JUNEAU, Alaska — Costs for Alaska’s expanded Medicaid program have exceeded first-year estimates by roughly $30 million so far, leaving some concerned about the impact the program may have on the state budget once the federal government stops covering the entire tab.
Gov. Bill Walker expanded Medicaid to provide coverage to thousands more lower-income Alaskans. Enrollment began last September, and as of July 31, nearly 20,400 people had signed up.
The federal government is expected to fully cover the health care expenses for the expansion enrollees through December; then, the state will start chipping in. The state share next year is expected to be 5 percent and grow to as much as 10 percent by 2020.
Under traditional Medicaid, the federal government funds half of most expenses, according to the state health department.
In advocating for expansion, the department said it expected the state’s share would be offset by savings realized from moving more people to Medicaid. Deputy health commissioner Jon Sherwood reiterated that expectation in a recent interview.
But Republican Rep. Dan Saddler of Eagle River said the costs seen so far are concerning. The state currently is mired in a multibillion-dollar budget deficit exacerbated by low oil prices.
Saddler, who chairs a House subcommittee overseeing the health department’s budget, said Medicaid is an important program that many people depend on. But he said it’s also a generous and high-cost program that merits greater scrutiny. It’s important for the Legislature and Alaskans to know what services are being offered and at what cost, he said.
A report commissioned by the department had estimated that first-year costs for Medicaid services under expansion would be $145.4 million. Through July, claims had totaled $174.7 million.
Sherwood could not explain the higher-than-expected claims, but he said it would be analyzed.
“Some states have seen pent-up demand. People have had medical conditions that have gone untreated for a while so initial spending is higher and then goes down somewhat,” he said in an email. “We need sufficient data before we can determine the trend, and that just takes time to accumulate.”
State health officials have seen expansion as an opportunity to leverage federal dollars to help pay for Medicaid reform efforts. State lawmakers earlier this year passed legislation aimed at curbing and containing Medicaid costs.
Sherwood said he would consider the first year of expansion as a success because more than 20,000 people who otherwise might not have had health care are now covered.
Those eligible for expansion are between the ages of 19 and 64 who are not caring for children, disabled or pregnant and who earn at or below 138 percent of the federal poverty line. For single people, that means earning up to $20,479 a year and for married couples, up to $27,628 annually, according to the department.
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