The Senate Finance Committee got a preliminary look Monday at Gov. Mike Dunleavy’s plans to reduce Medicaid state spending by nearly $250 million – plus another $465 million in lost federal funds.

The first phase cuts $102 million in state funds, resulting in a loss of another $84 million in federal funds.

This round features cost reductions such as a 5% rate decrease to certain hospitals and physicians, withholding inflation payments and eliminating adult preventative dental services.

The rest must come from federal approved changes, largely through waivers to change or reduce programs, meaning all of the proposed cuts will not be achieved by July 1 when the new fiscal year begins.

If all cuts are not achievable, Dunleavy’s plan is to draw from one of the state's savings accounts, something the Legislature is trying to avoid this session.

Sen. Peter Micciche, R-Soldotna, said using savings really makes the cut worth about $77 million. He and colleagues had slightly different takes on the presentation, but each seem to realize getting to $249.2 million is not realistic.

“The public has become somewhat misguided that this reduction is attainable,” Micciche told his colleagues. “When I talk to the folks back home that say, ‘Wait a minute. This sounds great, this is a $700 million reduction,’ well no; it’s not.

“It’s a $465 million federal reduction, a $249 million [unrestricted general fund] reduction, but the talk of the safety net is that it's going to result in the same supplemental [funding request] you've warned me about for years if we don't take the bigger step. So I want the public to hear that it’s just not that simple, or we would be buying into reductions of this size if it actually worked that way. It doesn’t.”

The committee's co-chair, Sen. Natasha von Imhof, R-Anchorage, also oversees the subcommittee reviewing Medicaid and other health care appropriations from the Department of Health and Social Services.

“I do appreciate that you are looking at a multi-year approach,” von Imhof told DHSS officials. “But again, I just ask that you keep an eye on value, which is that while we do address cost and lowering costs, that we don’t suffer the delivery of services to the point where we will see a degradation of overall population health in Alaska.”

About 213,000 Alaskans are on Medicaid rolls now; about 49,000 are part of the recent Medicaid expansion added under former Gov. Bill Walker.

Deputy Health and Social Services Commissioner Donna Steward said no Alaskan loses eligibility through this round of reductions.

“It is our goal to make sure that we are appropriately evaluating and putting in place a system for healthcare coverage for all low-income Alaskans,” Steward said. “That will take time for us to work through those particular issues.”

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