Michael Tavoliero: Why Alaska must reverse Medicaid expansion

By MICHAEL TAVOLIERO

The State of Alaska now faces a pivotal decision that will define its financial trajectory and societal integrity for decades. Since the administrative expansion of Medicaid in 2015, the state has been weighed down by unsustainable costs, an enlarged bureaucratic apparatus, and deepening dependence on federal systems that undermine local governance.

Recent developments, including a carve-out by Sen. Lisa Murkowski exempting Alaska from new federal Medicaid work requirements, have only further entrenched this dependency, shielding able-bodied adults from the very accountability measures that foster economic participation. To protect its fiscal health and constitutional order, Alaska must act decisively to reverse Medicaid expansion and reclaim control over its future.

Legal Authority:

Clear, tested, and available under the U.S. Supreme Court’s decision in NFIB v. Sebelius (2012), Medicaid expansion is strictly optional. 

States can join or exit at will without penalty to their traditional Medicaid programs. 

Alaska’s Medicaid expansion was implemented solely by Governor Bill Walker in 2015 through informal administrative action. This action was without legislative approval or the issuance of an executive or administrative order. While a 2016 Alaska Superior Court decision upheld the legality of the expansion under federal law, the Alaska Supreme Court has never ruled on the constitutional question of whether a governor may unilaterally commit the state to long-term fiscal obligations without a legislative appropriation.

Given that the expansion was executive in origin, it can be reversed the same way. The Governor of Alaska, Michael J Dunleavy, in Trump like fashion, must take the following procedural steps to return Medicaid expansion responsibilities to the federal government:

Step 1: Policy Determination and Legal Review
Initiate an internal legal review confirming that the reversal of the Medicaid expansion is compliant with NFIB v. Sebelius and aligned with federal Medicaid guidelines.

Step 2: Draft a Revised State Plan Amendment
Instruct the Alaska Department of Health to draft a revised SPA to formally withdraw the expansion population (an estimated 40,000 to 60,000 able-bodied adults) from state Medicaid coverage.

Step 3: Submit Revised SPA to CMS
Submit the revised SPA to the Centers for Medicare and Medicaid Services (CMS) with a formal letter from the Governor stating Alaska’s intention to end Medicaid expansion and outlining the transition plan.

Step 4: Coordinate Transition with CMS
Work with CMS to ensure that affected individuals are transitioned to appropriate federal fallback programs such as ACA marketplace subsidies.

Step 5: Restructure State Medicaid Programs and Personnel
Begin the downsizing and restructuring of administrative divisions within the Department of Health, DCCED, Division of Health Care Services, and Office of Children’s Services to reflect reduced coverage and compliance requirements.

Step 6: Public Communication and Legislative Notification
Communicate the rationale, process, and benefits of the reversal to the public and the Alaska Legislature to build transparency and support.

Step 7: Monitor Legal and Political Developments
Prepare for potential legal or political challenges from interest groups invested in expansion dollars and ensure a robust defense of the executive authority to act.

Fiscal Ramifications: Real Savings, Lasting Impact Long-Term Forecast of Medicaid Enrollment and Spending in Alaska:

FY2024-FY2044, February 16, 2024, by Evergreen Economics, Page 6, states Alaska’s Medicaid costs are escalating rapidly, with general fund obligations increasing by nearly 5% annually. Left unchecked, these costs are projected to exceed $1.7 billion by FY2044.

Reversing this expansion will: 

• Eliminate the 10% match requirement for the expansion population, saving hundreds of millions over time; 

• Reduce overhead by downsizing redundant layers of administrative bureaucracy in agencies like the Department of Health, Division of Health Care Services, and Office of Children’s Services;

• Simplify Medicaid management, making room for more effective delivery of care to the truly vulnerable—Alaska’s children, elderly, and disabled, not able-bodied adults; 

• Insulate the state from future volatility in federal policy, such as reductions in match rates or block grant conversions.

These savings are not theoretical. They are calculable, practical, and necessary for stabilizing Alaska’s long-term budget and restoring fiscal sovereignty.

