The Legislature should not propose changing eligibility requirements for AHCCCS to deal with increasing enrollment in the state Medicaid program, Governor Napolitano said Jan. 13.

“I don’t think we should ask the voters to revisit that,” she said, referring to Prop. 204, a ballot measure passed in 2000 that expanded AHCCCS eligibility to any resident with an income of up to 100 per cent of federal poverty guidelines (approximately $8,860 for a single person and $18,100 for a family of four).

“I think we should carry through with 204,” Ms. Napolitano said.

Since Prop. 204 was passed, AHCCCS clients have grown to more than 1 million, or 20 per cent of the Arizona population, outstripping funding originally provided by a portion of the $3.2 billion windfall from the 1998 multi-state tobacco lawsuit settlement.

JLBC: AHCCCS To Be $80 Million Short

The Joint Legislative Budget Committee reported Jan. 11 that AHCCCS will have an $80 million shortfall in this year’s budget and will need a $200 million increase in the next fiscal budget — pushing state funding for the agency to more than $1 billion based on projected enrollment, which has grown 8.4 per cent since December 2003.

Rep. Russell Pearce, R-18, says he believes voters would rescind their action once they learn that AHCCCS is taking money from the general fund and not being fully covered by the tobacco settlement.

“The chickens have now come home to roost,” said Sen. Carolyn Allen, R-8, chairman of the Senate Health Committee.

Ms. Napolitano told reporters Jan. 12, two days before her proposed state budget was to be released, that states across the country are facing increases in delivering Medicaid services, and some states that do not require voter approval to change eligibility requirements are cutting poor people from their Medicaid rolls.

“Fortunately in Arizona, we can pay for this growth in AHCCCS; it’s built into our budget,” she said. “Unlike many state Medicaid programs, we’re locked in.”

Officials have been analyzing “spikes” in AHCCCS enrollment, but say some growth has come from the clearance of a backlog of applications when the Legislature in 2003 changed its policy of requiring eligibility to be re-determined every six months instead of annually. Last year, the Legislature reverted to the 12-month re-determination.

“It’s a pig in the python problem — we got a lot of people declared eligible at once, and the system now is absorbing that,” Ms. Napolitano said.

She added, however, “The fact that there are a million people with health insurance, to me, is not necessarily a bad thing. It means they’re getting preventive health care. It means they’re not being dumped into the emergency rooms.” She said she has greater concern for Arizonans who don’t have health insurance coverage.

Other AHCCCS growth is said to be from an increase in enrollments by the working poor, who are not provided coverage by their employers and cannot afford commercial health insurance premiums.

House Majority Leader Steve Tully, R-11, said, “We’re hoping that early on in this session we’ll have some hearing to get at the root cause of the spike because without that, we can’t get control of the budget.”

Sen. Allen To Seek Study Committee

Ms. Allen, who said she did not vote for Prop. 204 because she didn’t think the tobacco settlement money would cover the costs of increasing the AHCCCS rolls, said she will introduce legislation to form a study committee to figure out why enrollment has spiked and what can be done about the growth.

Proposing anything now to deal with the increasing costs of AHCCCS, Ms. Allen said would be jumping the gun because, “We don’t know who we’ll be hurting, and it could be devastating.”

Governor Calls For Healthcare Group Expansion

Meanwhile, Ms. Napolitano called for expansion of Healthcare Group, an AHCCCS program for the self-employed, businesses with fewer than 50 employees and certain divisions of government.

The program offers a variety of coverage, including health savings accounts that may be moved from job to job. The coverage can be funded by employers or paid for by employees for monthly premiums as low as $95.

AHCCCS Director Tony Rodgers says there is no disincentive for employers not to have their employees covered by AHCCCS, and that poses a financial risk for the state.

Healthcare Group has enrolled 13,000 employees and hopes to eventually insure 80,000, Mr. Rodgers said.

Rep. Tom O’Halleran, R-1, has introduced a bill, H2171, which would repeal a section of statute that says the state may not enroll an employer group in Healthcare Group sooner than 180 days after the date a previous health plan was discontinued.

Rep. Russell Pearce, R- 18 has introduced H2394, which requires AHCCCS to conform to the provisions of Prop. 200. It requires the state to verify an AHCCCS applicant’s “immigration status through the systematic alien verification for entitlements program as administered by the United States Department of Homeland Security.”

Medicaid spending accounted for 21.4 per cent of state budgets last year, nearly matching spending on elementary and secondary education (21.7 per cent), according to a report released last November by the National Association of State Budget Officers.

Total state Medicaid spending reached $243.6 billion — an 8 per cent increase from 2002. Despite federal fiscal relief and cost-containment measures, including benefit reductions and eligibility restrictions, 23 states experienced Medicaid budget shortfalls in 2003, and 18 states anticipate shortfalls in last year.

The report predicted that with the expiration of federal relief and the continued rise in prescription drug and other health costs, state budgets will continue to feel the pinch from Medicaid spending.

Tennessee Governor Phil Bredesen announced Jan. 10 that he will drop 323,000 adults from the state’s expanded Medicaid program to save about $1.7 billion a year, but will preserve health coverage for children. —