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Pressure leads hospital group to pull the plug on AHCCCS ballot measure

The state’s largest hospital association had been working for several weeks on a ballot measure that would raise enough money to keep Arizona’s Medicaid program running at full strength. But the threat of political retribution from top Republicans in the Legislature appears to have sunk the measure.

The Arizona Healthcare and Hospital Association announced on April 6 that it would not pursue the Arizona Family Healthcare Act, which would have asked voters to approve a 1 percent income tax hike on individuals who earn more than $150,000 a year and couples who earn more than $300,000. The money would have paid for Medicaid coverage for about 310,000 people who will be kicked out of the Arizona Health Care Cost Containment System, the state’s Medicaid program, due to
budget cuts.

Association President John Rivers said his group canceled plans to pursue the ballot measure after Republican lawmakers made it clear that they would oppose the effort aggressively.

“We expected the initiative to cause a negative reaction in the Legislature because it was requiring a new source of revenue. But we did not expect the reaction in the Legislature to be as strong as it was,” Rivers said. “We had to think about the long-term impact of this on our relationships with key legislators.”

House Majority Whip Andy Tobin, a Republican from Paulden, and others drafted a counterproposal that would have provided money for AHCCCS through a new tax on hospitals and other health care providers.

The fear of a competing ballot measure that would have taxed its members, the Arizona Healthcare and Hospital Association decided to stop pushing for a measure that would have raised taxes on the
wealthiest Arizonans. In exchange, Tobin agreed to withdraw a Senate Concurrent Resolution that would have put the hospital tax on the November ballot.

Tobin also promised to work with the association to find a solution to the budget problems plaguing AHCCCS. “We need to sit down and work through it (together) instead of waiting for the other side to solve
it,” he said.

Rivers said the association and the Legislature did not set a timetable for finding a new funding source for AHCCCS. But any proposal would have to be implemented by mid-2011, or Arizona risks violating the federal health care law passed by Congress in March.

That law, the Patient Protection and Affordable Care Act, requires states to maintain existing coverage levels and eligibility standards for Medicaid.

The federal health care law was passed just two days after Gov. Jan Brewer signed a fiscal 2011 budget that cut about $385 million from AHCCCS. The spending reduction would have eliminated coverage for about 310,000.

Under the new federal law, though, Arizona must continue providing health care for those patients.

Congress has signaled that it will approve additional federal money for Medicaid that would keep AHCCCS intact until June 30, 2011. But by then, the state must find a new revenue source or it will be in violation of the federal health care law, which means Arizona could lose about $7 billion in federal money for health care.

Rivers said many Republican lawmakers opposed taxing the state’s top earners to cover AHCCCS’ budget deficit. But there are few other options, he said, because Arizonans already are set to vote on a temporary 1-cent sales tax increase on May 18. The association also considered a ballot measure to raise taxes on tobacco, alcohol and soft drinks, but later decided against it.

“I can promise you that there were no good options on the table,” Rivers said.

Under the federal health care law, the state must also find about $20 million to keep its KidsCare program afloat. That program, which provides health care coverage to 47,000 children, was eliminated to help bridge the state’s budget shortfall, but Arizona must now reinstate KidsCare before it expires on June 15.

Brewer said she was confident that the Legislature would reinstate KidsCare before the deadline. The Legislature is expected to adjourn sine die in May.

“I think that we will restore KidsCare. I don’t think there’s any question about it,” said Brewer, who is suing the federal government over the health care law.

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