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Anchorage Daily News - Parnell Leery of Medicaid Expansion in Health Overhaul

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Location: Washington, DC

By Sean Cockerham

Alaska Gov. Sean Parnell is expressing "serious concerns" about letting the federal government pay for medical care of more than 30,000 lower-income Alaskans, saying it would also result in state costs he's hesitant to take on.

Parnell refused requests for an interview this week. But he provided a written statement in which he laid out reservations with allowing the Medicaid expansion in the federal health care law. The U.S. Supreme Court upheld most of the law last month but said the stateshave a choice on the expansion of Medicaid eligibility to anyone with an income up to 133 percent of the poverty level, among the major parts of the law.

Alaska, under the Parnell administration, was among the states that sued to overturn the health care law and Parnell is calling for its repeal. At least five of Parnell's fellow Republican governors so far have promised to block the Medicaid expansion in their states, with Texas Gov. Rick Perry calling it a brazen intrusion into Texas sovereignty. Parnell said he is still weighing whether to allow the expansion and his spokeswoman, Sharon Leighow, said his decision is "likely weeks if not months away."

U.S. Secretary of Health and Human Services Kathleen Sebelius wrote Parnell and other governors this week, urging them to allow the Medicaid expansion. She wrote that the court's decision didn't change the fact the federal government will pay the full cost of the expanded coverage in the first three years it is in place and at least 90 percent of the cost after that.

"I am hopeful that state leaders will take advantage of the opportunity provided to insure their poorest working families with the unusually generous federal resources while dramatically reducing the burden of uncompensated care on their hospitals and other health care providers," she wrote.

Parnell, in his statement, called it a "myth" that the federal government would be paying the full cost.

He said, even in the first years of 100 percent federal coverage, the state would be on the hook for an estimated $12 million a year. There would be more costs when the federal share gradually drops to 90 percent, he said, as well as if federal budget problems lead to a slash in funding.

Parnell declined to take questions on health care, saying "if you want more comment than this during my deliberative process, you will need to seek it from (Alaska Department of Health and Social Services) Commissioner Streur."

Streur said the federal government is pledging to pay only the actual medical care for the newly eligible Medicaid patients, whose claims he expects to total more than $300 million a year.

The federal pledge doesn't cover associated costs such as technology, staffing and administration of processing the claims, he said. The federal government is paying 90 percent of the expense for states to overhaul their computer systems for the expansion but as low as 50 percent of other related costs, Streur said.

Parnell, in his statement, said Alaska's Medicaid costs are already growing by $100 million a year. Currently Medicaid eligibility is broken down by categories, such as children, pregnant women and people aged 65 and over, with each category having a different income standard for who is eligible.

The expansion would allow anyone who makes up to 133 percent of the poverty level to be eligible for Medicaid. In Alaska that means any single person with an income of $18,580 or less would qualify, or $38,330 for a family of four.

Parnell also has a choice in whether to establish a state health insurance exchange, an online marketplace in which people can comparison shop for insurance plans. Parnell previously opted not to apply for $1 million in federal money to help with creating an Alaska exchange.

Parnell said in his statement that he's reviewing the findings of a state health department study on such exchanges. "My review has thus far determined that if the state designs and implements the health insurance exchange, the state will have to pay upwards to $70 million initially for infrastructure and system development plus ongoing annual operating expenditures estimated at $7 million," Parnell said.

He said he expects to release the study within a week.

U.S. health secretary Sebelius said in her letter to governors that she would be making more grant funds available to help states set up there exchanges. The federal government will step in to implement the exchanges in states that won't do so.


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