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Feds nix hope for additional AHCCCS funding

The U.S. Department of Health and Human Services dashed Arizona’s hopes that it may be eligible for increased Medicaid funding even if it doesn’t fully expand coverage under the Affordable Care Act.

HHS Secretary Kathleen Sebelius on Monday informed states they will not get enhanced funding for partial Medicaid expansion. States that expand coverage to include people earning up to 133 percent of the federal poverty limit – which totals about $14,856 for an individual – will get a substantial increase in federal matching funds.

But many in Arizona were hoping to get enhanced matching funds if the state restores coverage that was cut in the past several years from the Arizona Health Care Cost Containment System, the state’s Medicaid program, but does not take on the full expansion allowed by the Affordable Care Act.

AHCCCS spokeswoman Monica Coury said the agency was disappointed by the all-or-nothing approach taken by HHS.

“Obviously we’re disappointed because we would have considered our early expansion status as supporting the policy initiatives under the Affordable Care Act,” Coury said. “Arizona voters expanded coverage well before the ACA and rather than support these efforts, the federal government decided to engage in a game of chicken with governors and state legislatures rather than view these policymakers as partners. I am deeply saddened by this approach.

Proposition 204, a 2000 ballot measure, expanded AHCCCS coverage to include childless adults earning up to 100 percent of the federal poverty level. But with the state facing massive deficits, Gov. Jan Brewer and the Legislature cut coverage for more than childless adults.

Health care organizations are pushing for a restoration of the AHCCCS cuts, if not the full expansion allowed by the Affordable Care Act. The decision is expected to be one of the most contentious issues of the 2013 legislative session.

Brewer spokesman Matthew Benson said “there’s no question” that the governor is less likely to restore the Prop. 204 population without the enhanced matching funds.

“If in fact the federal government is not willing to provide enhanced matching dollars for the state of Arizona to restore Proposition 204, that will be exceptionally unfortunate and will weigh heavily on the governor’s decision,” Benson said.

The U.S. Centers for Medicare and Medicaid Services provides 66 percent of most Medicaid coverage. But the Affordable Care Act provides up to 90 percent of funding for states that expand coverage to 133 percent of the federal poverty level, and would temporarily cover 100 percent of the funding for people earning more than 100 percent.

According to the Joint Legislative Budget Committee, it would cost the state about $478 million in 2015 to restore Prop. 204 coverage with the traditional two-to-one match from the feds. But with an enhanced match of 85 percent, the state would only pay $135 million.

Ironically, JLBC estimated that it would cost far less to comply with the full ACA expansion than to restore Prop. 204 coverage with the traditional federal match.

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