Legislature(2023 - 2024)ADAMS 519
03/08/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Fy 2024 Budget by Department of Commerce, Community and Economic Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 39 | TELECONFERENCED | |
| += | HB 41 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE BILL NO. 39
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 41
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
^PRESENTATION: LONG-TERM FORECAST OF MEDICAID ENROLLMENT
AND SPENDING IN ALASKA
^OVERVIEW: FY 2024 BUDGET BY DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT
1:34:18 PM
Co-Chair Johnson noted the shortened period of time for the
meeting.
1:35:45 PM
JULIE SANDE, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, introduced herself and
her staff. She abbreviated her discussion of the slides.
Commissioner Sande introduced the PowerPoint presentation,
"FY2024 Department Overview," dated March 8, 2023 (copy on
file).
Commissioner Sande began on slide 2 titled Mission and
Organization:
Mission: Promote a healthy economy, strong
communities, and protect consumers in Alaska. AS
44.33.020.
Commissioner Sande remarked on her pride in the work of the
Department of Commerce, Community and Economic Development
(DCCED) and felt it offered a remarkable spectrum of
services across hundreds of communities. She reported
that the department was comprised of 7 core divisions and 8
corporate agencies administered by its executive team. She
advanced to slide 3 titled How Do We achieve Our Mission?
The slide portrayed the various ways in which the mission
of a healthy economy, strong communities, and consumer
protection was accomplished. She cited the Division of
Banking and Securities and pointed out that its Financial
Institution Examinations, ANCSA Elections Proxies, and
Cryptocurrency Multistate Oversight was one example of how
the division impacted the departments mission.
Commissioner Sande continued to slide 4 titled Department
Structure. The slides graphic offered a high-level
overview of the structure of the department. She pointed
out that The Alaska Broadband Office was a new division
created in the last year. Ms. Sande concluded her portion
of the presentation.
1:40:23 PM
HANNAH LAGER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, continued
the presentation on slide 5 titled FY 2024 Governor
Amended Budget, which contained charts and graphs
portraying the departments overall budget. She pointed to
the bar graph on the right and recounted that DCCED
received special appropriations over the last fiscal year
that made the budget actuals difficult to determine. The
large gray area in the FY 2023 bar depicted over $185
million in American Rescue Plan Act (ARPA) funding as local
pass through grants. She moved to the pie chart on the
right of the slide showing the budget by fund source. She
indicated that DCCED was primarily funded through
Designated General Funds (DGF) [$108,668.0, 53 percent]
through programmatic fees e.g., licensing and banking fees.
The large gray area represented Other Funds [$53,740.7, 26
percent] that was mostly comprised of interagency receipts.
The blue sliver portrayed General Funds (GF), which was a
minor amount by contrast [$19,641.9 10 percent].
Ms. Lager continued on slide 6 titled Department Budget
Lookback that contained a bar graph depicting the
historical data of the department's budget from 2015. The
slide illustrated the reduction in GF appropriations to the
department. She advanced to slide 7 titled FY 2024
Operating UGF by Department (Governor's Budget), which
showed the operating Undesignated General Funds (UGF) by
department. She noted that the department accomplished its
multi-tasked mission with the smallest departmental GF
expenditure.
Ms. Lager moved to slide 8 titled DCCED Executive Team
containing a graphic listing the executive team
responsibility for overseeing the Alaska Broadband Office,
Legislative Relations, Special Projects, Office of
International Trade, Economic Development, and Boards and
Commissions. She moved to slide 9 titled Commissioner's
Office and highlighted the changes in its budget.
She explained that federal receipt authority for future
grant opportunities was added to the budget to pursue and
accept new federal grants. In addition, two positions were
added for executive administrative support. Ms. Lager
continued to slide 10 titled Administrative Services. She
relayed that the administrative budget did not contain any
major changes, only salary and health insurance
adjustments. She advanced quickly to slide 11 titled "Major
Sources of Department Revenue Generation." She pointed out
that a portion of the revenue generated by DCCED
contributed to GF and in FY 2022 the amount totaled $100.2
million largely through insurance premium taxes.
Ms. Lager advanced to slide 12 titled Alaska Broadband
Office. She focused attention on the Alaska Broadband
Office (ABO) and reported that it was working on meeting
all the federal requirements to access as much federal
funding as possible. Currently, the ABO's Tribal Liaison
position was funded in the FY 24 budget. The department was
also staffing grants administrators for broadband grant
management support within the Division of Community and
Regional Affairs. She expected that the large influx of
federal dollars would be included in the FY 2025 budget.
Some language was also added for statutory designated
program receipts to allow for non-state and non-federal
financial participation in broadband as well as federal
receipt authority language.
1:46:03 PM
Ms. Lager highlighted slides 13 and 14 titled Banking and
Securities. She offered that the budget included funding
for increased legal costs and a Financial Examiner IV
position due to the significant growth in the financial
sector. She continued on slide 15 titled Community and
Regional Affairs." She noted that the division's grant
portfolio continued to grow and was almost $1 billion,
encompassing 870 new grants with a staff of 8 individuals.
