03/17/1997 09:03 AM Senate HES

                                                                               
         SJR 23 REFLECT AK. COLA IN FED MEDICAID SHARE                        
                                                                              
 Number 001                                                                    
                                                                               
  CHAIRMAN WILKEN  called the Senate Health, Education & Social                
 Services Committee (HES) to order at 9:03 a.m. and introduced                 
 SJR 23  as the first order of business before the committee.                  
                                                                               
  COMMISSIONER KAREN PERDUE , Department of Health & Social Services,          
 spoke in favor of SJR 23 which would support a change in the                  
 Federal Medical Assistance Percentage, the cost that the federal              
 government will share in the state's Medicaid program.  This has              
 been historically identified as an inequity. Currently, for every             
 $.50 the state spends, the federal government participates with               
 $.50 in the Medicaid program.  Commissioner Perdue explained that             
 the calculation is according to a formula based on per capita                 
 income in an individual state in relation to the per capita income            
 in the U.S.  Alaska has had exceptions to these calculations such             
 as the 125 percent poverty level of the federal level.  The FMAP              
 does not recognize the historic measures of change.  Alaska                   
 receives the lowest FMAP that can be received, 50 percent, as does            
 11 other states.  The highest FMAP is 77 percent.  Commissioner               
 Perdue said that the FMAP adjustment would result in a lot of money           
 for Alaska, $37 million for a one time adjustment to $39 million.             
 This inequity was identified during the federal Medicaid reform               
 last year by Senator Murkowski in the Finance Committee.  However,            
 the one time savings to Alaska was not realized due to the context            
 of the Medicaid cap, therefore the bill did not pass.  Commissioner           
 Perdue clarified that there are two issues:  the one time                     
 adjustment for the current spending and the perspective savings as            
 the state continues to invest money into Medicaid.  SJR 23 is                 
 consistent with Senator Murkowski's bill and should assist in                 
 addressing this inequity.                                                     
                                                                               
 Number 119                                                                    
                                                                               
  SENATOR LEMAN  pointed out that those percentages in the packet              
 specify how much higher the cost of living is in Alaska.  Senator             
 Leman thought that more than four Alaskan cities should be in the             
 20 highest cost areas.  Perhaps, that is because not many cities              
 are identified or is there a size cut off.                                    
                                                                               
  BOB LABBE , Director of the Division of Medical Assistance in DHSS,          
 said that those were just representative.  There is not an                    
 exhaustive list of all the cities and the comparisons.  Mr. Labbe             
 offered to provide the committee with a comparison of the price of            
 a loaf of bread in various cities in Alaska and the lower 48.                 
                                                                               
 Mr. Labbe pointed out that the calculation does change on an annual           
 basis.  Alaska is one of the few states that is at the floor                  
 percentage, 50 percent.  The actual dollars will not become                   
 apparent until the accountants do the calculations.  In the future,           
 some years will result in an increase and others a decrease.  Mr.             
 Labbe mentioned that this issue is a priority of the division who             
 supports this.                                                                
                                                                               
 Number 175                                                                    
                                                                               
  COMMISSIONER PERDUE  commented that this has been a priority for the         
 Governor, for herself and for Mr. Labbe.  She noted that many                 
 technical issues will come up.  Commissioner Perdue informed the              
 committee that several years ago the federal government said that             
 the department owed them $100 million in the upper limit which is             
 the difference between what the department pays rural hospitals and           
 nursing homes and what the Medicare upper limit was.  Currently,              
 there is an opportunity to get this done.  Commissioner Perdue                
 expressed the need to achieve this before becoming involved in the            
 continued Medicaid restructuring.                                             
                                                                               
  CHAIRMAN WILKEN  asked if it was important to know why there is a            
 difference between the federal percentages and the federal medical            
 assistance percentages in other states.   BOB LABBE  stated that the          
 federal percentages apply to some other federal programs as a                 
 result of the restructuring of the welfare reforms block grant.               
 Mr. Labbe said that the federal percentages column on the left is             
 what is being reviewed.  The importance of the federal medical                
 assistance percentage is that it varies.  Mr. Labbe was unsure that           
 Alaska would earn 50 percent based on the current formula.                    
                                                                               
                                                                               
  CHAIRMAN WILKEN  inquired as to which budget the savings would               
 surface if this were to happen.   COMMISSIONER PERDUE  did not                
 believe that this would happen within the next 60 days.  In further           
 response, Commissioner Perdue believed that this had a better than            
 50 percent chance to pass since this was taken up last year.                  
                                                                               
 Number 245                                                                    
                                                                               
  SENATOR LEMAN  said that he would support SJR 23 in order to support         
 equity in the program, however his support was not intended to                
 suggest the need for more federal involvement in welfare or                   
 Medicaid programs.  Senator Leman believed that decentralization              
 and movement away from federal involvement would be better.                   
                                                                               
  SENATOR GREEN  pointed out that testimony stated that Alaska and 10          
 other states are at the 50 percent level, but the packet                      
 information lists 16.   BOB LABBE  was not sure of the 10.  The list          
 will be effective in October.  Perhaps, some have dropped to the 50           
 percent level due to the improvement in the economy in the lower              
 48.  Mr. Labbe offered to check that.                                         
                                                                               
  CHAIRMAN WILKEN  said that he would entertain a motion to move               
 SJR 23 from committee.                                                        
                                                                               
  SENATOR LEMAN  moved to report SJR 23 out of committee with                  
 individual recommendations and the accompanying zero fiscal note.             
 Without objection, it was so ordered.                                         
                                                                               
  COMMISSIONER PERDUE  stated that more flexibility for the state              
 would be appreciated, but as Medicaid reform continues risk must              
 not be shifted to the state.  This is an entitlement program to               
 which the federal government has an obligation.  Care must be taken           
 in order to ensure that risk is not passed to the state.