Results from a nationwide study assessing health care in all 50 states show that, like the others, Alaska faces rapidly rising costs in the delivery of long-term care, child care, Medicaid and in the prices for prescription drugs.
The study, which used data through fiscal year 2002, also ranked Alaska among the highest in uninsured adults between 21 and 65. Better than one in every five within that age group (22.2 percent) had no health insurance, a statistic worse in only eight other states. Alaska did somewhat better when it came to covering children under 18. Nevertheless, somewhere between 10 and 15 percent were uninsured, enough to rank the state 35th among all states.
The analysis of state-funded health-care delivery was part of the ongoing Government Performance Project conducted by Governing Magazine and the University of Richmond with funding through the Pew Charitable Trust.
The study, entitled "A Case of Neglect: Why Health Care Is Getting Worse Even Though Medicine Is Getting Better," was published in the February 2004 issue of Governing Magazine.
It found that state-run health care systems were largely unable to deliver improvements in medicine fairly and consistently to many of their citizens, in part because rising costs were overwhelming state budgets. Over the past several years, Alaska has been no exception.
However, Alaska is unique. Its annual budgets, which often have had to deal with negative gaps between revenues and expenditures by tapping savings accounts, are tied directly to the production and price of oil. World market prices began rising earlier this year, and this fall climbed above $50 a barrel. Though the price has fallen back to the low 40s in the past few days, it remains dramatically higher than predictions had put it last year.
Lawmakers are staring at the possibility of at least $400 million to $450 million in added revenue if oil prices remain elevated for several more months. That may present the Legislature with an opportunity to reverse at least some of the budget-cutting trends of the past several years, including within the budget of the Department of Health and Social Services.
In absolute dollars, the department's budget has continued to rise even as the department has meshed some programs, zeroed funding to others, eliminated unfilled as well as some filled positions, consolidated grants and contract functions and made other changes in an effort to deliver health-care services more efficiently and effectively. But as program costs rise, those "in the trenches" continue to struggle with limited resources to meet the needs of their clients.
Earlier this year, a retiring Homer public health nurse with 25 year's experience said reduced travel budgets had affected delivery of local health services. Homer nurses learned to resort to independent fund-raising efforts. Among other things, nurse Donna Fenske noted the need for maternal and child-care education outreach programs. Fenske said she'd seen programs come and go, some for the better, some not, as they were impacted by political choice or lack of funds.
Interviewed Wednesday, Health and Social Services Commissioner Joel Gilbertson said the department is considering budget requests that would take into account the unexpected oil revenues. But he said he wouldn't couch any increases in terms of reversing trends. Past changes to department programs, he said, were the result of analyzing their effectiveness and taking appropriate steps steps that while made with the budget in mind, were not driven entirely by the bottom line.
"If programs were not working, we stopped funding them and directed the money to those that were," he said.
Grant funding, for instance, was cut to nonprofit programs shown to be underperforming or underutilized in relation to the money they were receiving, he said.
The departmental budget has doubled since 1995. At $1.7 billion in fiscal year 2005, Health and Social Services represents the largest segment of the state's operating budget. Nearly $1 billion of that is associated with Medicaid.
The increasing cost of long-term care, home health programs, prescription drugs and the like are straining available state and federal dollars. Today, some 145,000 Alaskans hold a Medicaid card. More than 120,000 of them used it in the past year. That number will grow as the population ages, Gilbertson said.
"We are getting close to a quarter of the population using the system," he said. "That's a tremendous financial burden."
Like other state departments, Health and Social Services attempts to work within the finite dollars budgeted by the Legislature each year. It's been difficult, Gilbertson said, and has department officials "turning over every rock" looking for savings.
Increasing oil revenue may result in requests for more health and social service funding next year. Steps in that direction already are being taken, Gilbertson said.
Gov. Frank Murkowski recently announced a $5 million initiative to bring roughly 500 Alaska children home from Outside where they have been sent to receive behavioral health services unavailable in remote villages.
