Addiction does not let go because a person finishes a program. It lets go only if it stays gone. Knowing whether that happened, for a policymaker, a funder, or a family, means looking at what a person’s life looks like years after treatment ends, not the day it does. This series is built around that question.

Alaska is not short on money for addiction and behavioral health treatment. The state channels tens of millions of dollars a year through Medicaid, the opioid settlement fund, and the Alaska Mental Health Trust into a treatment system that still cannot meet demand. Federal survey data puts the gap in stark terms: an estimated 131,000 Alaskans age 12 and older needed substance use treatment in 2022 and 2023, and roughly 101,000 of them, nearly 79 percent, did not receive it in any form, residential, outpatient, or otherwise.

This series argues that the shortage is not primarily a funding problem. It is a structural one, built into how Alaska regulates who may open a treatment facility and who gets to advise the state on where the money goes. Three mechanisms compound each other:

• Alaska’s Certificate of Need (CON) program requires state permission before a new facility can open, and it gives existing providers a formal legal forum to object to new competitors. A documented Fairbanks case shows this process can take nearly two years and consume enormous resources even when the new provider eventually prevails.
• Alaska’s Advisory Board on Alcoholism and Drug Abuse (ABADA), the body statutorily charged with recommending treatment policy and funding priorities to the legislature and the Alaska Mental Health Trust Authority, has no requirement that its members be free of financial ties to the organizations that benefit from its recommendations. A comparable state board, the Mental Health Trust Authority’s own board of trustees, already operates under exactly this kind of conflict bar. ABADA does not.
• The federal Medicaid Institutions for Mental Diseases (IMD) exclusion caps Medicaid reimbursement for adult residential treatment at facilities with more than 16 beds, discouraging the kind of large-scale, efficient facilities that could bring per-bed costs down.

The series closes with a five-part reform framework: a targeted CON exemption for behavioral health facilities, conditional tax relief for any provider, for-profit or nonprofit, that adds licensed treatment capacity and accepts Medicaid patients, a statutory conflict-of-interest bar for ABADA modeled directly on language Alaska has already enacted for the Mental Health Trust Authority, a state resolution urging Alaska’s congressional delegation to act on the 16-bed rule, and Medicaid rate reforms already recommended by the state’s own contracted rate consultant.

The scope of the problem

Alaska’s overdose crisis is usually described as a fentanyl problem, and it is. Fentanyl was involved in 73 percent of Alaska’s overdose deaths in 2024. But methamphetamine is not a secondary story here. State epidemiology data shows that just over half of Alaska’s fatal overdoses between 2017 and 2023 involved methamphetamine, almost always alongside opioids rather than in place of them. Psychostimulant overdose deaths, the category that includes meth, rose to 202 in 2024, up from 198 the year before. The two drugs are compounding each other, not trading off.

Against that backdrop, the treatment access numbers are sobering. The 2022 to 2023 National Survey on Drug Use and Health estimates that 131,000 Alaskans aged 12 and older needed substance use treatment in a given year, and that only about 27,000 received it. That leaves roughly 101,000 Alaskans a year, nearly four in five of everyone who needed help, without treatment of any kind, not just a residential bed but outpatient counseling, medication-assisted treatment, or telehealth. Even accounting for new capacity coming online in the next several years, discussed below, the scale of unmet need dwarfs anything currently planned or under construction.

Root cause one: Certificate of Need as a competitor’s veto

What CON does

Alaska’s Certificate of Need program, codified at AS 18.07.031, requires state approval before a health care provider can spend more than $1.5 million on a new facility, an expansion, or certain equipment. Alaska adopted the program in 1976, becoming the 31st state to do so, at a time when the federal government tied health planning funds to states establishing exactly this kind of review. Congress repealed that federal mandate in 1987 after the Federal Trade Commission’s 1988 economic analysis concluded CON laws raised health care costs rather than lowering them. Alaska kept its program anyway, and it remains in effect today for behavioral health facilities, psychiatric hospitals, and residential treatment centers.

The defining feature of Alaska’s CON process is that it gives existing providers a formal, legal opportunity to object to a new applicant’s certificate, on the theory that the state should avoid an unnecessary duplication of services. In practice, this converts market entry into litigation.

The Fairbanks precedent

In 2006, two physician-organized companies, Kobuk Ventures LLC and Alaska Medical Development-Fairbanks LLC, applied separately for certificates to build ambulatory surgery centers in Fairbanks. Fairbanks Memorial Hospital, which held every existing licensed operating room in the city, filed its own competing application and formally appealed the certificates issued to both new entrants, even after its own project had already been approved.

