FAIRBANKS — Alaska won’t be creating a state-run health insurance exchange under the federal Affordable Care Act, Governor Sean Parnell announced Tuesday, even though a study warns against the move.
In a short news release, Parnell said letting the federal government implement its own exchange on the state’s behalf to allow people to compare and purchase insurance is a cheaper option. He based his decision on a report requested by the state that was released to the public Tuesday.
“Allocating state dollars and personnel to design and implement an exchange is the most expensive option,” Parnell said. “It doesn’t make sense to spend Alaskans’ dollars to set up an exchange when so much uncertainty exists about how to implement it and how to gain federal approval. Federally mandated programs should be paid for by federal dollars.”
The report, prepared by Public Consulting Group, agreed with Parnell’s cost analysis — it showed a federal option was cheaper than any state-run options by many millions — but the study warned about handing off policy decisions to the federal government.
“[The federal option] represents the least potentially expensive option because it does not require much systems development work, only integration of the Federal Solution into Alaska’s existing environment, but it is also the option with the most uncertainty since the specifications of the Federal Exchange are not known at this time,” the study said.
According to the study, state-run options ranged from about $10 million to $20 million to implement a system using existing infrastructure to the upper end of $70 million for a completely new system. The study estimates the cost of Parnell’s hands-off approach to be between $1.5 million to $3 million to coordinate with the federal government’s program.
The study ends its review of the federal option after noting the problems brought up by handing off control.
“State staff indicate a strong desire for the state of Alaska to find a state specific solution for exchange creation and a preference to not rely on federal solutions,” it states. “For this reason, the cost estimate of the eligibility system rules out a federal option.”
Despite what appears to be a preference for an intermediate approach where the state would maintain some management powers, the report avoids giving a clear-cut recommendation for a specific approach. Instead, it hedges its recommendation behind a concern about politics.
“If there was no political debate or controversy regarding health insurance exchanges, PCG would recommend the state consider initially implementing a state-federal partnership model with transition to a state-based exchange in 2016 or later,” it states. “The recommendation would be based on the fact that a state-federal partnership provides state autonomy regarding health plan management and consumer assistance and outreach.”
A state-federal partnership would allow the state to maintain control over developing health plan choices or manage consumer outreach and assistance, or both, while the federal government assumes the “responsibility for the operational and administrative burden associated with establishing and operating an exchange,” according to the study.
Parnell spokeswoman Sharon Leighow said the state wouldn’t be getting involved but said local control still is maintained because exchanges operate under state laws and regulations.
The health insurance exchange is designed to allow people to shop for coverage options and easily compare the cost and coverage of different programs. The federal government has offered grants to help states implement their own designed plans, but Alaska was the only state never to take advantage of the money. The exchanges are required to be up and running by 2014.
Parnell’s Twitter account sent out a message about the decision, with the hashtag “#FullRepeal,” a slogan for many people hoping that the entire health care law will be repealed. The law was largely upheld by the U.S. Supreme Court in late June, surviving a lawsuit that Alaska and many other states joined.
Parnell’s announcement means Alaska will join a growing list of states declining to start state-run exchanges.
The other major state-centric element of the Affordable Care Act is the expansion of Medicaid. Parnell has expressed “serious concerns” over the expansion but hasn’t made any announcement over whether the state will accept it or not.
Contact Fairbanks Daily News-Miner staff writer Matt Buxton at 907-459-7544 or follow him on Twitter: @FDNMpolitics
