Economic growth, Jim Capretta, Dr. Ryan McGhan

As the fiscal situation in Juneau drags on, and the economic recession begins to deepen, we turn this month to health care costs in Alaska.  They make up the context of almost everything happening in Alaska health policy right now – from the AHCA to RFPs to economic activity.

It’s what we’re all watching in Alaska health care to one degree or another, isn’t it?




1.  Coordinated Care RFP and budget

Kylie Walsh on our team reports that DHSS received a total of 9 proposals for its Coordinated Care RFP, including at least one from each of the three categories.  DHSS won’t release the full list of respondents until a final contract(s) has been signed.

With 183,000 beneficiaries on Alaska Medicaid, and rates set to be cut significantly, the stakes are pretty high. Both House and Senate budget whack DHSS, though the budgets continue to be about $34m apart.  The winning RFP contractor is expected to be able to provide offsetting cost savings to DHSS almost immediately.

2.  Is health care pinching AK economic growth

Alaska’s health care sector, as a share of the overall economy, has increased 30% since 2011 – a dramatic and concerning rise if you’re interested in economic growth in Alaska.  Healthy economies have regular, reasonable upward and downward cycles. Health care doesn’t have those, generally speaking. Health care prices are “sticky” for both demand-side and supply-side reasons. That is part of the narrative of a recent presentation I gave from which the above slides were drawn.

What that means is that during downturns like the one Alaska is having, health care doesn’t turn down also. The upward trend might slow, but health care keeps rising, generally speaking, thus crowding out spending on other goods. Moreover, spending on disease, particularly at the end of life, doesn’t have the same multiplier effect in the economy that spending on education or infrastructure does. So, as dollars move into health care from other parts of the economy, it reduces the multiplier effect of the economy as a whole, diminishing economic resiliency and making an economic turnaround all the more difficult.

3.  CBO score and a House re-vote on AHCA?

The CBO will release their “score” of the AHCA on Wednesday, detailing the impacts of the bill on coverage and the federal budget. Interesting note: though the bill passed the House, Speaker Ryan still hasn’t sent the bill to the Senate out of “an abundance of caution.”

Here’s why: because of the strategy of circumventing the filibuster in the Senate, where Republicans have only a two-vote majority, they are using a reconciliation process. That means the AHCA has to implement or “reconcile” with a budget bill Congress passed in January.

That bill requires $2 billion in savings to be structured in a very specific way. Some think the CBO or the Senate parliamentarian may find the savings from the AHCA don’t accrue properly. That would require relatively minor changes in the bill – but it would force the House to vote a second time on the bill, something few are likely excited to do.

4. Video:  Ryan McGhan, Alaska Hospitalists

Dr. Ryan McGhan is a provider with the Alaska Hospitalist Group and joins this episode of “What They’re Watching.”  He brings a refreshing candor to the topic that underlies much of what’s happening in health care today related to costs.

“As a country, we need to be introspective that health care is a large part of our GDP… that is worth spending some time thinking about.  As a well reimbursed professional, you have to look in the mirror a little bit but but certainly I think that we are a part of the system and focusing efforts solely on that (doctors only) would not result in the best possible solution to this problem.”

5.  Podcast: Jim Capretta, AEI

Jim Capretta is the Milton Friedman Chair at the American Enterprise Institute, and a very savvy observer of health care policy and politics. He was also one of our keynote speakers at both our Texas and Washington State conferences.

He joined me on the State of Reform Podcast last week to give us an update on the AHCA.  We get into the weeds a bit – meaning he corrects me a few times where I’m wrong. But he also provides important historical perspective, like that President George W. Bush included funds in his budget every year for a pathway via tax credits to a broader coverage model.  It’s a wonky and worthwhile episode if you’re a policy geek.