Questions on Medicaid expansion | Sustainability of individual market | Barbra Nault

Alaska made national headlines this month by announcing Medicaid expansion, but that may serve to distract from some significant questions which remain, not only for Medicaid but for the health care system in general.  There are tremendous issues remaining in Alaska health care, some of which we highlight in this month’s 5 Things We’re Watching.

DJ 5 Things Signature

1. Medicaid expansion puts Republicans in a tough spot

Governor Walker made a bold move last week announcing that he would unilaterally expand Medicaid eligibility. This is the 8th time an Alaskan governor has acted unilaterally, without the legislature’s approval, to accept federal funds. So far, Republican leadership in the House and Senate are predictably displeased.  But displeasure has yet to include any plans to block Medicaid. The Legislative Budget and Audit Committee had the opportunity to take up the Governor’s action at its meeting on July 22nd, but declined.

With this action, Walker has put legislative Republicans in a difficult position. To oppose expansion now means Republicans will have to take a benefit away, one already in place. The legislature has 45 days in which it could call itself into special session to take action to oppose this. We’ll see if they choose to do so.

2.  Medicaid: The questions that remain

We have clarity now that eligibility will be expanded for Medicaid on Sept 1st, but there are still significant questions outstanding. Will the MMIS system be able to handle the increase? DHSS is only paying at 90% now, according to Commissioner Davidson. Will the ARIES eligibility system be working sufficiently on Sept 1st to handle enrollment? How will organizations mobilize to enroll newly eligible beneficiaries?  Will providers be able to handle the influx of new patients? Will expansion foster reform efforts or will it muddy the waters?

These questions, and others we might list, aren’t meant to cast aspersions or offer an opinion on expansion.  But, we think it points to an underlying reality: for all of the huge amount of effort it took to get to this point, the work on Medicaid is only getting started.


3.  DHSS looking at a provider tax

The Department of Health and Social Services (DHSS) hired CPA firm Myers and Stauffer to research the impact of a potential provider tax to help offset the cost of Medicaid expansion in Alaska. It’s a way to capture some of the gains to providers (particularly hospitals) from expansion and reinvest them into the system.

When we mentioned the idea of a provider tax in our January newsletter, we one angry email from a doc for even mentioning it. During the session, the topic appeared more of a distraction from expansion rather than a standalone policy.  But, the $175k the state is putting into this effort is significant, particularly in a fiscal crisis. We expect to see proposals come out of this in the next session.

4. Is the individual market sustainable?

The Feds have released 2014 numbers on reinsurance (RI) received by health plans, and it looks like Premera captured about 57% of Alaska’s RI money at $20 million. Reinsurance helps plans with costly individual claims, reimbursing them at 80% for claims over $45K and up to $250K.  This allows plans to keep costs lower for members. But even with these dollars, it appears all plans are hemorrhaging money.

This reinsurance runs out in 2016. The state has not appeared interested in building an Alaskan model to replace it. Alaska has already had a hard time keeping plans in its individual health insurance market and with the “Cadillac tax” on the horizon poised to hit carriers with a 40% excise tax, we wonder if Alaska could be going the way of Washington State in the late 90’s where the entire individual market collapsed.


5. Video: Barbra Nault, Garvey Schubert Barer

In this edition of the “What They’re Watching” series, we feature Barbra Nault, Owner of Garvey Schubert Barer Law in Anchorage.  She joined us at our Seattle conference to learn what Washington has been learning through trial and error in clinical integration.

Nault is the third GSB attorney we’ve featured in this series from three different states, including Stephen Rose and Rachael Ream. To hear what thought leaders are saying inside and outside of Alaska, check out the entire video series.