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The Kodiak Kickback: the quiet payoff for an Alaska senator in the Senate health bill

Can giving Alaska $1.8 billion for health care let the GOP cut $1 trillion for America?

GOP Senators Continue Work On Revised Health Care Bill
Sen. Lisa Murkowski
Photo by Alex Wong/Getty Images

Buried in Senate Republicans’ new health care bill is a provision to throw about $1 billion at states where premiums run 75 percent higher than the national average.

Curiously, there’s just one state that meets this seemingly arbitrary designation: Alaska.

That state also just so happens to be represented by Sen. Lisa Murkowski, a crucial Republican swing vote who has spent months threatening to torpedo the entire Obamacare repeal effort over her concerns about Medicaid cuts.

Nobody believes this special fund was created to give Alaska alone a big boost through sheer coincidence. Reporters on the Hill have taken to calling the carve-out to help Alaskans the “Polar Payoff,” the “Kodiak Kickback,” and even the “Juneau Jackpot” — a special gift to the state, inserted by Senate Majority Leader Mitch McConnell to win Murkowski’s vote.

“They really, really, really need Lisa Murkowski to vote for this, and they’re thinking this may help,” said Timothy Jost, a health care expert and a professor emeritus at Washington and Lee University.

The big question right now is whether the approximately $1 billion in additional health spending for Alaska will be enough to win over Murkowski to a bill that would gut Medicaid and result in about $1 trillion less health spending for America overall.

How the “Kodiak Kickback” works

The Kodiak Kickback is responsive to a very real problem for Murkowski’s constituents in Alaska: extraordinarily high premium rates in the state.

As Vox’s Sarah Kliff has documented, Alaska in the past struggled with high and rapidly increasing premiums that put the state’s Obamacare exchanges on the verge of entering a death spiral. To avert it, the state started paying back insurers for especially high claims. Premiums stabilized, and the Trump administration just decided to let Alaska spend the savings.

But premiums in its Obamacare marketplace are still high, and the current Republican health bill would make subsidies for most low-income people much skimpier. A midlevel plan in the state’s Obamacare marketplace cost $905 in 2017 — partly because Alaska’s isolation makes it difficult to get patients to specialty doctors, and partly because such a large percentage of its population uses health insurance provided through the Bureau of Indian Affairs.

“It’s because they have a very small market and because health care is very expensive in the state,” Jost said. “The Alaskans in the individuals markets is a pretty small group of people, and when you have a really small risk pool it doesn’t take many high-cost cases for premiums to soar for everybody.”

Senate Republicans’ newest bill includes a special $182 billion fund that will give the Department of Health and Human Services broad latitude to help stabilize the Obamacare markets. This fund, which has increased as the vote on the bill draws near, is intended to reassure moderate Senate Republicans worried about its impact on the individual markets.

But to make sure it helps Alaska — and, perhaps, its moderate senator — lawmakers added a new clause to that special fund this week that will require at least 1 percent of it be spent on states where premiums run 75 percent higher than the national average. One percent may not sound like a big number, but we’re talking about Alaska, which only has 700,000 people. The state is still set to receive nearly $2 billion over 10 years.

“One percent of a multibillion-dollar fund could be very helpful for Alaska," Sen. Dan Sullivan (R-AK), Murkowski’s Senate counterpart, told the Alaska Dispatch News.

Murkowski could determine the fate of the entire bill

Right now, as Vox’s Dylan Scott explains, Senate Republicans can afford to lose zero additional votes on their health care bill. All Democrats oppose it, as do two Republican senators — Rand Paul (R-KY) and Susan Collins (R-ME).

In other words, Murkowski alone could kill the bill when McConnell brings it to the floor on Tuesday on a “motion to proceed” vote. But so far, she isn’t revealing her planned vote one way or another.

In an interview last month with Bloomberg, Murkowski insisted that she wouldn’t be swayed by any effort to buy her off if she still opposed the overall bill. “Let’s just say that they do something that’s so Alaska-specific just to, quote, ‘get me,’” she said in June. “Then you have a nationwide system that doesn’t work. That then comes crashing down and Alaska’s not able to kind of keep it together on its own.” It’s worth noting that Murkowski ran for Senate over McConnell’s wishes in 2010 and doesn’t owe him much by way of her political success.

Nothing else, though, has changed in the bill. Murkowski has primarily expressed opposition to the bill’s Medicaid cuts, but McConnell has preserved those steep cuts. And as the Center for American Progress’s Topher Spiro points out, the bill would still have devastating impacts on Alaska’s 185,000 Medicaid recipients despite the “Polar Payoff”:

Republicans’ health care bill will cost Alaska Medicaid recipients about $3 billion. In exchange, they’re trying to buy off Murkowski with far less in funding for the Obamacare exchanges. We’ll know soon if it worked.

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