What’s at risk for Alaska health care under Dunleavy’s Medicaid budget proposal

In a recent House State Affairs Committee meeting, Becky Hultberg, President & CEO of the Alaska State Hospital and Nursing Association (ASHNHA), testified on the implications of Gov. Dunleavy’s proposed Medicaid cuts on hospitals in Alaska. Among the potential impacts, Hultberg specifically testified on the rise in uncompensated care and the potential loss of health services and infrastructure.

In the middle of February, Gov. Dunleavy rolled out his 2020 budget, which included a 30-percent budget cut to Medicaid. During her presentation, Hultberg outlined the impacts of these budget cuts, along with the impact of a potential repeal of Medicaid expansion. Dunleavy has not yet said he plans to repeal expansion, but has also not ruled it out.

 

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Hultberg testified that, should these Medicaid cuts take place, one of the biggest impacts on hospitals is the rise in uncompensated care. Hultberg says there is a misconception that hospitals pay for uncompensated care, when in reality the costs are shifted.

“When hospitals have uncompensated care, they have to cost-shift to commercial insurance to make up the difference. And thus, that drives up the cost of insurance for everyone.”

Alaska Legislative Research Services predicts that a repeal of expansion could result in a 3 to 17 percent increase in commercial health insurance premiums.

According to Hultberg, during the first full of year of Medicaid expansion in Alaska, hospital uncompensated care dropped from $95 million to $50 million.

In 2017, the amount of hospital care provided for the Medicaid expansion population totaled $173 million. If expansion were to be repealed, a significant percentage of that care would either be avoided or turned into uncompensated care.

Hultberg also stressed that the proposed Medicaid budget cut would have major impacts on the state’s health care infrastructure.

“Medicaid is a significant part of the hospital payer mix; it is a significant part of the health care infrastructure. When we start pulling chunks of the infrastructure out, there are consequences.”

During the meeting, committee co-chair Representative Zack Fields asked Hultberg for a specific example of how health services or infrastructure would be impacted if Medicaid loses a third of its budget.

In response, Hultberg mentioned two behavioral health projects at risk:

“As a result of the budget announcement, Alaska Regional (Hospital in Anchorage) has put its planned 26 in-patient behavioral health unit on hold, perhaps indefinitely,” said Hultberg. “Mat-Su (Regional Hospital) is planning a psychiatric in-patient unit. They’re also planning to expand their emergency department. It’s the fastest-growing area in the state, and they have a planned in-patient expansion. All of those right now are threatened and under reconsideration. It amounts to over $55 million of capital spending in that community.”