The budget leveraged federal receipt authority, which
enabled the addition of two positions to the FY 2024 budget
to help support the grant workload. Ms. Lager advanced to
slides 16 and 17 titled Community and Regional Affairs,
which showed items of popular interest contained in the
base budget. She moved to slide 17 and pointed to the chart
listing the Grants to Named Recipients Included in the
Governor's FY 2024 Operating Budget:
• Alaska Legal Services Corporation
• Alaska Marine Safety Education Association
• Life Alaska Donor Services
• Native Village of Napaimute for the Kuskokwim Ice Road
Ms. Lager moved to slides 18 and 19 titled Corporations,
Business, and Professional Licensing. She related that the
division had over 300,000 licensees with professional
licensing alone, which grew 64 percent in the last 10
years. She discussed the divisions FY 2024 budget changes
listed on slide 19. She explained that in prior years GF
had been used to offset revenue collections for professions
in deficit positions. The budget proposed to stabilize
volatile licensing fees by offsetting investigative costs
with GF instead of revenue. The division observed a
destabilizing fee setting effect on small license programs
when burdened with large investigative costs. Furthermore,
the budget included restoring computer refresh funding
replacing one-time Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) monies. Finally, staff and receipt
authority were added to address the significant increases
in the professional licensing workload and to improve
licensing timeliness.
1:50:25 PM
Ms. Lager continued to slides 20 and 21 titled Division of
Insurance:
The Division of Insurance (DOI) is responsible for the
licensing and compliance of insurers and insurance
products in Alaska.
The Centers for Medicare and Medicaid Services
approved DOI's application to extend The Alaska
Reinsurance Program for another five years (through
2027). This allows DOI to leverage federal dollars to
reduce the cost of healthcare to individual Alaskans
purchasing insurance on the federal marketplace.
DOI deposited nearly $65 million into the general fund
in FY 2022.
Ms. Lager elaborated that $1 million was added to the
existing receipt authority for insurance actuarial costs.
The department was actively recruiting to hire additional
actuaries but until enough were hired, the division relied
on contract services which was more expensive. She moved to
slide 22 titled Division of Investments that had no
changes, and emphasized its important role in promoting
economic development through direct state lending for those
that did not qualify for traditional borrowing
opportunities.
1:51:52 PM
Co-Chair Johnson invited questions.
1:52:01 PM
Representative Hannan referred to the addition of increased
investigations and a financial examiner position totaling
$481 thousand on slide 14. She asked for a breakdown of the
personal services costs. Ms. Lager expounded that $275
thousand was for increased legal costs due to the added
investigatory burden from the growth in the financial
sector. The remainder was for personal services.
Representative Hannan asked if there was someone already in
the department that could move into the position or was the
department going to engage in recruitment. Ms. Lager
answered that there were promotional opportunities within
the division.
1:53:23 PM
Representative Tomaszewski requested more information
regarding cryptocurrency and multi-state investment [slide
3].
1:53:43 PM
MICAELA FOWLER, DEPUTY COMMISSIONER, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, OFFICE OF
MANAGEMENT AND BUDGET interjected that the division
director was available to answer the question.
1:53:59 PM
Robert Schmidt, Director Division of Banking and
Securities, Anchorage, responded that in 2022 the country
experienced a spectacular series of cryptocurrency
bankruptcies that impacted thousands of Alaskans for tens
of millions of dollars. Currently, division staff were
monitoring the bankruptcies and trying to ensure that the
successor entities would do a better job in running their
businesses. He noted that the division had engaged in 1000
staff hours of monitoring activities.
Representative Tomaszewski asked if Mr. Schmidt had
collaborated with the Alaska Permanent Fund Corporation
(APFC) regarding its handling of cryptocurrency. Mr.
Schmidt replied in the negative.
1:55:18 PM
Representative Ortiz returned to slide 20. He noted the
star graphic on the slide and read the following, Nearly
$400 million of federal funds collected 2016-2023. He
inquired about the mechanics of how the Division of
Insurance generated revenue for deposit into GF. Ms. Lager
replied that the division generated money in two ways. She
pointed out that the star graphic information related to
the Alaska Reinsurance Program that offset the cost of
private health insurance in the state. The $65 million
deposit into GF was generated by insurance premium taxes.
She relayed that a small tax ranging from 2.5 percent to
2.7 percent was added to all tax insurance premiums paid in
the state.
1:57:12 PM
AT-EASE
1:57:42 PM
RECONVENED
1:57:48 PM
Representative Stapp asked for clarification regarding the
$400 million collected from the Alaska Reinsurance Program.
Ms. Lager clarified that the money was not deposited into
the general fund but was collected by the state and issued
out of the grant to the Alaska Comprehensive Health
Insurance Association, which administered the reinsurance
program. Representative Stapp asked for confirmation that
the money lowered individuals insurance premiums through
the healthcare marketplace. Ms. Lager responded in the
affirmative.
1:58:37 PM
Representative Coulombe cited slide 18 and related that she
had received numerous complaints regarding the amount of
time it takes to obtain a license in the state. She
wondered what the division was doing to resolve the delay
issues.
