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.