Thompson: House Finance not comfortable moving ahead with Medicaid expansion at this time

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JUNEAU, Alaska — House Finance Committee co-chair Steve Thompson said Thursday that the panel is not comfortable moving ahead with plans to expand Medicaid coverage in Alaska at this time.

The decision deals a blow to Gov. Bill Walker, who campaigned on expansion and made it a priority of his administration. It followed three days of hearings focused heavily on issues surrounding the Medicaid program, including a provider payment system plagued by bugs following its 2013 launch. State health officials said the system has improved significantly in recent months and would be capable of handling new claims associated with any expansion effort.

Problems with the payment system prompted the state to file a complaint last year against the vendor it hired to develop and implement the program. That case has been put on hold to allow for continued work to resolve major system issues, a Department of Law attorney told the committee Wednesday. The parties are scheduled to meet by July 31 to see if the system is acceptable to the state.

Thompson, R-Fairbanks, said while the House majority shares Walker's concerns with the health of Alaskans, especially the most vulnerable ones, the hearings made clear "that Medicaid is a bigger problem than we knew." It would be best to negotiate with the federal government on expansion terms after further study and hearing from consultants on reform strategies — and not prior just because federal money is available, he said.

While the bill includes provisions the administration would pursue aimed at reducing and containing costs within the program, Thompson said the bill lacked specifics. He cited concerns with adding potentially 20,000 to 40,000 people to a "broken" system.

Thompson was the only member who spoke during the brief hearing in Anchorage, which was streamed on the Internet and ended with Rep. Les Gara, D-Anchorage, trying to speak. Gara said in an interview later that Thompson did not speak for the full committee.

Walker, in a statement, said he was disappointed by the committee's actions. He said he would continue to work with the Legislature to advance Medicaid expansion and reform, "which is what an overwhelming majority of Alaskans want."

His spokeswoman, Grace Jang, said by email that Walker "would prefer to pass Medicaid expansion through the legislature during this special session." It's not clear how that might happen; less than two weeks remain in the session and Senate Finance, which also has a version of Walker's bill, hasn't held a hearing. Members of the Senate's Republican-led majority have expressed similar concerns to those voiced by Thompson on Thursday.

House Minority Leader Chris Tuck, D-Anchorage, said the House Finance Committee's action complicates budget negotiations.

Failure of the Legislature to pass a fully funded budget for the fiscal year starting July 1 helped prompt Walker to call a special session. In the House, support is needed from the Democratic-led minority to access a reserve account to cover budget costs at a time when the state is facing multibillion-dollar deficits amid low oil prices. Democrats have opposed proposed cuts to education funding, among other things, and Tuck previously said Medicaid expansion would be important to securing minority votes to authorize a draw from the reserve account.

On Thursday, Tuck said expansion remains an important issue. He said he has yet to hear from Republicans what other reforms they would like to see in order for them to support advancing expansion.

Medicaid comprises about 60 percent of the state health department budget and is a driver of Alaska's operating budget. The administration has seen expansion as a way to leverage federal dollars to help finance efforts to reform the system and make it more sustainable.

For states accepting expansion, the federal government is to pay 100 percent of health care costs for newly eligible recipients through calendar year 2016, stepping down to 90 percent by 2020. The administration has said the federal match rate is comparable to that for transportation projects and that Alaska would not participate in expansion if the match rate fell below 90 percent.

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