Commissioner Sande responded that she had heard from most
legislators on the issue, and everyone agreed that the
Division of Corporations, Business, and Professional
Licensing (CBPL) was taking too long to issue licenses. She
shared that she had investigated the issue and discovered
that the 65 percent growth in professional licensing was
not anticipated and DCCED did not respond adequately by
increasing staff to meet the increased workload, which,
over time left the staff fragmented and frustrated. She
responded to the problem by determining short-term and
long-term fixes and she appreciated the commitment of the
legislature and administration for supporting what was
needed. She indicated that when she became commissioner
DCCED had a 22 percent vacancy rate that was currently 12
percent. She believed that things were moving in the right
direction to resolve the issue. She offered that when
things were going well, constituents typically were not
calling, and she requested that the legislature take note
when the complaints stop.
2:02:19 PM
Representative Coulombe asked if the increased staff was
impacting the problem and what the current timeline was to
issue licenses.
Ms. Fowler answered that each licensing program had its own
delayed timelines. She exemplified the nursing program that
took about eight weeks for the initial review of a new
license. She highlighted four things that the department
was doing to address the delays in CBPL:
• Increasing staffing; the governors budget added 12
new positions.
• Classification study: employment retention with the
opportunity for career advancement was an important
factor.
• Board liaison position within the commissioners
office to ensure the boards were working effectively.
• Universal Temporary Licensure: the governor introduced
legislation allowing a professional to work
temporarily under a similar state licensure until the
Alaska license was issued.
2:04:34 PM
Representative Cronk cited slide 4 and referenced the
Alaska Seafood Marketing Institute (ASMI) and the Alaska
Gasline Development Corporation (ACDC) and asked for
information regarding their roles.
Ms. Sande responded that Jeremy Woodrow, Executive
Director, ASMI was available. She shared that she was a
member of the board along with members of the industry and
was impressed at how they impacted marketing seafood in the
state as well as marketing the state itself. She mentioned
the international and domestic contacts the board developed
to dynamically move the industry forward in seafood
marketing and promoting the state.
Ms. Fowler interjected that Frank Richards, President, AGDC
was available to discuss the purpose of AGDC.
Representative Cronk indicated that he did not need further
discussion.
2:06:51 PM
Representative Josephson referred to the $6 million in
receipts from the Alaska Industrial Development and Export
Authority (AIDEA) and wondered why the number was much
lower than in the past. Ms. Lager answered that the $6
million dividend in FY 2022 went directly to the general
fund. Representative Josephson remembered substantially
higher dividend amounts from AIDEA in the past. He asked
for confirmation. Ms. Lager responded in the affirmative
and noted that the dividends had varied in size. The
statutory range for the dividend was between 25 percent to
50 percent of the statutory net earnings of the prior year.
Representative Josephson asked about the 64 percent
increase in professional licenses. He guessed that the
increase was due to new professions, and he wondered what
they were. Ms. Lager responded that there had been a few
new programs and she would find out what they were.
However, they experienced much of the growth in established
programs.
2:09:08 PM
Ms. Lager continued on slide 23 titled Corporate
Agencies. The slide graphically depicted the 8 state
agencies: Alaska Energy Authority (AEA), Alaska Industrial
Development and Export Authority (AIDEA), AGDC, ASMI,
Alaska Oil and Gas Conservation Commission (AOGCC), Alcohol
and Marijuana Control Office (AMCO), Regulatory Commission
of Alaska (RCA), and Alaska Railroad Corporation (ARC).
She noted that the Alaska Railroad Corporation was not
subject to the Executive Budget Act and DCCED only played
an administrative role. She turned to slide 24 titled
"Budget Highlights of Corporate Agencies." She delineated
that receipt authority was added for AEA to pay for 5
positions in AIDEA to support capital projects funded
through the Infrastructure Investment and Jobs Act (IIJA).
In addition, DGF from the Power Cost Equalization Endowment
was appropriated for PCE technicians. Currently, AGDC was
wholly supported by the Alaska Liquefied Natural Gas Fund
(AK LNG), as the fund was expected to be fully depleted in
FY 2023, over $3 million in additional GF was necessary to
fund items like travel, leases, personal services, etc.
Ms. Lager advanced to slide 25 that highlighted the $5
million request for marketing support for ASMI. She
examined slide 26 titled DCCED Vacancy History. The graph
portrayed the vacancy rates from 2017 to 2023. She
highlighted that the vacancy rate, depicted by the light
blue, had grown throughout the pandemic and impacted each
division in different ways. She exemplified DBPCL vacancies
that rose as high as 33.3 percent in occupational licensing
examiners, which contributed to significant delays. The
vacancy rate was currently 9 percent. She relayed that
DCCED was hyper-focused on filling vacancies throughout
the department.
2:12:43 PM
Ms. Sande continued on slide 27 titled Roadblocks to
Economic Growth. She expounded that through the
departments outreach, a resounding theme emerged quickly
that there was difficulty with housing, workforce, and
childcare as impediments to economic development. It became
clear that as the department tried to address economic
development the state needed to address the challenging
issues she listed along with the high cost of energy.
Ms. Sande discussed slide 28 [untitled]. She related that
through discussions with the governor, he appropriated $5
million to tackle the problems. She remarked that the
department was proud of being good stewards of state
funding. She shared her personal experience of her
beginnings as commissioner presenting the executive team
challenges to save state funding through consolidating
space. She believed that the staff performed remarkably
well. Space was made available to the Department of
Education and Early Development (DEED), and she enjoyed the
busy atmosphere it created. She related that she approached
every situation by asking how DCCED could be good stewards
of state dollars. She developed an economic development
strategy using the departments own receipts and not
growing state government. She established an economic
development subcabinet that met each week. She realized
that professional expertise was necessary and engaged a
public relations firm to help. She wanted a targeted and
strategic approach to economic development and planned to
use benchmarking to measure progress. She was engaging in
stakeholder engagement with the deputy commissioner. She
believed that the final element was telling Alaska's story.
