[Congressional Record Volume 143, Number 30 (Tuesday, March 11, 1997)]
[Senate]
[Pages S2142-S2143]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself and Mr. Stevens):
  S. 424. A bill to adjust the Federal medical assistance percentage 
determined for Alaska under the Medicaid Program to reflect Alaska's 
cost of living; to the Committee on Finance.


                 the alaska medicaid equity act of 1997

 Mr. MURKOWSKI. Mr. President, I, along with my distinguished 
colleague, Senator Stevens, introduce legislation that will more 
accurately reflect the appropriate Federal/State funding formula for 
Alaska's Medicaid Program.
  One-sixth of Alaska's population is eligible to receive Medicaid, and 
the population is growing. These Medicaid recipients are the needy 
children, pregnant women, disabled, and elderly poor of Alaska.
  Ever since the Medicaid Program was established in 1965, the Federal/
State funding formula has failed to recognize the extraordinarily high 
cost of living that all Alaskans face. Under current law, the funding 
formula that is used to determine the Federal matching payment is based 
on a comparison between average per capita income in the United States 
and each individual State's per capita income.
  Under the current formula, the minimum Federal Medicaid match is 50 
percent. The highest Federal match is 77.2

[[Page S2143]]

percent and is provided to the State with the lowest per capita 
income--Mississippi. By contrast, Alaska has a 50/50 Federal/State 
match based on the fact that it has the seventh highest per capita 
income in the United States, $17,961 based on 1993 data.
  However, many Federal programs recognize that per capita income, by 
itself, is not a fair measure of wealth. For example, a special Federal 
Government cost-of-living adjustment is provided to Federal employees 
in Alaska to reflect our cost differential. Other Federal formulas, 
such as the formula for the Federal School Lunch Program, Food Stamp 
Program, and certain housing programs each recognize and take into 
consideration Alaska's high cost of living.
  Mr. President, I recognize that Alaska's $17,961 per capita income 
suggests it is one of the wealthier States. However, when the 25 
percent higher cost of living is factored in, the State looks far less 
wealthy. In fact, when Alaska's high cost of living is factored into 
the equation, it would appear that an Alaskan with an income of $17,961 
lives at the same economic level as a person in Iowa with a per capita 
income of $14,399. Yet Iowa enjoys a 62/38 Federal/State Medicaid 
match.

  Why is Alaska's cost of living higher than the lower 48 States? The 
answer is primarily because of the high cost of shipping goods to 
Alaska. Almost everything of substantial size or volume comes to Alaska 
by water, and despite healthy competition among carriers, prices remain 
high due to the distance traveled and the fact that Alaska remains an 
importer of goods, not an exporter. That means most vessels are unable 
to carry a backhaul cargo that would lower the overall cost of the 
round trip. Moreover, because of an undeveloped road structure, most 
food transported to remote villages in Alaska rely exclusively on air 
freight.
  What this high shipping cost means is that it costs a family of four 
in Bethel, Alaska's largest rural community, nearly $30 more each week 
to feed their family, compared to the average family in the United 
States. And, it is these rural Alaska areas that have the highest 
number of Medicaid recipients.
  The present Medicaid formula is fundamentally unfair because it 
doesn't reflect these facts. What it means is that more people in 
Alaska are eligible for Medicaid, but the Federal match isn't adjusted 
accordingly. Basically, the current Federal formula gives us more 
Medicaid users and provides less money to pay for their services. to 
exacerbate this inequity--health care costs in Alaska are estimated to 
be 71 percent higher than the national average.
  The legislation we are introducing today, The Alaska Medicaid Equity 
Act, finally resolves this inequity. It adjusts the Medicaid formula 
for Alaska to factor in the State's high cost of living. Passage of 
this legislation would result in an estimated savings of $40 to $50 
million for the State of Alaska Legislature.
  This adjustment was included in legislation that was reported from 
the Senate Finance Committee as part of the reconciliation bill that 
was adopted in 1995. However, that omnibus bill was ultimately vetoed 
for unrelated reasons.
  Mr. President, we in Alaska have endured this historic inequity for 
nearly a third of a century. I hope my colleagues will agree, the time 
to right this wrong is this year.
                                 ______