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Remarks on Obamacare Medicaid Expansion

Press Conference

Governor Sean Parnell
November 15, 2013
Anchorage, Alaska

Medicaid expansion is part and parcel of Obamacare. The president and Congress established Obamacare as a system of interdependent pieces, and many of those pieces are failing. Some of those interlinking parts include private insurance mandates, insurance exchanges, and Medicaid expansions.

Since 2010, the federal government has tried to make Obamacare work. Each time one interdependent piece of Obamacare did not work, the president went about changing “the law.” Unilaterally.

He first delayed Medicare cuts. Then, delayed the employer mandate. Then, delayed enforcement of eligibility for subsidies, relying on the honor system. Then, delayed caps on out-of-pocket insurance costs to consumers. Then came the multi-million-dollar health exchange boondoggle.

Yesterday, the president fundamentally changed the law again. He said, basically, about those cancelled policies? “You know, never mind, until later.” The president promised to lower premiums. Premiums are now far more costly. He promised Americans could keep their policies and millions have lost theirs.

And now it gets worse, because Obamacare’s Medicaid expansion enrollment has far exceeded paying customers for insurance coverage. That fragile fiscal framework that Obamacare relies on is cracking.

Today, states must decide if they are going to shoulder the financial burden and risk of the Obamacare Medicaid expansion for those up to 138 percent of the Federal Poverty Level.

The decision comes down to this: Can states trust the federal government to not cut and run on its share of the cost?

Currently, Alaska’s Medicaid system covers 140,000 Alaskans, and it costs the State $1.5 billion. That’s about $11,000 per Alaskan. It is already one of Alaska’s biggest and most costly government programs.

By 2020, without expanding the program to people who are up to 138 percent of the Federal Poverty Level, the existing program is expected to grow and projected to grow from $1.5 billion to $2.5 billion.

The Obamacare Medicaid expansion comes with skyrocketing increases – billions with a ‘B.’ And no guarantee the federal government can make good on its 90 percent. Obviously, it’s not free money just because these are federal dollars. They’re from American taxpayers.

The Lewin Group Report, which I understand is on the web, as we released it today, will provide more detailed information on those costs.

So who might be eligible for the expansion? The studies’ numbers are all pretty close. The Lewin Group and the ANTHC study said 43,000. About 17,500 of those are eligible for tribal health organization benefits. So Medicaid expansion could directly benefit about 26,000 people. But Medicaid expansion does not necessarily address the poor’s actual access to health care. It does affect their eligibility to have it covered financially through this means.

The real issue in Alaska is, and always has been, access — not insurance. Insurance is one means to that access. Where do poor Alaskans who are not eligible for Medicaid now get their health care?

Many go to 25 health centers around Alaska that care for people on a free or sliding scale. These community health centers (CHC) are heavily subsidized by state and federal funds. In 2012, these CHCs served more than 36,000 [people] below 100 percent of the Federal Poverty Level.

Others go to emergency rooms, and still others go to providers for mental health or substance abuse issues. State behavioral health grants support $30 million annually for mental health and addiction issues.

The uninsured use a number of different means and providers to access services, paid for by those providers with uncompensated care, and by Alaskans through their tax dollars, and higher insurance premiums. To date, these costs to Alaskans are only being driven up by Obamacare.

The Alaskans who would be part of the Obamacare Medicaid Expansion are diverse in characteristics and needs. Some are the “young invincibles,” others have mental health issues, addictions, [are] homeless, or highly transient. Others have illnesses that create financial hardship.

They’re real people. Their health matters, and we acknowledge there are gaps in access to services.

And yet, the existing Medicaid program in Alaska is clearly unsustainable. Alaskans are right to pause and question the costs: Does adding more cost to an already broken-down system make sense?

I believe a costly Medicaid expansion, especially on top of the broken Obamacare system, is a hot mess.

The president knows that. In a letter to Senators Kennedy and Baucus in 2009, President Obama wrote: "[And] the ever-increasing cost of Medicare and Medicaid are among the main drivers of enormous budget deficits that are threatening our economic future. In short, the status quo is broken, and pouring money into a broken system only perpetuates its inefficiencies.”

Many of us agree with that statement. Where the president admits the existing Medicaid system is unsustainable, and where the most costly part of Obamacare — that is Medicaid expansion — is the only part of Obamacare that’s working to sign up people — at significant cost, we have to stop!

This is the time for every state, not just Alaska, but every state to stop digging our financial hole [deeper].

The president and the Congress need time to unravel this national mess.

They need to stop the destruction of the private insurance market and restore choice and affordability to health care plans.

Medicaid expansion addresses some of the uncompensated care issues for providers in Alaska, but it only makes things tougher on more Alaskans, particularly those struggling to get by on a paycheck who are now losing their coverage or being faced with paying substantially more for coverage.