2:19:34 PM
Co-Chair Johnson invited questions.
2:20:26 PM
AT-EASE
2:25:08 PM
RECONVENED
2:25:17 PM
Co-Chair Johnson introduced the next presentation.
2:25:34 PM
TED HELVOIGT, VICE PRESIDENT, EVERGREEN ECONOMICS, MEDICAID
CONSULTANTS, introduced a PowerPoint presentation, "Long-
Term Forecast of Medicaid Enrollment and Spending in
Alaska," dated March 2, 2023 (copy on file).
Mr. Helvoigt began on slide 2 titled Long-term Medicaid
Forecast (MESA):
• Requested by the Alaska Legislature in 2005
• First forecast completed in 2006
• 20-year projection updated annually
• Assumes current Medicaid structure remains in place
Provides a baseline for analysis of proposed
initiatives
• Provides a benchmark for DOH efforts to "bend the
Medicaid cost curve"
Provides insights into trends in Medicaid
enrollment, utilization, and spending
Mr. Helvoigt explained that the purpose of MESA was to
provide insights on Medicaid spending into the future.
Mr. Helvoigt continued on slide 3 titled Medicaid
Enrollment and Spending in Alaska:
Bending the Medicaid cost curve
Recent trends & events
FY2023-FY2043 projection
Chronic conditions & Medicaid
Healthy Alaskans 2030
Mr. Helvoigt discussed slide 4 titled Bending the Cost
Curve:
• Cost containment efforts have worked.
• Spending has been much lower than was projected
in 2006.
• Projected spending growth is lower than earlier
forecasts.
Mr. Helvoigt explained that the graph compared projected
spending from the current forecast to the first long-term
Medicaid forecast and depicted Medicaid spending from 1993
projecting into the future to 2043, represented by a red
line into a green dashed line (current projections) and a
blue dotted line (forecast from 2006). He pointed out that
through FY 2022 actual Medicaid spending was $1 billion
lower than originally forecasted, which he termed bending
the cost curve.
Mr. Helvoigt advanced to slide 5 titled Many More Alaskans
Receiving Medicaid Services:
• Actual recipient counts closely tracked the 2006
projection until Medicaid expansion in FY 2016.
• Recipient counts likely also impacted by Alaska
recession.
Mr. Helvoigt detailed that the graph compared projected
recipients from the current forecast to the first long-term
Medicaid forecast and spoke to the difference between the
idea of being enrolled in Medicaid and recipients of
Medicaid. The distinction was recipients used the services
and it was a more important measure to employ. The blue
dotted line represented recipient growth from Medicaid
expansion that lasted through the recession and the public
health emergency. The number of recipients grew by
approximately 50 thousand from 2006.
Mr. Helvoigt continued to slide 6 titled Spending Per
Recipient Has Grown Slowly:
• Spending per recipient is much lower today than
projected in 2006.
• Cost containment initiative by DOH will likely
continue to suppress growth in spending.
Mr. Helvoigt delineated that the slide compared projected
spending per recipient from the current forecast to the
first long-term Medicaid forecast. The blue dotted line
showed the original 2006 forecast. The red line showed
actual spending at $12 thousand per recipient on average
that had been projected at $25 thousand in the original
forecast.
2:31:21 PM
Representative Ortiz asked about the factors that caused
the expenditure per recipient to be lower than expected.
Mr. Helvoigt replied that from FY 1998 to FY 2004, total
spending increased by 18 percent a year and recipient
spending increased by 9 percent per year, from 2006 through
2022 it dropped to 2.2 percent per year and from 2012
through 2022, it decreased to 1.6 percent per year. He
indicated that many of the factors that decreased costs
were initiated by the Department of Health and Social
Services [currently the Department of Health (DOH)]. He
surmised that the largest impacts came from increased
regulation of Personal Care Assistants (PCA) and strong
efforts by the department to decrease Medicaid
reimbursement rates. He pointed out that decreasing
reimbursement rates brought both beneficial and negative
consequences that he would expound on in later slides.
Representative Ortiz asked about the term spending and
asked who was doing the spending. Mr. Helvoigt answered
that the Medicaid program was doing the spending, utilizing
GF and Medicaid reimbursement funds. He would provide
further detail in future slides.
2:34:47 PM
Representative Josephson asked about PCA costs increasing
in the earlier part of this century. He noted that the
costs could be money well spent because it was keeping
recipients out of institutions.
Mr. Helvoigt agreed with the statement. He deduced that it
was not the service but the overspending on the services
provided that increased costs. Representative Josephson
asked about keeping down reimbursement rates and deduced
that it had an immediate benefit to the treasury but had a
mal effect on providers by dropping out and reducing
access. He asked whether he was correct. Mr. Helvoigt
answered that it seemed correct in theory and offered to
research the answer. He agreed that as the cost of services
were held down and if the costs to the providers were
greater than the reimbursement, providers would decrease.
