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Brewer suggests overhaul of AZ Medicaid program

Voters may get a chance to rethink the massive expansion of AHCCCS they approved in 2000, a move that could strip thousands of low-income Arizonans of healthcare coverage and provide an infusion of cash for the deficit-wracked state.

Gov. Jan Brewer on Dec. 30 announced she may ask lawmakers to approve a ballot measure on whether to overhaul Proposition 204. In a press release, Brewer argued that the state can no longer afford the proposition’s massive expansion of Medicaid coverage as it prepares to tackle a $3.3 billion deficit for fiscal 2011.

“Arizona should return the current AHCCCS program to the voters with a funding source to see if they wish to pay for its costs,” Brewer wrote.

The governor did not specify what kind of funding source could be used to maintain the state’s existing AHCCCS coverage, but said she would not support using money from the temporary 1-cent sales tax increase she has proposed.

Brewer spokesman Paul Senseman said the proposal has been under consideration for about a year. He said the governor could include the proposal in the budget plan she will submit to the Legislature on Jan. 15.

“The governor hasn’t released her budget plans yet, but clearly from her statement you can see that the costs of this program are of tremendous concern to the governor and needs to be resolved,” Senseman said.

AHCCCS represents about $1 billion of the state’s 2010 general fund budget, and the program garners billions from a federal match, stimulus money and other sources, such as Arizona’s 1990s settlement with tobacco companies. The full cost of the program in fiscal 2010 is about $9.5 billion.

Prior to voters’ approval of Proposition 204, AHCCCS coverage was restricted to parents who earned 34 percent or less of the federal poverty level, which comes to about $8,000 for a family of four. The proposition expanded it to all Arizonans who make up to 100 percent of the poverty level, or $22,050 for a family of four. AHCCCS enrollment has jumped to 1.4 million people from about 500,000 since voters passed Prop. 204 nine years ago,

About 350,000 of the 1.4 million people on AHCCCS would not be eligible for coverage under the old requirements, according to the agency. AHCCCS estimates that such a move would reduce the agency’s total 2010 budget by nearly $3 billion.

Under the American Recovery and Reinvestment Act, better known as the federal stimulus, Arizona is eligible for about $1.8 billion for AHCCCS. That money comes with a maintenance-of-effort requirement prohibiting the state from making AHCCCS eligibility standards more restrictive than they were in July 2008.

But Senseman said a voter-mandated rollback of AHCCCS benefits wouldn’t violate the maintenance-of-effort provision in the stimulus act because that provision expires on Jan. 1, 2011.

Brewer’s concerns about the costs of the program have been heightened the federal government’s recent push for healthcare reform, Senseman said. President Barack Obama has made healthcare one of his top priorities, and both the U.S. Senate and House of Representatives have passed recent healthcare legislation.

In her statement, Brewer urged all members of Arizona’s congressional delegation to vote against the final healthcare bill on the grounds that it would further drain the state budget. AHCCCS estimates the plan passed by the U.S. Senate would cost Arizona an additional $3.8 billion from 2014 to 2020, the first seven years of the program. The Senate program would expand Medicaid coverage to anyone earning up to 133 percent of the federal poverty level.

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