Subcommittee removes Medicaid-expansion items from state health department budget

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JUNEAU, Alaska — A House subcommittee on Friday removed items related to Medicaid expansion from the Alaska health department's budget, despite the objections of minority Democrats, and called on Gov. Bill Walker to introduce a separate bill on expansion to spur a fuller debate.

Republicans on the subcommittee, made up of House Finance Committee members, repeated their call for Walker to introduce a bill rather than have expansion-related items sprinkled throughout the operating budget. A day earlier, a separate subcommittee handling the Department of Corrections budget removed a $4.1 million cut for inmate health services that the administration had attributed to savings from Medicaid expansion from that agency's budget because expansion has not been accepted yet.

Subcommittee recommendations will be considered as House Finance puts together its version of the operating budget. Whatever passes the House would still have to go to the Senate for consideration.

While a bill from Democratic lawmakers that would expand Medicaid is pending in the House and has not gotten a hearing, some members of the health department subcommittee who are in the GOP-led majority said it was important for Walker — who has made expansion one of his priorities — to take the lead, noting his administration has expertise on the issue.

The prior administration during the last legislative session initially included a proposal to transfer money from savings toward the state's pension obligation as a budget item. But as lawmakers struggled with how best to address the pension issue, the administration introduced a separate bill dealing with it. A version of that bill eventually passed.

So far, Walker has rejected calls for him to file his own separate bill to expand Medicaid. While his budget director told the Senate Finance Committee last week that he was considering a bill, his spokeswoman said that was a misstatement. Walker on Friday told reporters there is no need for the administration to file its own bill because the Democrats' bill is already in play. He said he would meet with finance committee co-chairs to see why they can't use that bill.

Now is the time for Alaskans to rally together and show their support for expansion, he said.

Health commissioner Valerie Davidson said she was disappointed in the subcommittee's actions, but she believed there was a path forward. The administration will have to regroup and assess its options, she told reporters.

In a letter to Walker dated Thursday, finance committee co-chairs Mark Neuman, R-Big Lake, and Steve Thompson, R-Fairbanks, said the public and policy debate is circumvented by expanding Medicaid through the budget process. They also called for a concurrent debate on reforming the current Medicaid system, a cost-driver in the state budget.

They asked Walker to introduce expansion legislation so Alaskans can debate and design a potential expansion system that works for Alaska. "We stand ready to assist in this process," they wrote.

Senate Finance co-chair Pete Kelly, R-Fairbanks, is working on a bill related to Medicaid reform. He said he believed there was willingness within the administration to work with him on that issue.

It's not that lawmakers haven't heard about expansion. Davidson has made presentations, for example, to the House Finance subcommittee handling her agency's budget and to the Senate Health and Social Services Committee.

During the subcommittee presentation earlier this month, a fair bit of time was spent on concerns from members about what would happen if the federal government did not honor its plans to pay at least 90 percent of the health care expenses of newly eligible recipients. The federal government is to pay 100 percent of those costs through 2016, stepping down to 90 percent by 2020.

Davidson has said the state would withdraw from expansion if the federal contribution fell below 90 percent. She also has said the match rate is similar to that for road or other infrastructure projects.

Rep. David Guttenberg, D-Fairbanks, said he had not heard any practical reason for why expansion did not make sense. Rep. Les Gara, D-Anchorage, cited figures from a recent health department report that laid out initial expected savings and the positive potential economic benefits. But Neuman said he's not sure if the numbers are right or wrong, saying there have been different reports with different numbers.

The department currently is soliciting proposals for help in further developing the expansion program and implementing greater reforms. While there have been longstanding issues with the state's Medicaid payment program, the department has targeted July to be able to start enrolling newly eligible recipients if expansion goes through.

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