2:37:04 PM
Representative Hannan inquired about spending per recipient
costs of $12 thousand. She wondered whether the amount
equated to $12 thousand of medical care that covered all
the recipients' medical needs. Mr. Helvoigt answered in the
affirmative. He offered that it would likely cost more in
the private sector.
2:38:11 PM
Representative Stapp cited reimbursement rates. He inquired
whether it was true that Alaska had the highest Medicaid
reimbursement rates in the country. Mr. Helvoigt replied
that Alaska had one of the highest rates but was uncertain
how it ranked among other states. Representative Stapp
asked how many states had higher Medicare reimbursement
rates than Medicaid. Mr. Helvoigt answered that very few
states had higher Medicare reimbursement rates than
Medicaid. Representative Stapp informed the committee that
Alaska was one of two states that had the highest Medicaid
reimbursement rates. He asked for Mr. Helvoigt' s
confirmation. Mr. Helvoigt agreed to follow up.
2:39:16 PM
2:39:27 PM
Mr. Helvoigt moved on to the next section of his PowerPoint
displayed on slide 7, Recent Trends and Events. He
quickly advanced to slide 8 titled Impact of Continuous
Enrollment Requirement:
Medicaid enrollment will likely revert to trend over
the next couple of years with the unwinding of the
Federal Health Emergency and the end of the continuous
enrollment requirement.
Mr. Helvoigt pointed out that the slide related to COVID-19
effects. He delineated that the graph showed monthly
enrollment in Medicaid from FY 2020 to the end of FY 2022.
The blue line represented the pre-COVID timeline, the
orange line represented the time covering the Federal
Health Emergency declared in March 2020, the blue dotted
line represented the enrollment trend before COVID-19, and
the orange dotted lines depicted the trend under the
emergency. He summarized that Medicaid enrollment increased
quickly under the emergency orders.
Mr. Helvoigt moved to slide 9 titled Spending is Back to
Trend:
Spending on Medicaid services is growing faster than
the pre-COVID trend, but will likely moderate in the
next few years.
Mr. Helvoigt explained that the slide showed the monthly
spending on the Medicaid program from FY 2020 to FY 2022.
The blue lines represented pre-COVID, and the orange line
represented the time under the health emergency. He
indicated that spending initially decreased under the
emergency and had reverted to but did not exceed the pre-
COVID trend. While enrollment had significantly increased
under the emergency, spending had returned to the pre-COVID
trend.
2:42:00 PM
Co-Chair Johnson asked if he knew whether there were
similar Medicaid trends in other states. Mr. Helvoigt
responded that every state was impacted by the pandemic and
enrollment had increased for all states by 20 million. He
was unaware of the spending impacts in other states.
2:42:53 PM
Representative Stapp asked if the graph represented the
total spend or state spend. Mr. Helvoigt replied that it
showed the total spend. Representative Stapp asked if the
graph incorporated the Federal Medical Assistance
Percentage (FMAP). Mr. Helvoigt responded in the
affirmative and added that the blue and orange lines
depicted total spending, however, the overall mix of
spending was not included on the slide but would be
discussed in a future slide.
2:43:53 PM
Mr. Helvoigt continued on slide 10 titled Comparative
Impact of COVID-19:
• In comparison to peer states,* Alaska experienced
•28% fewer (3,329) hospitalizations than peer
states
•22% fewer (393) deaths
Alaska's success in protecting vulnerable persons has
resulted in savings to the Medicaid program of $30.7
million ($5.6 million GF)
Through January 2023, the Medicaid program has spent
$4.6 million ($841,000 GF) treating 1,549
beneficiaries diagnosed with post-COVID conditions.
*Peer states: Idaho, Montana, New Mexico, North
Dakota, South Dakota, Wyoming
Mr. Helvoigt communicated that in the attempt to show how
Alaska compared to peer states, he chose the peer states
that were geographically large with small populations. He
identified the second bullet point that was a comparison to
the country and noted very similar results and ascertained
that Alaska performed exceptionally well.
Mr. Helvoigt advanced to slide 11 titled Medicaid
Enrollment, Recipients, & Spending:
• Spending growth driven by enhanced federal
participation.
• Enrollment growth due to expansion, recession, &
continuous enrollment.
• Enrollment and recipient counts have diverged.
Mr. Helvoigt offered that the slide depicted spending on
Medicaid services, enrollment in the Medicaid program, and
recipients of Medicaid services, by date of service, FY
2012 to FY 2022, and the total expenditure separated into
federal and state funds. Federal funds were represented in
red and state funding in blue. He specified that the
spending by the state had barely changed over the time
period. He noted that the additional FMAP provided by the
federal government had a large impact. Total spending had
increased by $1 billion from 2012 through 2022 and
essentially all of it had been federally funded. He
submitted that the growth in the Medicaid program had
overall been federally funded. He directed attention to the
green line showing the annual unduplicated count of
enrollees and the blue line showing the annual unduplicated
count of recipients. He reiterated that the blue line
represented enrolled recipients who actually utilized the
services. He elucidated that in 2012, 88 percent (nearly 9
out of 10) of Medicaid enrollees were also recipients. In
2022, 74 percent (3 out of 4) of enrollees were using
services.
