Alaska FMAP Fix Included in House Deficit Reduction Package

SENATE POISED TO PASS THE LEGISLATION THIS WEEK

Senators Lisa Murkowski and Ted Stevens today applauded House passage of the 2005 Deficit Reduction Package containing language to prevent enormous cuts in Alaska's Federal Medicaid Assistance Program (FMAP).

"House passage of Alaska's FMAP extension is recognition that health care needs in Alaska are different than the rest of the country," Murkowski said. "We've worked hard to ensure that Alaskans receive the same access to health care that is enjoyed across the country and we commend the House for passing such important legislation."

The language, originally introduced by Murkowski as free standing legislation (S.159), requires the government to recognize Alaska's higher costs of medical care when dispensing federal Medicaid funds and provides a two year extension of the higher matching rate originally obtained by the Alaska Delegation in 1997.

"Healthcare costs in our state are among the highest in the nation," Stevens said. "This provision helps avoid drastic cuts in our Medicaid services to the neediest of Alaskans. I am pleased that Congress saw fit to ensure that Alaskans who are eligible for Medicaid are able to continue to receive the level of care they currently enjoy."

With the passage of the Deficit Reduction bill, Alaska will maintain a 57.58 percent FMAP (Federal Medicaid Assistance Program) rate.

Because of an overall reworking of the FMAP formula that will take effect in 2006, leading to the reduction of FMAP payments for many states, and the expiration of Alaska's temporary fix at the end of fiscal year 2005, without the two year extension Alaska's FMAP percentage would be lowered nearly 8 percent. By extending the State's FMAP percentage, Alaska will receive approximately an additional $130 million in federal Medicaid funding for FY06 and FY07.

Because it is calculated on the basis of per-capita income, the Medicaid formula does not take into consideration Alaska's high health care costs, which are caused principally by higher transportation costs. Alaska health care costs are 70 percent higher than those in states in the Lower 48, because Alaska has fewer roads than any other State, gas costs as much as $4 per gallon in rural areas. And most medical supplies, patients and providers must travel by air. As a result, Alaska has a much higher percentage of Medicaid-eligible patients than other states - - 20 percent of Alaskans are Medicaid eligible, which is significantly higher than the national average of 12 percent.

Murkowski in 2003 proposed a permanent formula change and also another extension of extra state aid. In the absence of Congress tackling a revision of the overall Medicaid formula, she helped win a two-year change in the Economic Growth Reconciliation Act (the President's $350 billion tax cut package) that provided the state with an additional $34.11 million above the traditional Medicaid formula amount.

The deficit reduction package is expected to be taken up and passed in the Senate this week.

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