Walker team says first year of Medicaid expansion will save AK $6.1 million

A moral argument for expanding the Alaskan Medicaid program is likely to fall on deaf ears in light of oil prices plummeting the state’s budget. So the Walker-Davidson expansion team has come to the bargaining table with a different strategy—data that show how Medicaid expansion could save $6.1 million from the General Fund in the first year and add a much-needed $24.5 million of revenue in the following years.

Valerie Davidson, Department of Health and Social Services (DHSS) Commissioner, is confident that this type of logic is just what the team needs to garner crucial bipartisan support in the Alaskan legislature.

“Quite frankly, I think there are some legislators who aren’t necessarily so hot on expansion, per say, but they’re interested in reform, so if the two go hand in hand, and we can show that there are savings to the state in a time when we are looking for those savings opportunities in our General Fund, then I believe that they will come on board,” said Davidson.

At a press conference at the Anchorage Neighborhood Health Center, the Walker team previewed data from their internal report, “The Healthy Alaska Plan: A Catalyst for Reform.” The report features data gathered by Evergreen Economics which has been monitoring Alaskan Medicaid for a decade.

Evergreen projects that about 40,000 Alaskans will become eligible for health insurance under expansion from 2016 to 2021. The cost of insuring these residents will be $7,250 per person. That represents $145 million in federal money coming into the state the first year and a projected $225 million for 2021.

AK Medicaid numbers

Increase in Enrollees and Revenue / source: The Healthy Alaska Plan

“It’s over a billion dollars of new revenue coming to our state in a time when Gov. Walker has indicated we could use those revenues in our state,” said Davidson.

In addition to new revenue, Davidson estimates that the state will save money from the General Fund in the first year. With expansion, $4 million will be saved from corrections, $1 million from catastrophic and chronic assistance programs, and $1 million in behavioral health grants.

AK medicaid map

Geographic distribution of Alaskans eligible for Medicaid through expansion/ Source: The Healthy Alaska Plan

Davidson quoted promising numbers from the report at the Walker team press conference:

40,000 uninsured Alaskans eligible for basic health care coverage
$1.1 billion in new federal revenue for Alaska
4,000 new jobs
$1.2 billion more in wages and salaries paid to Alaskans
$2.49 billion in increased economic activity throughout the state

In addition to General Fund savings, Gov. Walker announced another source of funding from The Alaskan Mental Health Land Trust, which in a recent meeting agreed to cover the first year of implementation costs for Medicaid expansion, an issue which had caused some push back in past legislative sessions.

The Walker expansion team is working hard to get opponents to rethink their positions, adding to the rhetoric that the oil crunch represents an opportunity rather than a crisis.

“When our resources get tightened, it gives us the permission to be bold and innovative,” said Davidson.

“I’ve always said, we’re not going to balance the budget on the back of Alaskan health care,” said Gov. Walker.

The Walker team announced that it is aiming for July 2015 as the start date for expansion in the state.