With one foolish step, Dunleavy may try to end health care for 50,000 Alaskans

Chopping Medicaid expansion from the state budget would eliminate 3,700 jobs in Alaska, prolong the recession and subtract $400 million in federal funds from the Alaska economy.

But the disastrous budget expected Wednesday from Gov. Mike Dunleavy could very well propose an end to Medicaid expansion, leaving nearly 50,000 Alaskans without health care coverage.

It may be illegal to do this without a change in law and legislative opposition will be substantial because the economics are all in favor of keeping Medicaid expansion as it is. There is a legal opinion in circulation that says the governor has to keep Medicaid expansion in place unless the Legislature agrees that the state should not accept the federal money.

Alaska institutions have received $1.2 billion in federal funds for this portion of the Medicaid population in the last three-and-a-half years since former Gov. Bill Walker applied for the program. There are about 150,000 other Alaskans covered under the traditional Medicaid program, and they may see cuts in coverage as well under the Dunleavy plan.

A new study by the Alaska State Hospital and Nursing Home Association says the job loss from ending Medicaid expansion would be accompanied by the reduction of more than a half-billion dollars in total annual economic output.

The state could “save” $30 million by giving up more than $400 million in federal money that helps 50,000 Alaskans live better lives. Dunleavy is not about to give up hundreds of millions in federal road money to save a small state matching requirement in that area and he should not abandon health care for the poor in exchange for the illusion of savings.

Dunleavy promised to analyze Medicaid expansion, but he hasn’t done that.

His temporary budget director announced in December that the only way to pay more in Permanent Fund Dividends and balance the budget was to slash state services by $1.6 billion.

If there is a guiding hand in the Dunleavy budget, it comes from temporary budget director Donna Arduin, on loan from Petoskey, Mich.

Her approach will create chaos, as even GOP legislators understand that accepting the Arduin budget would require them to find new opportunities in the private sector.

The Arduin cuts have to come in large measure from health care and education. Medicaid expansion is likely to be one target.

“Repealing Medicaid Expansion is a particularly ‘bad deal’ because the savings accruing to the state’s finances are relatively small compared to the losses to the economy,” consultant Jonathan King writes. “The federal government covers 93 percent of Medicaid Expansion enrollee costs in the current calendar year and covers 90 percent in 2020 and beyond.”

“A repeal of Medicaid Expansion trades a $400+ million annual federal injection into the Alaska economy, health coverage for over 50,000 unique individuals annually, and 3,700 in-state jobs for state fiscal savings of roughly $30 million a year (including benefit costs and administrative costs),” he said.