Commentary: Medicaid is a safety net

In a recession, it’s even more important not to rend that safety net. By Senators Tom Begich, D-Anchorage and Donny Olson, D- Golovin

Around the Capitol, there has been talk about “the high cost of Medicaid” and what can be done about it.  Just the other day legislation was introduced in the Senate that would institute work requirements for Medicaid recipients.

Let’s be clear: kicking the economically-vulnerable off Medicaid and the Children’s Health Insurance Program (CHIP) might be one way to reduce health care costs, but it is undoubtedly not the right way.  And in the end, is very likely to cost ratepayers more. There is no honor in reducing enrollment when it means the neediest among us suffer even more.  Our Medicaid system is a safety net which most of us in the legislature are lucky enough never to have needed. In a recession, like the one we are in now, it is even more important to ensure that we don’t rend that net.  For some it might mean that a family is only a medical disaster away from finding themselves on the street – damaging families and potentially costing us all more through unrecoverable costs to emergency rooms.

There are real problems with our health care system in this state, but it isn’t Medicaid, and it isn’t CHIP.  Increases to these programs are symptoms of deeper problems. Rather than covering fewer people, to reduce State Medicaid costs, we need to both fix our economy so people have good jobs, and figure out how to make health care more accessible and affordable.

In Alaska, 35 percent of the total state budget is devoted to health care, and that number will continue to rise.  It’s driving up costs to our education system as health care premiums take a bigger and bigger bite of our budget. Health care is affecting our local communities, our businesses, and nearly every aspect of our economy.  At the same time, the recession has caused dramatic job loses forcing many Alaskans to turn to Medicaid for health coverage. It’s as simple as that.

Some legislators blame Medicaid rather than looking at these underlying issues. Further, they forget access to basic health care is a good thing, not a bad thing.  The goal of Medicaid is to provide health insurance to low-income Americans.

The benefits of this access go far beyond just preventative care, reducing the financial burden of chronic conditions, and of people using emergency rooms as their primary source of healthcare.  It gives people access to financial security, making it easier to find work and stay employed because those covered can afford to get treatment.  It also means that all of us with insurance pay less because we don’t have to cover uncompensated care.


This year, Medicaid will bring about $1.4 billion of federal funds into Alaska, money that rolls through our economy creating an even greater impact as dollars get spent and re-spent (some estimate as many as seven times in the state).  This “multiplier” effect shores up our private economy as well.  The Department of Health and Social Services estimates that Medicaid expansion alone will bring an additional 3,700 jobs to Alaska by 2019, meaning an estimated $1.2 billion more in Alaskan salaries and wages, and $2.49 billion in increased economic activity across the state.

So, how do we continue to provide care and save lives while reducing the cost of healthcare?  Alaskans are innovators, so let’s innovate.  Let’s talk about bending the cost curve, rather than denying our fellow Alaskans basic health care.

Already, Alaska’s reinsurance program of separating out our “high-risk pool” of patients has reduced costs for ratepayers and is a model for the rest of the country, with the full benefits still emerging.  Another idea the state has been exploring is creating larger insurance pools to include all school districts and state employees, spreading out risk, buying in bulk, and driving down costs.  This could save the state and school districts millions of dollars a year.

It is also time to examine the business model of our health care industry.  Right now, doctors and hospitals make money when people are sick, rather than by keeping people healthy – an inherently flawed system.  In Alaska, we could move away from expensive fee-for-service payment and towards “accountable care organizations” which are paid a set price to serve a set population, regardless of whether someone seeks care or not.  They have a financial incentive to keep their patients healthy and out of costly hospitals – a win-win situation for business and people.  Payments are linked to improved quality of care and reduced costs.

The best way to reduce the total need for Medicaid and CHIP is to get our economy back on track with a comprehensive fiscal plan which will provide a stable and safe Alaska – showing the private sector the stability they need to invest in our future for the long term.  A key part of that functioning economy will be ensuring that we get control of our health care costs at the front end through lower prices and prevention rewards, and maintaining a security net for our citizens when times are tough.