A four-wheeler travels a road in Bethel in November 2023. (Marc Lester / ADN)
Most of the reporting on the recently passed federal budget has focused on the massive increase in federal debt and deep cuts to Medicaid. These should be a concern for every Alaskan, but the unique way that Medicaid is entwined with our economy means Alaska will probably be harmed more than any other state by this bill. We don’t have the ability as state legislators to prevent the damage caused by this legislation, but as Alaskans, we must all seek to understand it and hope that a future Congress will actually care about the health of our neighbors and our economy..
Here’s how the federal budget reconciliation bill will devastate Alaska’s economy:
• More addiction, homelessness and crime. Slashing Medicaid coverage will reduce the number of Alaskans who can access behavioral and mental health care, leading to increased rates of addiction, suicide, homelessness, crime and other symptoms of untreated addiction and behavioral health issues.
• Shutting down energy development. The federal budget reconciliation bill eliminates Investment and Production Tax Credits (ITC/PTC) for wind and solar projects by 2027, which are essential for reducing exposure to imported diesel for rural communities and imported LNG for Railbelt communities. The ITC/PTC were longstanding, bipartisan energy programs, and Congress’ abrupt elimination of them is just one example of the unprecedented and destructive nature of this federal budget bill.
• Canceling Medicaid coverage through red tape. One of the most destructive health care provisions in the federal budget bill is a requirement for states to confirm that Medicaid enrollees are working, which, based on experience, is massively expensive and unworkable. This intentionally unworkable burden on the state will contribute to tens of thousands of Alaskans losing health coverage, which in turn will lead to uncompensated care and financial losses for frontline health care providers and put additional hospitals at risk of closure. The Alaska Hospital and Health Care Association estimates nearly 40,000 Alaskans will lose coverage.
• Shifting costs for Medicaid expansion from federal budget to state budget. Opponents of Medicaid are attempting a back-door repeal of Medicaid expansion by cutting the federal match rate nearly in half. This massive cost shift will add at least tens of millions of dollars to Alaska’s budget, necessitating either drastic cuts in other public services or cuts to the Permanent Fund Dividend.
• Massive cost increases in private health insurance. The federal budget bill terminates Enhanced Premium Tax Credits, which make health insurance affordable for 23,000 Alaskans in the private sector, primarily those who own or work for small businesses. This will increase some Alaskans’ premiums by thousands of dollars per month. Making health insurance unaffordable for small businesses will increase bankruptcies from medical bills, exacerbate the labor shortage, and increase premiums for the dwindling number of Alaskans who still have health insurance.
• Increased health insurance premiums from uncompensated care: Cutting Alaskans off Medicaid, slashing federal support for Medicaid Expansion and canceling private health insurance through massive premium increases will have the cumulative impact of significantly increasing uncompensated care, which hospitals provide but are not paid for. In turn, this increases premiums for the shrinking number of insured Alaskans, representing a cost increase for businesses, contractors, school districts, local governments and state employees. Increases in uncompensated care will put hospitals, especially those in smaller communities, at serious risk of shutting down as a loss of Medicaid dollars makes it impossible for them to meet payroll.
• Threat to Medicare: In a brazen and corrupt giveaway to Big Pharma, Congress eliminated Medicare’s ability to negotiate drug prices for numerous drugs, adding $5 billion to the federal debt. After years in which the Biden Administration cracked down on pharmaceutical price-gouging, now Congress is going in the opposite direction, threatening to make life-saving drugs unaffordable.
For rural communities, the negative impacts of cuts to the Supplemental Nutrition Assistance Program, or SNAP, Medicaid cuts and the elimination of energy development may well be fatal. Our off-the-road system communities have relied on wind and solar energy to reduce costs from expensive imported diesel fuel. Many of these projects in development will now have sharply higher costs, leaving some communities trapped with spiraling costs of imported energy. Those same rural communities will struggle to keep critical access hospitals and community health centers open. At the same time, SNAP cuts will both starve families and endanger the viability of small grocery stores. Medicaid cuts also threaten the solvency of rural air carriers, causing further cost increases for everyday goods and services.
The federal budget bill is a disaster for Alaska’s economy, with sweeping negative impacts on health care providers, employers offering health coverage, and Alaskans relying on Medicaid to meet their basic health care needs. As Alaskans, the scale of this bill far exceeds our ability to respond. We can only hope that the next Congress reverses many of the deadly decisions in this bill, because Alaskans’ lives and our economy are at stake.
Rep. Carolyn Hall represents West Anchorage and co-chairs the House Labor and Commerce Committee.
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