Gilbertson said his department would seek to add funding for substance-abuse prevention, invest in medical-condition screening programs and look at ways to invest in local, nonprofit agencies such as food banks and other social service groups.
Asked if funding requests might include putting more public health nurses in the field, Gilbertson said that program currently was strong and expressed caution about adding expense where it might not be needed.
Another area of the budget in flux concerns a new wrinkle added following the terrorist attack of Sept. 11, 2001. All states have received some federal help, but many have had to divert funds to develop mandated programs aimed at combating possible bioterrorism attacks.
Because of the way those grants have been structured, Alaska has gotten sufficiently large federal grants that it has not had to divert funds from other programs. But that could change if future federal grants begin focusing more on densely populated regions of the country, as officials in those areas have demanded, Gilbertson said.
Whether Health and Social Services sees increases will be up to the governor and the Legislature. The department can make recommendations, but the decision is in their court, Gilbertson said.
As the newly named Senate Majority Leader, Sen. Gary Stevens, R-Kodiak, would be in a position to help move legislation through the brighter fiscal landscape, however long it lasts. But the faster flow of oil dollars is temporary and shouldn't signal abandonment of efforts to bridle state budget growth, he said.
The state has made some good moves recently, he said, citing as an example of savings achieved the tightening of eligibility requirements for Alaska's children's health insurance program, Denali Kid Care. A 2003 bill cut eligibility from 200 percent of the poverty level to 175 percent.
According to critics, the move took more than 1,000 previously eligible recipients from the program. But Stevens said it had eliminated only those families with the highest incomes.
"I'm not upset that we took the best paid people out," he said. "We did it to protect the program for those at the lower end. When you have a limited amount of money, you have to look at ways to protect those who need it most."
Still, Stevens said state efforts at frugality probably had resulted in cuts that shouldn't have been made. He pointed to the state's foster-care program, where lack of personnel and heavy case loads may have led to poor response and contributed to cases of child abuse going undetected.
"I'm not blaming the agency," he said. "They're basically doing too much with too few. I would be extremely interested in looking into (correcting) that."
Beyond that, Stevens noted efforts to help seniors to acquire low-cost generic prescription drugs. But he also said there were seniors in Alaska who sometimes face bitter choices between buying drugs and buying food.
"With the loss of the Longevity Bonus Program, we have to be sensitive to the needs of seniors," he said.
Indeed, there have been calls from some lawmakers to restore the bonus program. Whether the advent of more oil dollars will take the Legislature in that direction remains to be seen.
Neither Stevens nor Gilbertson had an answer regarding the high number of Alaskans doing without health insurance. Both noted, however, that when those folks need care, they appear at emergency rooms for treatment. Those costs are spread across the entire population.
Gilbertson said the state's effort to limit rising costs to its own general fund has met with some success, as when the state found more than 60 million in new dollars from previously untapped federal sources. But that was a one-time shot not likely to be repeated. Meanwhile costs continue to rise.
"We are slowing the growth, not reversing it," he said. "My responsibility is to make sure whatever additional investment is made, it is being used daily to deliver services to clients as efficiently as possible."
The state, he added, can't rely on continuing high oil prices and shouldn't spend as if they'd be there forever. It just doesn't work that way. He's fully behind the governor's argument that resource development is the way to provide new revenues for Alaska. But he cautioned that even if that policy proved successful in the long run and new revenue streams came on line, they would be unlikely to grow at the 15 percent a year or more necessary to match the increases being seen just in Medicaid.
Thus, rising health care costs will continue to challenge the best of management and delivery efforts for the foreseeable future and confront policymakers with the same dilemmas. The goal won't change.
"We have to find ways to control the growth of these programs," Gilbertson said.
Becky Hultberg, Murkowski's press secretary, said the administration could be expected to make new budget announcements over the next couple of months, but she did not say whether they would involve new initiatives for health and social service programs specifically.
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