20‑year Medicaid forecast: Alaska spending projected to grow about 4.7% yearly; reimbursement and chronic care drive costs

Ted Helvoit, president of Evergreen Economics, told the Senate Finance Committee on March 5 that Alaska’s Medicaid program is projected to grow at about 4.7% annually over the next 20 years if the program remains as it exists today, reaching roughly $7.4 billion in total spending by 2045.

“The forecast… focuses on the Medicaid program as it exists today,” Helvoit said, explaining the forecast’s baseline assumption and why it serves as the legislature’s reference point for evaluating proposed policy changes.

Helvoit reviewed the program’s recent dynamics: the federal continuous‑enrollment requirement during the COVID emergency raised enrollment by about 40,000 people; roughly 18,000 people were removed during the federal‑required redetermination period. He emphasized the distinction between enrollees (those enrolled in Medicaid) and recipients (those who actually receive services) and said recent data show recipients have remained roughly flat even as enrollment changed.

The presentation identified three primary long‑term drivers of cost growth: demographic change (Alaska’s overall population projected to be flat or shrink, with a growing senior cohort), increased reimbursement rates paid to providers, and a rising share of spending concentrated among recipients with multiple chronic conditions. Helvoit said reimbursement growth is the largest single contributor to future cost increases in his model, and that provider rates have recently begun rising faster than general medical price inflation.

Helvoit presented key figures from the forecast and recent program history: total spending in 2025 was estimated to be a little under $3.0 billion; annual growth of spending per Medicaid recipient averaged about 8.7% in the last two fiscal years on a month‑to‑month basis; 1% of Medicaid recipients account for about 22% of program spending while the 50% of recipients with the lowest spending account for about 4%.

He noted that Medicaid expansion and the program’s current structure materially changed the historic relationship between enrollees and recipients: in fiscal 2024 fewer than seven in 10 enrollees used services. Helvoit also discussed the Department of Health’s efforts (IHS reclaiming) that have increased the federal share of funding for some services and helped reduce state general fund growth compared with earlier forecasts.

Committee members asked about several risks and operational controls. Senator Kaufman asked whether the state has adequate fraud‑and‑abuse controls and whether enrollment records are validated; Helvoit said a state unit does that work but his analysis relies on Medicaid Management Information System data and does not audit program integrity. Senators also asked whether behavioral health and substance‑use diagnoses are driving costs; Helvoit said the prevalence of behavioral‑health and substance‑use diagnoses among higher‑cost recipients has grown and is an important cost‑growth risk.

Helvoit said the forecast does not assume policy changes — including changes to federal matching rates for the expansion population — and flagged federal match for expansion as a key external risk. He gave an example: if the 90% federal match for the non‑IHS expansion population were reduced by one percentage point, Alaska’s share of that portion of spending would rise by an estimated $4.6 million in a single year (using the example math from the presentation).

The committee did not take action on the forecast; the report was presented as the Legislature’s baseline document for budget planning and future policy analysis.