Certainly, Obamacare is forcing more into economic peril right now than it is helping. Why, under these circumstances, would we add more financial risk to Alaskans with a one-size-fits-all Medicaid expansion?

The bottom line is: Obamacare failed to launch, is failing to deliver on its promises, and remains in disarray.

We simply cannot bail out this failed experiment by expanding Medicaid. At least not at this time, because to expand Medicaid in the way envisioned by Obamacare, and it’s the only choice being given under Obamacare, puts more people at financial risk than it helps.

Alaskans deserve better than what is being dished up by the federal government.

To chart Alaska’s course through this federal mess and better ensure health care access and affordability for our people, I have made a point of consulting with a diverse range of Alaskans.

I have met with Native health organizations, ASHNHA (Alaska Hospital and Nursing Home Association), the Alaska State Medical Association, hospital professionals from different communities, the NFIB, individual Alaskans.

I’ve read the reports, consulted with my commissioner of Health and Social Services, and heard from a number of sources.

What’s become clear is that Medicaid expansion is a bigger, more far-reaching decision than most appreciate. And, Medicaid expansion, to work, requires functioning, affordable private insurance options and functional exchanges. It’s that interdependent system.

So first, we need the president and the Congress to stop the falling dominoes of millions losing their private insurance policies and paying more for coverage they don’t want or need. We cannot afford a mere delay of a failed policy.

Congress should overrule United States Health and Human Services’ requirements for qualified health plans. Americans should be allowed to buy whatever policy they think fits their needs and circumstances, for the American people know better than government about what we need.

Second, in Alaska, we need to bend the cost curve of the existing Medicaid program before adding to it.

And third, I learned and we learned that we need a better understanding of gaps in health care the poor receive. For instance, what gaps in service exist for them? What percentage of people at 100 percent of the Federal Poverty Level makes use of these primary care options versus [an] emergency room?

How much of that is truly uncompensated care, versus taxpayer subsidized, in the form of state and federal subsidies, or via higher health insurance premiums?

The arguments and the studies, and even the public discourse and the public conversation, has for some time assumed that 43,000 people have absolutely no access to health care because they don’t have Medicaid.

That is simply a false assumption. Still, I want to be clear on this: There are challenges of access for this population, and we need to better understand those challenges.

I asked the groups I mentioned to work with me and our administration to address these issues and I pledged to continue the conversations on these issues.

Instead of expanding Medicaid at this time, we will work to address the issues within our control. The president and the Congress have the rest.

We will develop an Alaska Medicaid Reform Strategy to address Medicaid’s structural issues, and bend the cost curve while meeting Alaska’s needs:

  • It will be a plan developed with attainable goals and a timeline.
  • It will be done in collaboration with the Legislature, health care providers, payers, consumer groups, and a defined public process.
  • We must take into account the recommendations of the Medicaid Task Force, including moving to cost-based rates, increased care coordination, payment reform, expanded use of the patient-centered medical home model, and others.

I will create a Medicaid Reform Advisory Group to pull together stakeholders and craft a proposal for significant, meaningful reforms to the state’s Medicaid program. No Band-Aids, but real reform to sustain Medicaid for decades to come.

I envision the group comprised of a member from the state House, one from the state Senate, and three appointees, including the chairman, named by me.

The commissioner of DHSS will be an additional non-voting member and provide support staff, and the final report would be submitted to the Legislature no later than one year from today.

The Medicaid Reform Advisory Group will be asked to address three key reform mandates:

  • Stability and predictability in budgeting.
  • Increasing the ease and efficiency of navigating the system by providers.
  • And providing whole care for the patient by uniting physical and behavioral health treatment.

Next, I am directing the commissioner of Health and Social Services to develop a report defining the current status of Alaska’s safety net for those non-Medicaid-eligible Alaskans, up to 100 percent of the Federal Poverty Level.

Clearly, we need to know more about the people in this category, and their health care needs, what current services available to them are being utilized, and if different services need to be accessed.

I also want the commissioner to identify how best to get at the issue of purely uncompensated care, versus taxpayer-subsidized care for this population.

We need to work to address uncompensated care for providers, but Alaskans also need some relief from high health care costs and insurance premiums in return.

At least, the effort needs to be more targeted and specific than Obamacare’s Medicaid expansion approach.

If additional analysis is required from an independent party, I’ve let the commissioner know I would seek additional funds from the Legislature for that purpose.

I expect this report, this report on the safety net, and the interrelationship between uncompensated care and subsidized health care access, to be delivered to me in time for any amended or supplemental budget requests of the Legislature.

And now, I know you have many good questions, I brought with me Commissioner Bill Streur, Health and Social Services, and I’m happy to take your questions.

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