The Medicaid Double Dilemma
We have a double dilemma, a fiscal and moral crisis facing Alaska—a crisis that demands our urgent attention. 36% of Alaskans – 270,000 state residents – are enrolled in Medicaid, far exceeding the national average of 21%. More than one in three Alaskans rely on this taxpayer-funded government health insurance program compared to one in five Americans.
This disparity – 1 in 3 in Alaska versus 1 in 5 nationally – forces us to ask: is this fiscally sustainable? And when we understand the dynamics of how we got here and how discussions are underway to bring in out-of-state workers to meet needs, we are also forced to ask, is this morally acceptable?
Some With Blinders and Some Without
Only a handful of us – those in the Senate Republican Caucus – asked this question when SJR 15 was before us on Friday. The resolution is begging Congress not to consider cost-saving reforms to Medicaid. The resolution is agreeing to put the elderly, children, and the disabled at great risk by diverting dollars toward able-bodied working-age adults. A few of us refused to wear blinders, honestly assessed the dire circumstances, and voted no. We recognize the status quo is not fiscally or morally acceptable.
What got us here?
Medicaid was meant as a safety net for the vulnerable, those unable to work to be covered under private health insurance: the elderly, children, and those with disabilities. Former Governor Walker changed that. He unilaterally expanded coverage to include able-bodied, working adults. This has caused costs to explode both in Washington, D.C. and here at home.
With more than $36 trillion in federal debt and a growing and extremely real and serious fiscal gap at the state level, are we jeopardizing the truly vulnerable – elderly, children, and the disabled – who aren’t in a place in life where they can run out and earn more to afford private insurance? Absolutely, we are.
Except for the newer category of working-age enrollees and Alaska Natives (in some cases), the state pays half, and the federal government pays half. For working age adults, the federal government is picking up 90% of the tab. When Alaska Natives are seen in tribal facilities, the federal government covers 100% of the tab; otherwise, the state picks up 50% of the cost.
It’s a mixed bag as to who pays what percentage, but the bottom line for Alaska is the portion the state is responsible to pay is growing and simply not sustainable.
That much, really? You’ve got to be kidding. Nope. I’m not.
In about two years, the state’s portion for Medicaid will hit $1 billion, with an annual pace of growth expected at 5%. That means in year three, the state will have to add another $50 million to the $1 billion it’s paying – and add more than $50 million each following year due to compounding.
It’s out of hand folks. Our small population and private sector cannot afford to maintain this annual climb in state Medicaid spending. The federal government – our federal tax dollars – can’t keep up with this either. That’s why Congress is looking at reforms to bend the cost curve. It is also why President Trump is working to lower drug prices. High medication costs have drastically driven up the cost of Medicaid, and I’m incredibly thankful work is being done on this front,. When the same medication costs $1300 in the US but only $80 in Europe, we’ve got a problem.
The Moral Dilemma
Of the able-bodied, working age adults nationally, only 42% work full-time or part-time. I don’t have that data for Alaska but if it were a higher and better rate, I’m guessing we’d know about it.
Regarding those on Medicaid who do work, many employers here in Alaska have shared stories with me about capable employees rejecting raises and promotions to stay on Medicaid. This, my friends, is a perverse incentive that traps, not uplifts. We need a step-down approach to allow Alaskans to accept raises and transition off Medicaid.
This isn’t just about money; it’s about principles. When a system punishes ambition and self-reliance, we must rethink its design.
Medicaid was never meant to be a lifestyle for families, generation after generation, but that is what it is becoming if we don’t reverse course.
We should support restructuring Medicaid to move working adults toward independence, not perpetual reliance. This is a moral imperative in my mind. Anything less is unacceptable. Medicaid was never meant to be a lifestyle for families, generation after generation, but that is what it is becoming if we don’t reverse course.
Congress is considering work requirements to refocus Medicaid on its original intent—a move I support.
Can We Lead By Example?
I believe Alaska can lead the nation by example to address our two-part state-specific dilemma: 1) proportionately too many Alaskans on Medicaid and 2) a workforce shortage.
We must provide a step-down transition-off-Medicaid paired with robust training options for Medicaid enrollees in the working age category. With new oil fields on the North Slope coming online, a gasline project that is looking more like a reality every day, why on earth are we caving into the idea that we’ll have to recruit out-of-state workers? Let’s train our own! With more than one-third of our population on Medicaid, surely there are some enrollees we could train for high-paying and rewarding jobs.
Protecting the Status Quo is Not the Answer
We must not abandon our truly vulnerable. We must stop putting them at risk. It’s time working-age, able-bodied adults transition off of Medicaid and onto private insurance.
We must face the truth at the federal level too – as US Senator Dan Sullivan pointed out to us – that a country paying $950 billion in interest on its federal debt, outpacing the $870 billion it spends on the military, is a country at risk. History shows great powers fail when debt interest overtakes defense spending—we’re at that dangerous inflection point.
National security, economic stability, and global competitiveness depend on controlling spending.
We can’t cling to an overstretched system out of fear or inertia. Medicaid should be a lifeline for the truly vulnerable, not a lifestyle for families.
SJR 15 resists change when we need reform—it prioritizes a status quo of dependency over the American and Alaskan dream of independence and prosperity. I look forward to the day, and I hope it is soon, that there is the political will and the political make-up of elected officials to address the double dilemma, the pressing fiscal and moral Medicaid crisis.
