Alaska’s health care system is broken – not because of a lack of funding, but because of systemic inefficiency, administrative bloat, and policy misalignment. Despite ranking among the top states in per capita health expenditures, Alaska’s outcomes remain stagnant, with worsening conditions in rural and Native communities. The primary cause is not inadequate funding, but the unchecked growth of a misaligned Medicaid system and the expansion of overlapping bureaucracies.

The state’s 2015 Medicaid expansion under the Affordable Care Act (ACA) added thousands of able-bodied, childless adults to the rolls. While expanding access, it also created permanent cost burdens without proportional improvements in health outcomes. Simultaneously, agencies such as the Department of Health (DOH), Office of Children’s Services (OCS), Division of Behavioral Health (DBH), and Division of Public Assistance (DPA) evolved into parallel bureaucracies – more focused on federal compliance and contractor oversight than actual care delivery.

This reform plan outlines a comprehensive strategy to:

— Responsibly reverse Medicaid expansion and refocus eligibility on truly vulnerable populations.

— Streamline and modernize both health and welfare programs, including SNAP, TANF, and LIHEAP, to improve service delivery and reduce administrative overhead.

— Eliminate obsolete regulatory barriers—such as the Certificate of Need (CON)—that suppress competition and inflate costs.

— Transition redundant state employees into private-sector, nonprofit, and tribal health and social service roles.

— Realign the state’s health and welfare bureaucracy to operate sustainably, even under a $40-per-barrel oil scenario.

— Leverage federal funds (e.g., WIOA, ARPA, CMS waivers) to fund the transformation—without raising taxes or drawing from the Permanent Fund.

CORE STRUCTURAL REFORMS

Reverse Optional Medicaid Expansion

Alaska must submit a State Plan Amendment (SPA) to CMS to withdraw from ACA’s optional expansion category. This reverses coverage for non-mandatory populations, able-bodied, childless adults, and re-centers resources on those Medicaid was originally intended to serve: low-income families, children, seniors, and the disabled.

Actions:

— Submit SPA to CMS to terminate ACA Medicaid expansion.

— Refocus eligibility on federally mandated populations.

Audit and Restructure the Department of Health (DOH)

The 2022 split of the Department of Health and Social Services into two agencies created additional bureaucracy without fixing underlying inefficiencies. Alaska must conduct a forensic audit of Medicaid eligibility, contractor billing, licensing, and grant administration, followed by a complete restructuring of DOH.

Actions:

— Conduct full audit of Medicaid and behavioral health systems.

— Consolidate redundant compliance units into a Health Oversight Authority.

— Streamline licensing and eliminate low-value programs.

Reorganize the Office of Children’s Services (OCS)

OCS should be reorganized into two separate divisions—Prevention and Protection—with a mandate for culturally relevant, community-based services. Alaska must end its over-reliance on out-of-state therapeutic placements and prescriptive drug treatment for at-risk youth.

Actions:

— End use of default prescription-based therapies.

— Replace out-of-state placements with community-based options.

— Empower tribal co-management and guardianship models.

Eliminate the Certificate of Need (CON) Law

CON laws block private and tribal investment in health infrastructure, inflate costs, and preserve monopolies. Repealing CON will unleash affordable, locally tailored health care options and enable workforce transitions.

Why Repeal CON:

— Suppresses competition and market-based pricing.

— Prohibits new clinics and service lines without state permission.

— Disproportionately harms rural and Native communities.

— Violates Alaska’s constitutional guarantees of maximum local self-government.

Benefits of Repeal:

— Opens the market to innovative, affordable providers.

— Enables tribal and rural health infrastructure development.

— Creates jobs and absorbs transitioned state employees.

Personnel Transition Plan: From Bureaucrat to Builder

Restructuring the state health bureaucracy must be accompanied by a humane and effective transition plan. Fortunately, no state dollars are required. Federal funding through WIOA, DWG, ARPA, and DOE workforce grants can fund retraining, early retirements, and bridge employment programs.

