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Sinema: State will lose $7B with KidsCare elimination

Arizona is risking nearly $7 billion in annual federal funding for health care by eliminating a children’s health insurance program in the budget that was signed into law last week, Democratic lawmakers said.

Ending the KidsCare program puts Arizona in violation of the terms of the federal health care reform legislation that Congress approved yesterday and that President Obama is expected to sign tomorrow, said House Assistant Minority Leader Kyrsten Sinema.

The new federal health care law requires states not reduce eligibility in existing programs in order to qualify for matching funds. Because the KidsCare program won’t be officially eliminated until June 15, Arizona will not qualify for any federal funds, Sinema said.

“From the basic math, it makes no sense to cut these people off of health care,” she said.

Under the current federal system, matching funds given to states are contingent on state money spent on particular programs. Eliminating KidsCare under that system would mean Arizona would only stand to lose the match for that program. But the new federal law will link all matching funds, so cutting enrollment in one program causes a state to lose all funding.

That means Arizona will also forfeit its Medicaid funds. The total would be nearly $7 billion each year that the state would not receive, Sinema said.

But Republican leaders said they were unaware of any potential loss of all federal health care funds.

“You’ll forgive us for not taking Kyrsten Sinema’s word for it,” said House Speaker Kirk Adams. “We’re looking into it.”

House Democrats have asked Adams to allow the late introduction of two bills they say will ensure the state doesn’t lose the federal money and won’t negatively impact the state budget, which was designed to bridge a $2.7 billion deficit in fiscal 2011.

One bill would restore KidsCare, while the other would subject extended warranties on retail products, like computers or appliances, to a sales tax. House Minority Whip Chad Campbell said the revenue gained by expanding the sales tax would be about $22 million, which would cover the cost of KidsCare.
Both bills would include emergency clauses, which require approval of two-thirds of each legislative chamber, so they go into effect immediately.

Adams said he had received the request for the late introduction, but didn’t have enough information to make a decision.

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