OPINION: Medicaid cuts threaten the broader economy

As government pandemic programs wind down, tens of thousands of Alaskans have lost Medicaid health insurance as the Alaska Department of Health has struggled to adjust to new federal program requirements. Losing medical coverage can have devastating consequences for an individual, but these disenrollments also hurt the broader Alaskan economy. We could be plunged into recession by the annual loss of billions of federal dollars and associated economic activity if trends continue in Alaska’s Medicaid program.

Emergency measures

During the early months of the pandemic, as layoffs mounted and people needed help, the federal government took emergency action to change rules for some benefit programs, including Medicaid, to help state governments keep up with the waves of new applicants pouring in. One of those changes was to reduce eligibility rechecks for existing beneficiaries, allowing them to remain enrolled indefinitely through the pandemic. Beginning last year, pandemic health emergency authorities expired, and now all 50 states must confirm everyone’s eligibility, basically by having everybody reapply.

A disaster for low-income Alaskans

Alaska started this “eligibility redetermination” process in April, checking every beneficiary in the state — about 260,000 Alaskans — and it’s not going well. As of Sept. 30, the Division of Public Assistance (DPA), which administers Alaska’s Medicaid program, had finished processing 45,000 beneficiaries, of whom 60% have lost their coverage. These are mostly people, many of them kids, who meet the eligibility requirements for the program, but they’re losing their health insurance anyway mostly because the state couldn’t reach them or get them to produce necessary documents. Many states are having difficulty with these redeterminations, but Alaska is among the worst, ranking 44th of 50 states.

The feds recently asked DOH to pause some disenrollments — and they have, but the share of people contacted who are found eligible remains low — just 32% last month, so this pause just kicks the can down the road. If this pace continues, nearly 150,000 Alaskans could lose coverage as redetermination progresses. That could be catastrophic, particularly for those with chronic health conditions, suddenly cut off from affordable care. Health care accessibility would also be affected, as many providers count on revenue from Medicaid patients to keep their doors open.

A crisis for the whole economy

With more than one in three Alaskans enrolled at the start of this year, the Medicaid program represents an enormous injection of federal money into our economy every year. The state paid out roughly $2.2 billion in Medicaid benefits in 2022, of which $1.7 billion came from the federal government. Including economic activity associated with that spending, Medicaid directly generates nearly $4.5 billion in GDP, 7% of the statewide total. If we cut our Medicaid population by more than 50%, as we are currently on pace to do, Alaskan GDP could shrink by nearly 4% — that’s a recession right there.

A path forward

If this situation sounds familiar, it is. A backlog in application processing plagued SNAP (Supplemental Nutrition Assistance Program) recipients over the last year, at one time reducing program enrollment by 70%. From public schooling to public defenders to environmental permitting, so many government services in Alaska are too underfunded to provide for the needs of Alaskans or the business community we depend on. That lack of funding restrains Alaska’s business climate and hampers Alaska’s ability to pull in federal dollars that stimulate the economy. Over time this will weaken our health care and education systems and cripple our ability to meet our state’s full economic potential. The costs I’ve described make it clear: we need a new approach to our economy—one that starts with adequately staffing agencies like DPA so that employees don’t burn out, paying our public servants competitive wages, and reinstating strong pensions for public employees.

These measures won’t come cheap, but I can’t think of better investments to get our economy back on track.

Rep. Donna Mears represents Anchorage’s House District 21 in the Alaska Legislature.

The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.