Tools for Transition:

— WIOA (Workforce Innovation and Opportunity Act)

— DWG (Dislocated Worker Grants)

— ARPA (American Rescue Plan Act)

— DOE (Tribal Workforce Transition Programs)

Actions:

— Offer early retirement or buyouts to redundant DOH/OCS personnel.

— Retrain workers for private or tribal healthcare roles.

— Connect workers to new jobs enabled by CON repeal and service expansion.

Broader Health Bureaucracy Realignment

Alaska’s broader health and welfare agencies must be audited, consolidated, and reoriented toward measurable outcomes:

Targeted Agencies:

Division of Behavioral Health (DBH)

Division of Public Assistance (DPA)

Division of Senior and Disabilities Services (SDS)

Health Facilities Licensing and Certification (HFL&C)

Actions:

— Conduct agency-wide administrative audits.

— Merge overlapping units and reduce federal grant bureaucracy.

— Shift personnel from compliance to service delivery or community support.

Consolidating State and Federal Welfare Programs for Efficiency and Impact

To achieve a sustainable and effective welfare system, Alaska must integrate and streamline both state-administered and federally funded programs such as Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), Low-Income Home Energy Assistance Program (LIHEAP), and Medicaid. These programs are currently managed through separate bureaucracies, particularly within the Division of Public Assistance (DPA), resulting in overlapping functions, excessive administrative costs, and poor service coordination.

By consolidating intake, eligibility, and case management systems across these programs, Alaska can:

— Eliminate redundant staffing and IT infrastructure

— Improve outcomes through unified, client-focused service delivery

— Redirect funds from bureaucracy to direct services

Key Efficiency Actions:

— Merge SNAP, TANF, Medicaid, and LIHEAP eligibility under a single point-of-entry platform

— Consolidate backend compliance and reporting under a centralized oversight office

— Use federal transition grants (WIOA, ARPA, DWG) to retrain displaced administrators for roles in community-based service delivery or private care coordination

These reforms would allow Alaska to reduce its reliance on state funds, maintain compliance with federal funding requirements, and deliver more effective and culturally responsive support services—especially in rural and tribal communities.

What Happens If We Don’t Reform?

The cost of inaction is catastrophic:

— Medicaid spending will continue growing unchecked, consuming general funds.

— Bureaucratic dysfunction will worsen, with no accountability or measurable outcomes.

— Federal dependency will deepen as Alaska loses control of its own healthcare system.

— Rural and Native communities will remain blocked from pursuing local, culturally appropriate care solutions.

If oil prices remain at $40/barrel, Alaska may be forced to:

— Continue to slash PFD payments to its ending

— Impose an income tax

— Draw down the Permanent Fund

Fiscal and Economic Outcomes: Clean Summary

Below is a final consolidated fiscal summary reflecting all cost savings and private sector impacts across the reform package:

What Happens If We Don’t Reform?

If no action is taken:

— Medicaid spending will crowd out essential state services.

— Bureaucratic agencies will continue to grow while delivering less.

— Tribal and rural communities will be denied self-determination in health care.

— Alaska will have little choice but to impose an income tax, drain the Permanent Fund, or eliminate the PFD.

— Health outcomes will further deteriorate, especially for the most vulnerable.

Fiscal Resilience at $40 Oil

Budget Balance Projection:

This projection shows that Alaska can fully fund a reformed health and welfare system at $40 oil without new taxes, without dipping into the Permanent Fund corpus, and without maintaining bloated bureaucracy.

Final Word: Reform Is Sovereignty

This plan is not just a fiscal roadmap—it’s a declaration of intent. Alaska must return to a model where health care serves people, not bureaucracies. Where communities govern their own care. Where outcomes, not compliance checklists, determine funding. And where state sovereignty is preserved through disciplined reform, not sacrificed to administrative inertia.

If Alaska acts decisively, it can build the most locally empowered, fiscally responsible health care system in the nation. If not, it will lose the independence that once defined it.

The views expressed here are those of the author.

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