2:49:13 PM
Mr. Helvoigt identified the next section of his discussion,
FY 2023-FY 2043 Projection shown on slide 12. He directed
attention to slide 13 titled Alaska's Population Is
Aging:
• Population growth has slowed precipitously & will
continue to slow.
• Number of children in Alaska is expected to
decrease.
• Growth in the adult 20 64 population will be
modest (1.8 percent per year).
• Growth in the senior population will be
relatively robust (8.1 percent per year).
Mr. Helvoigt expounded that the state demographer expected
the states population to increase by only 1000 people per
year through 2043, which is very slow growth. Within the
Medicaid program it was understood that working age adults
were more expensive than children, while seniors were more
expensive than younger adults, which would impact the
program.
2:51:13 PM
Co-Chair Edgmon commented that he regularly read a
publication by the Department of Labor and Workforce
Development (DLWD) called Alaska Trends. He related that
most of the information on the slides concurred with DLWDs
data except that he recalled that the population growth for
adults aged 20 to 64 years was expected to decrease between
2021 to 2050. Mr. Helvoigt responded that the numbers in
the slides were from June 2022 DLWD data.
2:52:47 PM
Mr. Helvoigt moved to slide 14 titled, Medicaid
Reimbursement Rates Have Mostly Trailed Medical Price
Inflation:
• Between FY2016 and FY2020, medical price
inflation in Alaska outpaced Medicaid
reimbursement rates by about 3.6 percentage
points per year.
• Between FY2020 and FY2022, Medicaid Reimbursement
rates slightly outpaced medical price inflation.
Mr. Helvoigt defined medical price inflation as the amount
of money paid by consumers for insurance, deductibles, co-
pays, any other out-of-pocket costs for medical care and
did not include Medicare, Medicaid, or any type of public
insurance. The bar chart portrayed rapid growth in medical
price inflation from FY 2016 to FY 2020 in Alaska. He
underlined that as Medicaid reimbursement rates were held
down for cost containment, medical price inflation grew
faster due to the provider adjusting for low
reimbursements. He emphasized that as reimbursement rates
were restricted, it affected private sector medical costs.
The rapid growth in medical price inflation was only
experienced in Alaska and was partly attributable to low
Medicaid reimbursement rates.
2:56:03 PM
Representative Josephson surmised that a Medicaid provider
was providing services for low-income patients, which they
could decline to provide. He observed that between FY 2016
through FY 2020 they were not reimbursed as well as they
had been relative to inflation. He asked if his assumption
was correct. Mr. Helvoigt replied in the affirmative. He
clarified that if there was a point in time when both
payments were equal it was true that the Medicaid
reimbursement rates were currently much lower than what an
individual with a private plan paid.
2:57:57 PM
Mr. Helvoigt continued on slide 15 titled, Growth in
Medicaid Reimbursement Rates:
• Medicaid reimbursement rates will continue to
grow at a slower rate than overall healthcare
price inflation.
Mr. Helvoigt pointed out that the blue line on the graph
represented the medical price inflation that was expected
to continually increase. The orange reflected a projected
slow growth (1.6 percent annually) through 2042 in
reimbursement rates. He stressed that the data was based on
his assumptions about how the department would act. He
noted that a change by one percentage point per year in
reimbursement rates greatly increased the spending in the
Medicaid program 20 years in the future.
2:59:48 PM
Representative Josephson determined that Mr. Helvoigt
indicated there would be pressure to keep reimbursement
rates down. He relayed that rate rebasement was the
primary way to adjust reimbursement, which the state was
supposed to perform every 4 years but neglected to do. He
asked if the state would need to perform rate rebasement at
some point. Mr. Helvoigt answered in the affirmative. He
deduced that as providers costs increased, it would focus
attention on the issue.
3:01:41 PM
Mr. Helvoigt advanced to slide 16 titled, GF Spending Will
Grow Faster than Federal:
• Difference in growth rates is due to unwinding of
enhanced FFP.
o Impact will affect FY2023 and FY2024
o All states will be impacted by the unwinding
of enhanced FFP.
• Assumes no other future changes to FFPs beyond
unwinding of federal health emergency response to
the COVID-19 pandemic.
Mr. Helvoigt reported that the chart showed GF and Other
matching funds and federal spending. In FY 2023 the total
spending was $2.6 billion and would increase to $5.3
billion in 2043 (3.6 percent growth rate). The federal
spending would increase by 3.6 percent and state spending
would increase by 4.2 percent. The states growth rate was
predicated on the elimination of .6.2 percent enhanced FMAP
beginning in April 2023 and continuing to zero over the
following 3 quarters. He added that the 4.2 percent
increase would happen rapidly. He projected that by 2024
spending would increase by $184 million in total; roughly
$95 million would be incurred by the state.
Mr. Helvoigt moved to slide 17 titled, Growth in
Reimbursement Rates Will Drive Spending Growthbut at a
relatively slow pace:
• Growth in population, enrollment, utilization,
and intensity of use will have relatively modest
impacts on spending growth.
