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Analysts: AZ could get cash infusion by lifting Medicaid freeze

A year ago, Republicans boasted that they made the tough decisions on state spending needed to close a massive budget deficit.

The decision to freeze enrollment in state-funded health care for the poor was held up most often by Republicans as a shining example of how they addressed the festering fiscal imbalance.

But one incentive might persuade Arizona’s policymakers to let the uninsured back into the Medicaid fold: cash — lots of it.

The federal health care overhaul that Congress passed in 2010, and which the U.S. Supreme Court upheld last month incentivizes states to open their Medicaid rolls to more people beginning in 2014. Though the court struck down the penalties to states that don’t do so, the federal government still plans to dramatically increase the amount of money it gives to states to cover those new health care costs.

In particular, that money will cover much of the cost for states to include childless adults – the same group of Arizonans who were directly affected by the AHCCCS enrollment freeze.

Currently, the federal government covers 66 percent of the costs for that population.

But the match increases to roughly 74 percent in 2014 and continues to grow in subsequent years, reaching 91.5 percent in 2020.

Legislative budget analysts say that restoring the coverage for childless adults means lowering the cost for existing participants by $217 million, and that, in turn, will offset the cost of letting in new enrollees.

The bottom line, the analysts determined, is that the state could improve its financial position by $51 million by 2015 if it lifts the enrollment freeze.

But it’s not clear if the state will get that extra money if it doesn’t comply with another provision in the federal law that requires states dramatically expand Medicaid enrollment to everyone who makes less than 133 percent of the federal poverty limit.

In its decision to uphold the Affordable Care Act, the U.S. Supreme Court said threatening the states with the loss of their existing Medicaid funding as a way to compel them to expand the health program was unconstitutional. But the Joint Legislative Budget Committee analysts say it’s unknown whether the federal government will “link” the extra money for childless adults to the general Medicaid expansion.

“We do not know if the childless adult population would receive an enhanced federal match rate if the state foregoes the 133 percent expansion,” the analysts wrote last week in a report on what the ruling means for Arizona.

 

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