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AZ, feds choose opposite directions on health care

As the federal government prepares to expand health care coverage to more Americans, Arizona may be looking to drastically cut back on its Medicaid program to help solve state budget problems.

A bill passed by the U.S. Senate would greatly increase the number of people receiving coverage under Medicaid, but that coverage wouldn’t begin until 2014. In the meantime, Gov. Jan Brewer wants to give Arizona voters a chance to either partially reverse an expansion of the Arizona Health Care Costs Containment System (AHCCCS) they approved 10 years ago or find new funding for the program.

Even if the Senate health care proposal becomes law, a reduction in AHCCCS could strip coverage for 300,000 Arizonans while they wait for the federal program to go into effect.

Scaling back Arizona’s Medicaid program is expected to save the state about $900 million a year, providing a much-needed infusion of cash to a state that faces an estimated $3.3 billion deficit in fiscal 2011.

Will Humble, interim director of the Arizona Department of Health Services, said the loss of health care would be devastating for Arizonans who depend on AHCCCS, and would put a lot of pressure on hospital emergency rooms. But without more funding for AHCCCS, he said, the state may be out of options.

“It doesn’t make a lot of sense for lots of different reasons. Just as a human being, personally, it hurts,” Humble said. “There’s lot of reasons to preserve the system. On the other hand, you can’t do it for free. And unless the Legislature does something about the revenue side of the equation, essentially we have to be in the position of eliminating everything in state government that’s not mandated by the federal government.”

Brewer’s proposal would give voters an opportunity to rethink Proposition 204, a ballot measure that aimed to use tobacco taxes and money from the state’s legal settlement with tobacco companies to pay for AHCCCS expansion.

Prior to 2000, the year voters approved Prop. 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 measure increased the benchmark to 100 percent of the federal poverty level, and made childless adults eligible for coverage.

Since the measure passed, AHCCCS rolls have jumped to nearly 1.4 million people from about 500,000, and the tobacco money has not covered the full costs.

“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 in a letter to Arizona’s congressional delegation, asking them to vote against the health care proposals being considered by the U.S. House and Senate.

The Senate plan provides additional money for states to increase Medicaid coverage to include anyone making up to 100 percent of the federal poverty level, or $22,050 for a family of four. Because Arizona has already done so, it is not eligible for that funding.

Brewer spokesman Paul Senseman said Arizona will still have to foot that bill if voters drop AHCCCS eligibility below 100 percent of the poverty level. The language of the Senate bill would not relieve Arizona of that fiscal burden, he said.

The program passed by the U.S. Senate would expand Medicaid coverage to anyone earning up to 133 percent of the federal poverty level. 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.

AHCCCS Director Tom Betlach said the state must find new revenue sources for its Medicaid program or face a serious drop-off in coverage once the state hits its “stimulus cliff” in January 2011, when the federal money is due to run out. Under the American Recovery and Reinvestment Act, better known as the federal stimulus, Arizona is eligible for about $1.8 billion for AHCCCS.

“There are negative consequences, clearly, and I don’t think anybody’s saying that there isn’t. But we’re also saying there’s only so many options available at this point in time,” Betlach said.

Rep. Kyrsten Sinema, a Phoenix Democrat, said $900 million is not enough to justify kicking 300,000 people off AHCCCS. Emergency rooms will be flooded with people who have nowhere else to go, she said, and any federal program approved by Congress will not go into effect soon enough to pick up the slack.

“We’ll still have at least four to five years of no coverage for those people, and that means we’ll be paying for it through emergency room care,” Sinema said.

Others were supportive, saying there is no other way to balance the state’s budget. Rep. John Kavanagh, a Fountain Hills Republican, said Arizona is one of the few states that provides health care for people who earn up to 100 percent of the federal poverty level, an “over-generous” amount that Kavanagh said voters approved in 2000 because they were misled into believing that money from the state’s legal settlement with tobacco companies would cover the expenses.

“It’s long overdue,” Kavanagh said. “I think the voters should be able to re-evaluate it based on the actual reality.”

Brewer has spent much of the past year advocating for changes to Proposition 105, the Voter Protection Act, which strictly limits lawmakers’ ability to tamper with voter mandates. If voters give the Legislature more leeway regarding Prop. 105, lawmakers could make some of the proposed changes to AHCCCS.

At the same time, voters may reject changes to AHCCCS coverage and to Prop. 105. That would leave Arizona facing the same fiscal problems it has now.

John Rivers, president of the Arizona Hospital and Healthcare Association, said he doubts voters would approve a rollback of AHCCCS coverage, and he said his organization will urge lawmakers not to refer the issue to the ballot.

But Rivers said he agrees that AHCCCS needs a new funding source to make up for the shortfall in tobacco money, and he said the Arizona Hospital and Healthcare Association has pledged to help find a new funding mechanism.

“We need to do something dramatically different. But I don’t agree that part of the solution should be stripping health care coverage from poor people who already have it,” Rivers said.

The new restrictions on mental health coverage, combined with the proposed eligibility standards for AHCCCS would strip about 15,000 patients with serious mental illnesses of coverage, Humble said. Because the proposal would likely conflict with the Arizona Supreme Court’s ruling in the landmark mental health case, Arnold v. Sarn, Humble said the Legislature would have to make changes to state statute.

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