Ending coverage for 250,000 won’t threaten U.S. funds
Arizona doesn’t need federal approval to eliminate 250,000 people from its Medicaid rolls in order to continue to receive federal matching dollars, health officials said Tuesday.
Lawmakers had sought to eliminate coverage for low-income Arizonans to help close a huge budget shortfall, but recently passed federal health reform mandates that states maintain their level of coverage.
In a letter to Brewer today, U.S. Health and Human Services Secretary Kathleen Sebelius said the state’s entire program comes up for federal reauthorization Sept. 30, and Arizona could simply choose to stop covering the childless adults who Gov. Jan Brewer and legislative Republicans are seeking to drop from the rolls.
In a statement, Brewer called it an “encouraging” development. However, Brewer did not indicate what steps the state will now take, beyond saying she looks forward to meeting with Sebelius.
If lawmakers do approve the elimination of coverage for the state’s low-income health program, critics say a lawsuit will soon follow.
Proponents of the cost-cutting measure have maintained that the state can’t afford what they call “Cadillac” coverage. Arizona is one of six states with the most generous coverage, a plan voters approved a decade ago.
The requirement to maintain eligibility does not prevent Arizona from dropping people whose coverage goes above and beyond Medicaid requirements, such as the childless adults, when the state renews its request for federal matching funds this fall, Sebelius said.
“Any reduction in eligibility associated with the expiration of your demonstration . . . would not constitute a (maintenance of effort) violation,” she wrote.
Brewer and GOP lawmakers have been railing almost daily against the Obama administration, arguing that the health-care law handcuffs the state as it struggles to balance its budget.
Arizona is facing its fourth straight year of budget deficits. This year’s gap is estimated at $763 million and a $1.15 billion deficit in fiscal 2012, according to Brewer’s office.
Arizona last month sought a waiver from federal requirements that states maintain Medicaid eligibility until new aid arrives in 2014, arguing that eliminating the childless adults would put the state in line with most other states.
“Secretary Sebelius’ letter clearly indicates that Arizona may take the steps it requires to manage its Medicaid program and balance its budget, without violating (maintenance of effort) requirements,” Brewer said in a statement.
But Brewer and Republican legislative leaders have another legal hurdle. Voters in 2000 agreed to cover the group they want to eliminate from the Arizona Health Care Cost Containment System, the state’s Medicaid program.
The governor’s fiscal 2012 budget proposal relies on the waiver and $541 million in savings from cutting 280,000 people from AHCCCS, effective Oct. 1.
She and lawmakers face a near-certain lawsuit if they proceed with that budget plan.
Proposition 204 funded the AHCCCS expansion through tobacco settlement and tobacco-tax proceeds but has been supplemented from the general fund since those funds were depleted. Republicans argued that language in the measure about “available funds” gives them license to cut members without going to voters.
The announcement, which stunned policymakers, could also prompt hospital and health-care groups to sweeten last month’s offer to provide additional federal funding through a tax on their revenues. The funding plan brings in more federal money, but the one-year offer by the Arizona Hospital and Healthcare Association was viewed as a nonstarter by lawmakers.
The waiver request was largely viewed as a gamble, without a backup plan in the governor’s budget. Critics have argued that the Obama administration was unlikely to give Arizona permission to cut its Medicaid program when more than 30 other states have made similar, albeit informal, requests to be exempted from the maintenance-of-effort provision.
But House Speaker Kirk Adams said he wasn’t surprised, and he also is confident the state will win a court challenge. And regardless of any proposal the health groups may bring forth, he said, AHCCCS needs to be cut.
“This will certainly be very helpful in helping to meet our state’s funding obligations,” he said. “I believe that we need to reduce our expenditures in the Medicaid system to protect education and public safety.”
Arizona’s spending on Medicaid now accounts for about 30 percent of the state’s budget, up from 17 percent in 2007. That’s after budget cuts eliminated more than $873 million in state and federal spending.
Services also have been cut, including certain transplants, physical exams, dental care and podiatry. The KidsCare health insurance program for children has been frozen, saving more than $76 million and leaving nearly 80,000 children on a waiting list for health care.
The cuts in Brewer’s budget proposal include about 30,000 parents, but federal officials said their Medicaid coverage could not be cut under a new Arizona plan. Another 11,000 children and 5,200 adults with a serious mental illness also would have to be covered under federal rules, but Brewer’s staff have said they expect to re-qualify them under other Medicaid categories.
In her letter, Sebelius said Arizona must submit a plan by March 31 detailing how the children, parents and mentally ill will continue to receive health care, and how those who might be eliminated can be eased off coverage, “to ensure that the adverse impact on beneficiaries is minimized.”
Website: www.azcentral.com/arizonarepublic/news/articles/2011/02/16/20110216arizona-health-care-cuts.html