The operating budget passed by the Alaska House cuts $72.9 million from the state Department of Health and Social Services, most of it coming from Medicaid. One way Republican Gov. Mike Dunleavy means to realize those cuts is by privatizing Medicaid expansion, shifting thousands of those covered in the expanded program onto subsidized private insurance plans.
The proposed legislation, filed Monday in the waning weeks of the session, supposedly would make the path off of Medicaid easier for people as their financial situations improve. That's the rationale the deputy commission for Medicaid, Donna Steward, provided. She added that the plan is "absolutely not" intended to eliminate Medicaid expansion, and "if anything, this enhances" it. About 49,000 Alaskans are covered in the state’s expansion, made possible by the Affordable Care Act. While the proposal is part of the plan to reduce Medicaid spending, Steward is "not prepared to share" how much the governor's office expects to save through this scheme.
This is part of the Trump administration and Dunleavy's larger plan to make the state the first to follow Trump's block grant scheme for replacing Medicaid. In a letter to Trump earlier this month, Dunleavy wrote that "we are eager to do this," and urged Trump to support this "first" to "keep the proper focus and speed on this application." Block grants would be the first step in eroding the program to nothing, changing it from an open-ended program guaranteeing health care and responsive to need and economic situations in states to a capped program where states could determine how the money was to be spent.
No state has gone there yet, and if Alaska is the first, it's going to face legal challenges. In the meantime, Democratic lawmakers are throwing cold water on Dunleavy's privatization scheme for the fundamental problem of time. Anchorage Democratic Rep. Ivy Spohnholz, chairwoman of the House Health and Social Services Committee, told reporters "It's a big thing, and dropping it on Day 91. […] there's no way we’ll be able to get this done in time" for the fiscal year beginning July 1.