The Political Ramifications: Resistance from the Dependent Class 

This reform will face intense opposition. It will come not from the public at large, but from institutional beneficiaries of the status quo. 

• Public health bureaucracies, tribal health consortia, large hospital systems like Providence and ANTHC, and public-sector unions have developed entire ecosystems around the federal dollars tied to Medicaid expansion. Their resistance will be fierce, driven by the threat to their funding, power, and jobs. 

• Sen. Lisa Murkowski’s exemption for Alaska from the new national Medicaid work requirements, as included in the so-called “Big Beautiful Bill,” is a textbook case of political dependency management. Rather than requiring able-bodied Alaskans to work, seek employment, or contribute through volunteering, as every other state must, Alaska’s Medicaid population is now protected from such responsibilities.

This move deepens the dependency trap and sends a demoralizing message: that Alaskans are less capable than their peers across the country. It treats the expansion population not as citizens to be empowered, but as wards to be managed.

Gov. Dunleavy can not only lawfully reverse Medicaid expansion but also pivot politically by tying that action to a practical, dignity-centered initiative that gets able-bodied Alaskans off Medicaid and into the workforce.

What Was Promised and What Was Delivered

Internal marketing documents promoting Medicaid expansion in 2013 painted a glowing picture: increased access, improved outcomes, and a booming economy. But the outcomes failed to meet expectations: 

• In the October 2013 “Medicaid Expansion Marketing Paper”, Valarie Davidson, then Senior Director of Legal & Intergovernmental Affairs at the Alaska Native Tribal Health Consortium and later Commissioner of Health and Social Services under Governor Walker, promised that Medicaid expansion would bring job growth, improved care, and budget relief. In practice, however, Alaska’s healthcare system has become more costly, more bureaucratic, and increasingly disconnected from local control. 

• Administrative layers have multiplied, not shrunk. Emergency care remains overburdened. Preventable chronic diseases persist. The Alaska Department of Health has become a bloated compliance machine, while rural and mental health needs go unmet.

The expansion did not reform the system, it fed it. And now, reform cannot occur without dismantling the very framework built around this failed expansion.

The short-term financial gain for Alaska’s variety of health care providers comes at the expense of long-term fiscal sustainability and personal accountability. Healthy Medicaid recipients may receive minimal care, but their existence in the system sustains a bloated structure that grows government, stifles local innovation, and cements dependency, both socially and economically. Reversing this trend would restore incentives to work, refocus care on the truly vulnerable, and rebalance the system toward freedom and responsibility.

A New Path Forward: Freedom Over Dependency Reversing 

Medicaid expansion reversal is more than a budget cut. It is a philosophical return to Alaska’s roots of self-reliance and local control. It would: 

• Restore constitutional checks by returning such a sweeping fiscal policy to legislative and public oversight; 

• Redirect funds to front-line care, mental health support, and rural medical innovation; 

• Reduce bureaucratic sprawl, allowing community-centered care to emerge in response to real local needs; 

• Reclaim Alaska’s identity as a place of freedom, not a managed zone of compliance.

This reform will send a national message: Alaska chooses sovereignty over submission, productivity over passive entitlements, and governance over government dependency.

Conclusion: A Test of Leadership and Resolve

Gov. Mike Dunleavy has both the legal right and the moral duty to reverse Medicaid expansion. While political forces aligned with Medicaid dollars will rage, this decision offers a path to financial stability, empowered citizens, and meaningful healthcare reform.

Sen. Murkowski’s actions may shield the Medicaid bureaucracy from reform, but they cannot shield Alaskans from the consequences: rising debt, declining services, and eroded independence.

The question is no longer whether Alaska can reverse Medicaid expansion. It is whether Alaska’s leaders will. The choice is between deepening the dependency cycle or breaking it, between protecting bureaucracies or protecting Alaskans.

For the sake of Alaska’s future, Gov. Dunleavy, the answer must be clear.

Michael Tavoliero: It’s time to stop funding failure