House Finance Committee cuts Alaska Medicaid spending, but less than governor suggested

JUNEAU — In a unanimous decision, the 11 members of the Alaska House Finance Committee voted Thursday to cut Alaska’s $2.25 billion Medicaid program by $58 million.

The cut is less than the $249 million reduction proposed by Gov. Mike Dunleavy in February and less than a revised $102 million cut proposed by the Department of Health and Social Services after it was disclosed that Dunleavy’s proposal would be impossible to implement in a single year.

The committee was continuing to work into the evening Thursday.

Rep. Jennifer Johnston, R-Anchorage and chairwoman of the subcommittee in charge of the budget for the Alaska Department of Health and Social Services, suggested Thursday’s cut after receiving advice from the members of the House Health and Social Services Committee.

Speaking after the meeting, she said she was concerned that the administration’s proposed cuts were more aspirational than practical. In the past two years, the Legislature has made significant cuts but seen the state have to come back for additional funding.

“If the department can come up with more savings, I’ll be ecstatic, but I don’t want to continue this tradition of huge supplementals,” she said.

Members of the committee considered but ultimately rejected deeper cuts.

“I do appreciate that a lot of thought has gone into this, and it’s a very, very expensive part of the budget,” said Rep. Andy Josephson, D-Anchorage, speaking shortly before the final vote.

Most of the state’s Medicaid program is funded by the federal government, and federal permission is needed to significantly change the way the state delivers Medicaid. Last month, Health and Social Services Commissioner Adam Crum unveiled a two-stage program intended to reduce state spending on Medicaid while preserving as much service as possible.

More than one in four Alaskans relies on Medicaid for health coverage, according to state figures.

Crum’s plan would have cut spending by shifting additional costs to the federal government, cracking down on fraud and reducing rates paid to some health care providers.

Legislators thus far have rejected rate reductions but Thursday’s vote means no inflation adjustments for payments next year. The $58 million cut includes other cost-cutting moves, including limits on the time window when providers can request payments from Medicaid and new restrictions on physical, occupational and speech therapy.

Members of the 11-member finance committee worked through the day and into the night Thursday to finalize their proposal for the state’s operating budget in the fiscal year that starts July 1.

In February, the governor proposed significant reductions in state spending to accommodate a larger Permanent Fund dividend, one paid using the traditional formula in state statute. House lawmakers are deviating from the governor’s proposal, suggesting instead that the state should reduce the dividend in order to preserve state services.

Neither the Legislature nor the governor are considering tax increases as an alternative to that binary choice.

Abortion funding also cut

In a separate action, the committee voted 9-2 to cut $334,700 in funding for abortion services provided through Medicaid services. The pair of amendments cutting the funding were sponsored by Rep. Cathy Tilton, R-Wasilla. The vote followed a tearful speech by Rep. Kelly Merrick, R-Eagle River, in which she said she was adopted at birth from an unwed teenage mother and is strongly opposed to abortion.

Josephson, one of two votes against the amendment, warned that the funding is legally required, and similar cuts in other states have been found unconstitutional by the U.S. Supreme Court.

Prison cut partially reversed

In addition to the Medicaid cuts, the finance committee voted unanimously to oppose efforts by the Dunleavy administration to send some prison inmates to Outside facilities. The administration had proposed the move to cut costs, but the corrections budget subcommittee led by Rep. Tammie Wilson, R-North Pole, suggested the state could instead save money by housing more inmates in halfway houses or by keeping them on electronic monitoring.

Opponents of the idea suggested that approach could expose Alaskans to greater danger from convicted criminals. To reduce that danger, the committee voted unanimously to increase funding for the Department of Corrections by $13.5 million, halfway reversing a cut that had been made by Wilson’s subcommittee.

Ocean Rangers eliminated

Not all of the finance committee’s actions Thursday were designed to reduce state spending. The committee voted 8-3 to eliminate the Ocean Rangers program, which monitors pollution from cruise ships. The program is funded by fees paid by the cruise ship industry and was established by a 2006 ballot measure.

Lawmakers Thursday said the program has not found many violations and amounts to unnecessary regulation.