The resulting administrative case, consolidated under Office of Administrative Hearings docket numbers 06-0744-DHS, 06-0745-DHS, and 06-0746-DHS, ran for roughly twenty months. The hearing record includes about fifty hours of testimony from twenty-five witnesses and runs to sixteen hundred pages. A staff calculation error that inflated the projected need for new capacity by nearly 21 percent was not discovered until December 2006, well into the review. The commissioner’s final decision, issued October 9, 2007, ultimately awarded a certificate to Kobuk Ventures over its competitor and upheld a smaller version of the hospital’s own surge-capacity application.

The new providers eventually got in. But the case shows what “eventually” costs: nearly two years of litigation and, based on the volume of expert testimony and legal filings from three parties, a substantial sum spent on lawyers, consultants, and expert witnesses rather than patient care. The same competitor’s-veto dynamic has surfaced elsewhere in Alaska, including a Kenai ambulatory surgery center whose certificate was denied and fought through the courts, and an Anchorage case in which a competitor sought a hearing to block a facility that had, by the time of argument, already been built and was operating.

A more precise version of the argument

It would overstate the case to say CON blocks all behavioral health capacity in Alaska. It does not. Providence Health and Services received approval in 2026 for a sixteen-bed youth residential psychiatric facility in Anchorage, and Mat-Su Regional Medical Center’s forty-five-bed freestanding behavioral health hospital, now under construction in Palmer, moved through CON review without any recorded objection. The difference between those cases and the Fairbanks fight is instructive: in both the Providence and Mat-Su Regional cases, the applicant was already the dominant or sole provider in its market. There was no incumbent competitor with legal standing to object.

The more defensible claim, and the one this paper makes, is that CON approval moves smoothly when the applicant is already an incumbent, and turns into a prolonged adversarial fight specifically when an independent or new-entrant provider tries to build capacity that would compete with an established player. That is precisely the population of providers Alaska needs most if it wants to add capacity quickly: independent physician groups, smaller nonprofits, and out-of-state operators willing to invest in a difficult market, none of whom can easily absorb a twenty-month legal fight the way a hospital system or an established nonprofit with tens of millions in annual revenue can.

National evidence

Alaska’s experience matches the broader research record. States that maintain CON restrictions on behavioral health facilities have 20 percent fewer psychiatric hospitals per million residents and 56 percent fewer inpatient psychiatric clients per ten thousand residents than states without such restrictions, and their facilities are meaningfully less likely to accept Medicare, according to a 2022 study cited in the Cicero Institute’s 2025 CON repeal research. Nationally, CON laws are associated with roughly 10 percent higher hospital costs, and hospital charges fell 5.5 percent in the five years following CON repeal in states that eliminated their programs.

There is also a live financial argument for reform that did not exist a few years ago. The federal Rural Health Transformation Program is distributing fifty billion dollars to states over five years, with part of each state’s award tied to a technical score that includes CON reform. A state can improve that score by a full 35 points simply by repealing CON requirements for behavioral health beds, services, and facilities. Alaska is leaving federal money on the table by keeping its behavioral health CON requirements in place.’

Closed Loop Part 2 will discuss the advisory board lacking a conflict-of-interest firewall, the federal 16-bed rule, and Medicaid reimbursement structure— all contributing to Alaska’s addiction treatment resources falling short of the demand.

Sources 

Alaska Statutes: AS 18.07.031, AS 44.25.200-.295, AS 44.29.100-.140. 

Alaska Office of Administrative Hearings, In the Matter of Alaska Medical Development-Fairbanks, LLC; Kobuk Ventures, LLC; Fairbanks Memorial Hospital, OAH Nos. 06-0744-DHS, 06-0745-DHS, 06-0746-DHS (Decision After Remand, Oct. 9, 2007). 

Alaska Department of Health, Division of Public Health, 2024 Drug Overdose Mortality Update and related epidemiology bulletins. 

Substance Abuse and Mental Health Services Administration, 2022-2023 National Survey on Drug Use and Health, Alaska state tables. 

Cicero Institute, 2025 Playbook for Certificate of Need Repeal (Dec. 2025). 

Guidehouse Inc., Alaska Behavioral Health Rate Evaluation, prepared for the Alaska Department of Health (Sept. 30, 2025). 

IRS Form 990 filings, Set Free Alaska Inc. and Akeela Inc., most recent available years. 

42 U.S.C. Section 300x-4(b) (Public Health Service Act Section 1914(b)). 

42 CFR Part 2 and 42 CFR 2.54, Confidentiality of Substance Use Disorder Patient Records, final rule (89 Fed. Reg. 12472, Feb. 16, 2024).