The fight over expanding Medicaid between Gov. Bill Walker and Republican legislators has gone from the Capitol to the Anchorage Legislative Information Office and is now headed for a courtroom.

The Republican-heavy joint Legislative Council voted 10-1 Aug. 18 to sue Walker over his use of executive authority to accept federal funds to expand the state Medicaid program.

Minority Democrat Rep. Sam Kito of Juneau was the only dissenting vote. 

Senate Majority Leader John Coghill, R-Fairbanks, said the attorney fees would be split between the House, Senate and Legislative Council budgets.

Walker announced July 16 that he would accept $148.6 million from the federal government for Medicaid expansion beginning Sept. 1, the end of a mandatory 45-day waiting period.

It is possible the majority’s push for an injunction to halt the expansion process could be heard as early as Aug. 24, Coghill said.

“We’ve kind of been put in a position where you either defend the integrity of the Legislature or not defend it,” he said.

Accepting and spending money by the State of Alaska typically requires the Legislature’s approval. However, because this Medicaid funding is federal dollars and does not involve the general fund, it could be done administratively.

The legislators contend that expanding Medicaid coverage to a group of previously uncovered individuals qualifies as adding a new, optional group, which would require the Legislature’s approval.

Also approved was spending $450,000 to secure legal counsel from the Washington, D.C.-based law firm of Bancroft LLC and the Anchorage firm of Holmes, Weedle and Barcott.

 “I’m just really disappointed,” a visibly frustrated Walker said during a press briefing after the Legislative Council vote. “I cannot understand, I cannot fathom to understand why suing to take away health care coverage of working Alaskans is a partisan issue. I don’t have a clue as to why they’ve done that.”

Growing the low-income health care program will make about 42,000 uninsured residents eligible for coverage; about 20,000 are expected to sign up in the first year. Newly eligible for Medicaid under the program will be adults without dependents who make less than 138 percent of the federal poverty level; for single individuals that is $20,314 per year and for married couples it’s $27,490 annually.

House Speaker Mike Chenault, R-Nikiski, said he understands the governor’s frustration, but that Walker exceeded his authority when he moved to start a new state Medicaid program.

“We as the Legislature have the authority to pass laws and set state policy and we feel that this time the Legislature has been left out of that policymaking decision, and out of that process, and this is the constitutional way that we are allowed to uphold the powers that the Legislature has,” Chenault said.

“The legislative process is working. Government was never intended to be fast. Normally when legislation moves through quickly, that’s when we find we have the most problems.”

Walker said he is confident in his position and that Alaska governors have accepted outside money this way seven other times. He did not directly address the potential legal issue of establishing a new program without legislative approval.

Ultimately, the state will likely spend about $1 million in the fight after his administration hires outside counsel because of cuts to the Department of Law, Walker said.

Kito said in a formal statement that the decision to sue the governor will cost the state money and up to 4,000 jobs that could be associated with adding money to the state’s health care system.

“I am very disappointed with the Legislative Council vote to hire outside counsel to pursue a lawsuit against our governor, challenging his action in accepting Medicaid expansion,” Kito said. “The governor’s attorney general and the legislative legal department have both prepared legal opinions indicating that the governor, under existing state law and our Constitution, has the ability to accept Medicaid expansion under the Affordable Care Act.”

Rep. Andy Josephson, D-Anchorage, said U.S. Supreme Court rulings made accepting the federal money optional, not providing care to the expansion population once the money is taken, and therefore the governor is not accepting optional funds for a new program.

Alaska state Medicaid law encompasses those groups required to be covered by the federal statute and an additional 15 groups that are eligible. State law requires any new groups to be approved by the Legislature, but Attorney General Craig Richards has asserted that the expanded eligibility for Medicaid under the Affordable Care Act falls under the federal “required” group. 

Under that interpretation, the only thing struck down by the U.S. Supreme Court was the enforcement mechanism allowing the federal government to withhold Medicaid funds from states that refused to expand their coverage.

Republicans skeptical about expanding Medicaid, one of the largest line items in the state budget at about $1.5 billion per year, have long said the current system must be reformed to save money before federal expansion money is accepted.

The governor said that he had been encouraged by recent conversations he has had with Legislative Budget and Audit Committee chair Rep. Mike Hawker, R-Anchorage, on reforming the Medicaid program.

“We began working on (Medicaid) reform on Dec. 1, 2014, when we were sworn in,” Walker said.

Both sides insist there is still a good working relationship between Walker and Republican leaders despite the current situation and battles on other matters.

Walker, who included Medicaid legislation in a special legislative session he called in late April, said all he has ever asked for is a vote by the Legislature.

Chenault said repeatedly that the Legislature and the administration each hired expert consultants to make recommendations on how to restructure the Medicaid program. Legislators need that information before making a decision, he said.

Coghill said the Medicaid legislation was tough to handle during the special session on top of trying to close budget negotiations “in a very austere year.”

Health and Social Services Commissioner Valerie Davidson has said more Medicaid money would also save the state $6.6 million this year and more than $100 million over the next six years by using federal funds to foot the bill for things the state is currently paying for.

The state would not have to contribute this fiscal year, which ends next June 30, but contributions would begin in fiscal year 2017 and by 2021, the state would be required to put up a 10 percent match on any federal Medicaid expansion dollars, which would be about $20 million, according to Health Department projections.

Senate President Kevin Meyer, R-Anchorage, noted that actual costs have exceeded projections in a number of the 29 states that have accepted Medicaid expansion.

A $145 million line item for federal receipts to expand Medicaid included in Walker’s operating budget proposal was cut out by the Legislature during the budget process, and a bill to expand Medicaid introduced by Walker did not make it out of the House Finance Committee during the special session.

Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at elwood.brehmer@alaskajournal.com.