Mr. Helvoigt indicated that the blue area on the graph was
based on the status-quo 2023 recipient population without
projecting any changes through 2043. The other colored bars
displayed the various components of Medicaid growth. All of
the components listed: population growth, enrollment above
population growth, utilization of Medicaid services,
intensity of use of Medicaid services, and growth in
reimbursement rates were all forecast to increase. The
mauve color represented the growth in reimbursement rates
and had the largest increase, but the forecast would be
much higher (by $2.2 billion in 2043) if it grew as rapidly
as medical services inflation.
3:07:43 PM
Representative Stapp cited the $42.5 million budget
increase in Medicaid in FY 2024. He wondered how accurate
the FY 2024 increase was given the factors impacting
Medicaid in the current year. Mr. Helvoigt reiterated that
overall spending would increase by $184 million, and the
states share was $97 million. He estimated that $55
million represented the actual Medicaid growth and the
remainder was the decreased FMAP. Representative Stapp
observed that the Office of Management and Budget (OMB) was
only projecting a $45 million increase in spending.
3:09:51 PM
Representative Galvin referred to the population of 744
million in the state. She asked how many were currently on
Medicaid. Mr. Helvoigt replied that his unduplicated count
was 277 thousand or 38 percent of the population.
Representative Galvin inquired if the 38 percent might
decrease with positive changes in the economy. Mr. Helvoigt
answered that the number would shift over the next year or
two and would decrease to about 34 percent due to
redetermination. He estimated that roughly 84 percent of
enrollees would be recipients. He believed that the program
should not be divorced from the local or state economy.
However, the biggest impact on Medicaid enrollment was
federal policy. A strong economy could assist in getting
people off Medicaid and also help finance the Medicaid
program.
3:13:24 PM
Mr. Helvoigt identified the next section of his discussion,
Chronic Conditions and Medicaid on slide 18. He stated
that chronic conditions were a significant cost driver to
the Medicaid program. He quickly advanced to slide 19,
titled Acute Vs. Chronic Conditions:
• An acute condition develops or occurs suddenly
and lasts a short time.
• Chronic conditions typically occur gradually and
persist for many months or years, factors that
directly or indirectly lead to chronic conditions
• Lifestyle, e.g., drug and alcohol abuse,
obesity, tobacco use
• Environmental, e.g., certain cancers, asthma
• Congenital disorders, e.g., cystic fibrosis,
Down syndrome
o Risk factors affecting chronic conditions can be
categorized as modifiable and nonmodifiable.
Mr. Helvoigt advanced to slide 20 titled, Chronic
Conditions and Age, FY 2022:
• Most Medicaid recipients do not have a diagnosed
chronic condition.
• Prevalence of a diagnosed chronic condition
increases with age.
• Higher Medicaid spending for seniors is due to
chronic conditions.
3:15:35 PM
Co-Chair Johnson asked if the data was for Alaska
specifically. Mr. Helvoigt responded that it was Alaska
specific.
3:16:00 PM
Representative Josephson asked if the increased spend for
seniors for chronic conditions was due to non-covered costs
associated with Medicare. Mr. Helvoigt answered that at the
age of 65, many on Medicaid lose coverage and transition to
Medicare. He added that for other eligibilities (dual
eligibility), Medicaid pays Medicare premiums and takes the
role of primary payer.
Mr. Helvoigt advanced on slide 21 titled, Age and Chronic
Conditions:
• Prevalence of chronic condition is positively related
to age.
• Many Medicaid recipients have multiple chronic
conditions.
Mr. Helvoigt pointed out that less than 10 percent of
children under 10 had a diagnosed chronic condition but it
continued to increase through age 64 and precipitously
dropped between 65 to 74 years of age. The drop was due to
the decrease in Medicaid recipients due to Medicaid
expansion and those that migrated completely to Medicare.
The remainder of recipients that were dually eligible and
were diagnosed with chronic conditions were getting
reimbursed through Medicare, which reduced Medicaid costs.
He emphasized that the prevalence of chronic conditions
increased with age, which was the reason the age factor
impacted Medicaid, since chronic conditions were more
costly.
Mr. Helvoigt continued on slide 22 titled, Incremental
Cost of Chronic Conditions:
• Diagnosis of one or more chronic conditions is a
bigger driver of Medicaid spending than is age.
Mr. Helvoigt delineated that column a. of the chart
reflected recipient age and column b. average recipient
spending by age. He attributed $8 thousand to those under 5
years of age and $48 thousand to those 85 years of age and
older. He cited column c. showing Medicaid spending without
a chronic condition that revealed spending did not differ
with age. However, column d. demonstrated that the Medicaid
expenditure per recipient with a chronic condition
increased dramatically regardless of age. He related that
out of the estimated 200 thousand Medicaid recipients in FY
2022, 50 thousand had chronic conditions and represented
most of the spend in the Medicaid program and noted that it
was a significant cost driver.
3:22:21 PM
Mr. Helvoigt continued on slide 23 titled, Chronic
Conditions Drive Medicaid Spending:
• Today 77% of Medicaid spending is on
beneficiaries diagnosed with one or more chronic
conditions; This will grow to 82% by 2043.
