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Brewer drops AHCCCS bombshell in state of the state

Arizona Gov. Jan Brewer delivers her 2013 State of the State address. (Photo by Ryan Cook/RJ Cook Photography)

Arizona Gov. Jan Brewer delivers her 2013 State of the State address. (Photo by Ryan Cook/RJ Cook Photography)

In a surprising announcement that may mark the beginning of her fiercest battle with the Legislature in years, Gov. Jan Brewer opened the 2013 legislative with a bang when she announced she will seek a full expansion of Arizona’s Medicaid program under the Affordable Care Act.

The decision over what to do with the Arizona Health Care Cost Containment System loomed for weeks as the biggest unanswered question of the upcoming session. The governor and lawmakers had three choices – leave it alone, restore funding they cut over the past couple years, or fully embrace one of the most controversial aspects of the Affordable Care Act, which Brewer and GOP lawmakers fought tooth and nail against since its inception.

And in her annual State of the State address, Brewer answered the question in grand fashion. The governor said she wants to expand AHCCCS to cover all Arizonans who earn up to 133 percent of the federal poverty level.

And she said she found a way to do it that will clear the biggest hurdle – the cost.

• Read Gov. Jan Brewer’s 2013 State of the State address

Brewer said the state’s share of the additional coverage will be paid for by a provider tax on hospitals, which is essentially a tax on hospital services. She said the $154 million a year the tax will raise will be enough to pay for Arizona’s share of the additional coverage, which will allow the state to receive extra federal money at no cost to the state itself.

The governor emphasized her longstanding opposition to President Barack Obama’s signature health care law. She even joined the multistate lawsuit against it.

But with Obama’s reelection, Democrats still in control of the U.S. Senate and the U.S. Supreme Court upholding its key provisions, the Affordable Care Act is the law of the land.

“It’s a decision some would prefer not to face. They’d like to wish it away. We cannot. Nor can we simply wag our finger at the federal government. Trust me. I tried that once,” Brewer said, referring to her famous 2012 confrontation with Obama at Phoenix-Mesa Gateway Airport. “The Affordable Care Act isn’t going anywhere, at least not for the time being.”

The governor said the expanded Medicaid coverage would pump $2 billion into Arizona’s economy while creating and saving thousands of jobs. She said it will also protect many hospitals from the cost of covering uninsured patients while providing health care for an additional 240,000 people.

Business and health care groups have urged policymakers to at least restore AHCCCS funding that was cut in recent years.

“Weigh the evidence and do the math,” Brewer said.

On top of the hospital tax, which Brewer said would allow the state to expand AHCCCS coverage without taking money out of the general fund, the governor included another provision to help protect the state. She said her plan will include a clawback provision that would automatically roll back coverage if the federal share of the additional cost – which would be 85 percent under the ACA – drops below 80 percent.

“I won’t allow an Obamacare bait-and-switch,” she said.

Traditionally, the federal government provides a two-to-one match to states for Medicaid funding. But to entice them to opt into the Affordable Care Act, the feds offer 85 percent of the funding for expanding to 133 percent of the federal poverty level.

Arizona provided coverage to people making up to 100 percent of the poverty level, but froze enrollment for childless adults in 2011, which ultimately reduced the AHCCCS rolls by about 141,000 people. Brewer had been hoping to get the enhanced federal match to restore the 100 percent coverage, but federal officials announced in December that it would only be available for the full expansion.

According to the Joint Legislative Budget Committee, it would cost Arizona $478 million to restore the 100 percent coverage in fiscal year 2015, compared to just $135 million for the full expansion. Brewer’s estimate for the full expansion was $154 million in its first year, which would be paid through the hospital provider tax.

Brewer’s remarks, which were not part of the embargoed speech the Governor’s Office released to the media earlier in the day, were met with mixed reactions from GOP lawmakers, whose support will be needed to pass her plan.

House Speaker Andy Tobin, R-Paulden, said he needed to see the details. But if it works out the way the governor said it would, he sounded somewhat receptive.

“If we find that the state of Arizona balances out without raising taxes and we are paying down our debt like we promised, I think that’s a conversation this caucus can have,” Tobin said.

Rep. Heather Carter, who chairs the House Health Committee, said she could “absolutely” support Brewer’s plan if the details work out.

“I think the plan that she outlined today gives a great starting point for further conversations,” said Carter, R-Phoenix. “Obviously, I want to see the numbers and how this all sort of shakes out in the specific budget on Friday. But on the first glance, this sounds like a win-win for Arizona, not only for our voters but for our small businesses.”

And Rep. Kate Brophy McGee, R-Phoenix, R-Phoenix, said she supported it as well.

“People are still getting sick. That’s the issue. We may not be paying for it, but the fact is that people here are still getting sick. They’re going to emergency rooms. They’re not getting treatment. It’s a problem. We need to address it,” she said.

Others were noncommittal. Senate President Andy Biggs, a fiscal hawk, said he couldn’t take a position until he saw the details, which will be part of the executive budget plan Brewer will release on Friday.

“I want to see the proposed plan before I comment on it,” said Biggs, R-Gilbert. “I need to see what’s in it before I start answering hypotheticals. I want to see what’s in the plan.”

Rep. Eddie Farnsworth, R-Gilbert, took a similar position.

“I don’t think we have enough detail and impact on the budget to know yet,” Farnsworth said.

Rep. John Kavanagh, who chairs the House Appropriations Committee, sounded skeptical from the start. When asked after the speech if Arizona would expand Medicaid coverage, the Fountain Hills Republican responded, “I personally won’t be.”

“There would be a cost to the insurance companies, which means the people who pay the insurance policies and the people who pay for their own health care. Someone’s paying for this. It doesn’t come out of nowhere,” Kavanagh said.

Brophy McGee said she expected Brewer’s plan to face strong resistance from some legislative Republicans, and compared it to the governor’s 2009-2010 battle with her own party to put a temporary one-cent sales tax on the ballot.

“When you think about when she got up and proposed the one-cent sales tax, it was a very similar feeling,” said Brophy McGee, who wasn’t in the Legislature at the time. “That same dynamic of standing up and saying, ‘This is what I think is right for Arizona,’ as opposed to what may be popular.”

Legislative Democrats, who have long urged their GOP colleagues and Brewer to implement the full expansion, seemed flabbergasted by the Republican governor’s proposal and were hesitant to throw their support behind it in the immediate aftermath of the speech.

“At the end of the day I’m sure we’re supportive,” said House Minority Leader Chad Campbell, D-Phoenix. “I’ve been around long enough to know that sometimes people say one thing then they propose something different. I want to see the plan before I say anything concrete. I’m cautious, I’ve been burned down here a lot.”

Considering the likely opposition Brewer’s plan will face from some legislative Republicans, Campbell emphasized that Brewer will need Democratic votes.

“You’ve got to work with us, if she wants to pass Medicaid expansion it’s not going to be a Republican-only pass, it’s going to need Democratic support and that means she has to work with us on some things,” he said.

– Hank Stephenson contributed to this article.

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