Although a bill passed by the Senate Appropriations Committee after midnight the morning of Feb. 23 would repeal Arizona’s Medicaid system, its real purpose appears to be to start a discussion on how the state can save money on health care.
Even the bill’s sponsor, Sen. Andy Biggs, R-Gilbert, acknowledges that HB1519 won’t pass in its current form.
“Nobody’s talking about real structural reform to an unsustainable socialized medicine system,” Biggs said. “Do I think the bill has a long, long road to go? Yes. Would it look like this six months from now, if we’re here? It would look different.”
SB1519 would terminate the Arizona Health Care Cost Containment System by Oct. 1. Biggs said the state is going to continue hemorrhaging money and won’t recover economically if the program remains in place.
The bill calls for some of the money saved by terminating AHCCCS — the state’s total savings would be nearly $2 billion over the next nine months — to be distributed to the Department of Health Services to take care of as many of those who would be dropped from the program as possible. Approximately $900 million would go to the general fund. Most of those the system currently serves would not be covered.
If states spend a certain amount of money on Medicaid, they are eligible to receive matching health care funds and grants from the federal government. Though the percentage changes each year, most of the funding for AHCCCS is covered by the federal government. For that reason, critics call cutting AHCCCS a drastically irresponsible move. Even the bill’s proponents estimate a loss of $4.8 billion in federal matching funds.
In the committee hearing, Sen. Kyrsten Sinema, D-Phoenix, asked how the state could possibly make up the loss in federal money.
Biggs said, quite simply, the state wouldn’t.
“It is perverse and immoral to borrow money from future generations, which is exactly what you’re doing, to pay for current year health care bills,” Biggs said in reply to Sinema. “I don’t make up that money. It’s just that simple.”
In a post-hearing interview, Biggs said that eliminating AHCCCS by year’s end isn’t necessarily the ultimate goal. But, he said, it’s imperative get the ball rolling on a discussion about cutting the cost of health care to Arizona.
Biggs denied, however, that his bill is more of an anti-AHCCCS statement than an attempt to dismantle the program.
“Number one, I introduced the bill seriously,” he said. “Number two, I’m willing to entertain amendments. And number three, do I think I have the votes to get it out of here without amendments? No.”
Some of Biggs’ fellow Republicans on the Appropriations Committee offered less drastic ideas in the way of health care reform. Sen. Sylvia Allen, R-Snowflake, agreed with Biggs that Arizona needs to get moving on a serious overhaul of public medicine.
But when she voted for the bill in the committee hearing, she made it clear that an Oct. 1 deadline is unrealistic, and that she prefers alternative solutions to a complex problem.
“I would really like being able to add something to this bill, like making a study group to really look at what you’re proposing and maybe some other reform efforts,” Allen said to Biggs during the hearing. “For instance, I’d like to look at a model where we take a certain amount of money and go to an insurance company and buy catastrophic insurance for the indigent population.”
Sen. Rich Crandall, R-Mesa, voted no, and predicted that if the bill became law, all rural hospitals in Arizona would close by Christmastime. In a later interview, he agreed that the bill is a statement that Arizona health care is in need of reform. He offered some alternatives.
“One of the big things lacking from AHCCCS is that there is zero incentive for wellness,” Crandall said. “If you’re on AHCCCS, you have no incentive to take care of yourself. Start there, with an incentive for people to take care of themselves and not go in every time they stub a toe or something like that.”
Crandall also suggested incorporating health savings accounts into AHCCCS. With such accounts, a person’s unused money for medical coverage rolls over from year to year. Whatever allotted money isn’t used in a given year can be saved for withdrawal at any point.
Patients using such accounts can withdraw money for any reason, but the money is subject to income taxes and a 20 percent penalty if it isn’t used for a documented medical expense.
“If you stay healthy and stay within in this range, and take care of yourself,” Crandall said, “then hey, we’re going to share this with you and you get (money) at the end of the year.”
Crandall said that because Arizona is up for Medicaid reapplication this fall, he hopes the state can fit some of those ideas into the current system.
The bill passed the committee by a vote of 8-5, and is on its way to the Senate floor pending caucus discussion.
Spending the savings under SB1519
Of the state money saved by dismantling AHCCCS, $1.8 billion would be distributed to the Department of Health Services for the following:
• $200 million for behavioral health services.
• $200 million for services to the developmentally disabled.
• $500 million for services to the medically indigent.
• $900 million to the state general fund.