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Medicaid expansion appears unlikely after Supreme Court ruling

If the feds can’t force Arizona to move forward with the massive Medicaid expansion, it’s a near certainty the Republican-led Legislature won’t do it for them.

Though the U.S. Supreme Court upheld the core of President Barack Obama’s Affordable Care Act, it ruled that the federal government couldn’t force states to expand health care for the poor by threatening to take away other Medicaid funding.

Chief Justice John Roberts said the federal government can’t put a “gun to the head” of states that refuse to expand coverage by threatening to take away Medicaid funding, as the Affordable Care Act would have done.

And legislative Republicans, who have spent the past several years making deep budget cuts to deal with the ongoing fiscal crisis, are largely content to opt out, now that there’s no mandate.

“How are we going to expand it if we don’t have the money to pay for it?” said Senate President Steve Pierce. “We made some real hard decisions that were the right decisions at the right time. If we were flush with money we could revisit some of that, but we’re not.”

Even with the extra federal funding the Affordable Care Act provides for the expansion, the expansion would cost too much in the long run, said Pierce, R-Prescott.

“I’m not going to get sucked in on that one again. ‘Hey, we’ll help you out now.’ (But) somebody’s going to have to pay for it sooner or later,” he said.

Rep. John Kavanagh, who chairs the House Appropriations Committee, said the cost of expanding Medicaid coverage — otherwise known as the Arizona Health Care Cost Containment System — would be “phenomenal.”

“I would be very reluctant to get involved with that,” the Fountain Hills Republican said. “I don’t think you’ll see many Republican-led states expanding. It’s not just an issue that the state can’t afford it … but the federal government can’t afford it either.”

Republicans such as House Speaker Andy Tobin and Sen. Al Melvin said they would prefer to implement reforms to Arizona’s Medicaid program rather than expand it.

Tobin, R-Paulden, said Arizona should root out fraud and abuse in AHCCCS to cut costs, while Melvin, R-SaddleBrooke, said Arizona should enact reforms to the civil justice system. Melvin also wants the federal government allow people to buy health insurance across state lines.

“I’m not a believer in expansion of government health care services,” Melvin said.

The Arizona Hospital and Healthcare Association, which opposed last year’s AHCCCS enrollment freeze for childless adults, wants to see as many people covered by the program as possible and hopes policymakers will consider the full expansion. But Peter Wertheim, the association’s vice president for strategic communications, said his group may have to find another route.

“Clearly there was concern about the direction the federal program would’ve taken us, so then I guess the question is, what now?” Wertheim said. “I think we’re going to need to again not rule anything out but not expect people to automatically embrace an expansion.”

Wertheim said the hospital group will sit down with the Governor’s Office, lawmakers and other stakeholders in the process to work on a more “Arizona-centric” solution. Instead of expansion, Wertheim said Arizona may want to look at “some other creative method,” such as recent policies like insurance premium subsidies, high-risk pools, or the AHCCCS safety net care pool, which uses money from political subdivisions to obtain federal matching funds.

“I think in the months to come, more specifics will come out,” he said.

Melvin suggested that Gov. Jan Brewer follow the lead of other Republican governors who have already declared their intentions to refuse the Medicaid expansions.

At least seven GOP governors, including South Carolina’s Nikki Haley, Louisiana’s Bobby Jindal and Florida’s Rick Scott, have said they won’t expand their Medicaid programs, and at least eight others have indicated they probably won’t either, according to media reports.

Brewer’s office said she is considering the state’s options and hasn’t made any decisions about whether to expand coverage under AHCCCS.

Don Hughes, the governors’ health policy adviser, said the Ninth Floor is still studying last week’s Supreme Court ruling and evaluating its options. He said the Governor’s Office plans to meet with industry leaders, lawmakers, AHCCCS and other stakeholders, and hasn’t yet decided on a course of action.

“At this point we’re just looking at what our options are and trying to figure it out. It’s a complicated decision. I think we need to take some time and be thoughtful here,” Hughes said.

When asked whether it’s possible that Arizona would expand AHCCCS coverage under the Affordable Care Act, Hughes said, “I would say that I don’t know whether we will or we won’t. I think we have to take a look at what the options are and go from there. It’s just too premature to talk about anything else.”

But Brewer’s past comments on the issue left less room for discussion.

When Brewer asked the Legislature in 2010 to join a 26-state lawsuit against the Affordable Care Act, the Medicaid mandate was one of her top concerns.

Her special session call in March of that year included two items — authorization for a lawsuit over the health care law, and a message urging Congress to fully pay for any mandatory federal entitlement expansions.

The governor railed against the billions of dollars the mandate would cost Arizona, and wrote letters to Obama, U.S. Senate President Harry Reid and then-House Speaker Nancy Pelosi, saying her cash-strapped state simply couldn’t afford it.

A Brewer spokeswoman said it would be premature for the governor to comment on the issue, saying only that she has not yet decided whether to implement the expansion.

The additional costs that Brewer and legislative Republicans worried about in 2010 are still there, but are mostly uncertain. The Joint Legislative Budget Committee estimated that if Arizona implemented the full Medicaid expansion — which would also require it to end a partial AHCCCS enrollment freeze it implemented in 2011 — it would cost the state an additional $40 million in fiscal year 2014 and $210 million in fiscal year 2015.

However, JLBC does not yet know how much the expansion would cost after 2015. JLBC said the cost may depend on unknown factors.

The mandate would have forced state Medicaid programs to cover anyone earning up to 133 percent of the federal poverty level, which would be $30,657 for a family of four. Prior to the enrollment freeze for childless adults in July 2011, AHCCCS covered anyone earning up to 100 percent of the federal poverty level.

Many proponents of expanding Medicaid say the federal matching funds that states receive make it a deal that’s too good to pass up.

From 2014 through the end of the fiscal year 2016, the feds would pay for 100 percent of the cost for covering people who earn between 100 and 133 percent of the federal poverty level. The federal match — which is normally set at 66 percent — would gradually drop to 90 percent from 100 percent by 2020.

Arizona would also get increased money for childless adults and others earning between 33 percent and 100 percent of the federal poverty level — the population covered by Proposition 204, the 2000 ballot measure that drastically expanded AHCCCS coverage.

The federal match for the Prop. 204 population would start at about 85 percent and increase to 90 percent by 2020, but only if Arizona goes along with the full Medicaid expansion envisioned in the Affordable Care Act.

Some Democratic lawmakers are holding out hope that Arizona will expand AHCCCS coverage, but few have any optimism that the Republican- controlled Legislature will do so. Assistant House Minority Leader Steve Farley, D-Tucson, said GOP lawmakers need to consider the strain that the uninsured are putting on Arizona’s hospitals.

“It’s pretty much a no-brainer to take the deal that’s on the table. But if you’re going to reject it because ideologically you don’t like the person that’s offering the deal, I think you’re committing malpractice on the people of Arizona,” Farley said. “Can the state afford not to? What happens when our emergency rooms close down?

What’s that going to do to our economy, to our people and to our business environment? I’ve talked to hospital CEOs, and they’re struggling right now.”


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