States are poised to receive a larger share of funding if they adopted certain Make America Healthy Again policies, such as requiring nutrition training for physicians and restricting purchases of soda and candy using federal food-assistance benefits,” the Journal reported Monday.

The Journal reported last summer that it was Sullivan who helped connect Medicare and Medicaid administrator Mehmet Oz with Murkowski to get her to support the bill with a pledge to give more money to Alaska.

“CMS officials granted a verbal assurance, according to one of the people familiar, that the final formula for divvying up some of the rural hospital fund would work well for Alaska—perhaps by giving preference to states with hospitals very far apart. Those assurances would lead to Alaska getting $280 million total out of the rural fund, according to this person.”

In the end the Trump administration promised to give $8 million less than the payout mentioned July 2 by the newspaper.

“Murkowski mattered the most because the other remaining dissidents were clearly dug in, making her either the 51st vote against the bill, or the decisive 50th in favor. Murkowski is known for her independent streak in Congress, and some of her colleagues were visibly angry with her indecision in the early hours of Tuesday morning,” the Journal said July 2.

“In the end they chose to add more subsidies for Alaska to get Sen. Murkowski’s vote,” Paul told the newspaper. “The bill got more expensive to get her vote.”

Here is the Washington Post coverage of the distribution plan announced this week.

Here is a report from the Wall Street Journal.

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