Mr. Helvoigt referred to the graph and remarked that from
2023 to 2043 Medicaid spending increased from $2.6 billion
to $5.3 billion, roughly doubled, mostly due to spending on
chronic conditions represented in blue, which would
increase from 77 percent to 82 percent by 2043. He moved to
the last section, Healthy Alaskans 2030 on slide 24 and
disclosed that he was not involved in the plan. He was
asked to evaluate the plan and perform scenario analysis to
determine if the plans goals were reachable and what the
savings effect was on Medicaid. He discussed slide 25
titled, Healthy Alaskans 2030:
Alaska's state health improvement plan, Healthy
Alaskans 2030,* provides an approach for how the state
can improve on the most significant health issues that
Alaskans face.
Among the 30 health objectives contained in the HA2030
plan are ones directly related to chronic conditions:
Objective 1 Reduce cancer mortality.
Objective 9 Increase percentage of children who
meet health weight criteria.
Objective 14 Reduce number of days adults
report being mentally unhealthy.
Objectives 22 & 23 Reduce alcohol-induced and
drug-induced mortality.
Objectives 26 & 27 Reduce tobacco use among
adolescents and adults.
*An equal partnership between the Department of Health
and the Alaska Native Tribal Health Consortium
(ANTHC).
Mr. Helvoigt continued with Healthy Alaskans 2030 on slide
26:
Evergreen Economics estimated potential savings to the
Medicaid program under the assumption that the
prevalence of the following five chronic conditions
decrease at the same rate as targeted by the seven
Healthy Alaskans 2030 objectives shown on the previous
slide.
1. Cancer [prevalence decreases by 0.88% per year]
2. Obesity [prevalence decreases by 0.44% per year]
3. Mental health conditions [prevalence decreasing by
0.46% per year]
4. Drug & alcohol dependency [prevalence decreases by
0.90% per year]
5. Tobacco use [prevalence decreasing by 0.68% per
year]
3:26:32 PM
Mr. Helvoigt advanced to slide 27 titled, Potential
Savings to Medicaid:
Reducing the prevalence of certain chronic conditions
directly related to seven of the Healthy Alaskans 2030
goals could lead to substantial savings to the
Medicaid program.
Mr. Helvoigt directed attention to the chart that focused
on the five chronic conditions and the potential reduction
in Medicaid spending achieved by meeting Healthy Alaskans
2030 goals in FY 2028, FY 2033, FY 2038 and FY 2043. He
pointed to total savings of the combined objectives
(savings were above his baseline projections) that amounted
to $428 million and over $120 million in GF, which
represented 8 percent in savings.
3:27:48 PM
Representative Stapp asked how many states augmented their
Medicaid program with a Medicaid provider tax. Mr. Helvoigt
was aware of the tax but did not know the number of states.
3:28:37 PM
Co-Chair Edgmon asked where Alaska sat as compared to other
states with the percentage of people on Medicaid and was
the composition of the age demographic similar to other
states. Mr. Helvoigt responded that the proportion of
people on Medicaid in Alaska was slightly larger than in
other states. He elucidated that the best comparison would
be to other states that participated in Medicaid expansion.
He deduced that the future average monthly enrollment would
be about 32 percent of the population. The year prior to
the start of the pandemic approximately 30 percent of the
population was on Medicaid; Alaska was a bit higher. Co-
Chair Edgmon commented that Alaska was one of the top 9
states in Medicaid utilization. He appreciated the
information Mr. Helvoight provided.
3:31:36 PM
Representative Josephson understood the need for re-
enrollment with the end of the COVID emergency. He deemed
that there would be people who were able to be dropped from
the rolls and others would postpone treatment or go to an
emergency room (ER) and put off payment due to lack of
other medical options. He wondered whether that behavior
increased costs to the entire system. Mr. Helvoigt
responded that 25 percent of enrollees were not using
services, which suggested some people had other options. He
agreed that for individuals that lose Medicaid, many went
to emergency rooms for care. However, a small cohort of
recipients went to the ER for care instead of primary care
providers. He was unsure the scenario would increase costs.
However, he relayed the conclusion of a peer, who deduced
that many hospitals love the uninsured because they can
charge exorbitant costs, over what they charge for Medicaid
or privately insured patients and lacking full repayment,
the hospitals were compensated for the remaining balance
via the Medicaid Disproportionate Share Hospital (DSH)
payments. He believed that there was some truth in the
conclusion.
3:35:36 PM
Representative Tomaszewski asked what amount, if any,
people on Medicaid contributed to their care. He wondered
whether there were deductibles or co-pays. Mr. Helvoigt
answered that there was no payment from the enrollee.
Representative Tomaszewski asked why there were no co-pays
in the Medicaid program. He wondered if it was prohibited.
Mr. Helvoigt was unaware of the answer and thought someone
from the department could respond.
3:37:37 PM
Co-Chair Johnson reviewed the agenda for the following
day's meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFIN DOH MESA Presentation 3.2.23.pdf |
HFIN 3/8/2023 1:30:00 PM |
|
| DCCED HFC 03.08.2023 - Budget Overview.pdf |
HFIN 3/8/2023 1:30:00 PM |
HB 39 |
| DCCED HFC 030823 - Response 032723.pdf |
HFIN 3/8/2023 1:30:00 PM |
HB 39 |
| DCCED HFIN Response CBPL - PL Stats FY2012-FY23 10 yrs. 032123.pdf |
HFIN 3/8/2023 1:30:00 PM |
HB 39 |
| DOH HFIN MESA 030823 Response to Q 041323.pdf |
HFIN 3/8/2023 1:30:00 PM |