Gov. Brewer says Ariz. wants Medicaid waiver

Arizona Gov. Jan Brewer said Thursday she’ll ask for a waiver under the federal health care overhaul so Arizona can reduce its Medicaid rolls to lower costs that Brewer and fellow Republicans say the cash-short state can’t afford. If approved, the change could mean the loss of government-funded health care for hundreds of thousands of people.

Brewer’s administration previously said it might request a waiver, but the governor on Thursday said “yes we are” when asked directly whether she would.

“We need flexibility from the federal government in order to get our state budget in line,” she said.

Brewer spokesman Paul Senseman later said details of the waiver request are still being decided, including how many people could lose coverage.

The state Medicaid program, the Arizona Health Care Cost Containment System, accounts for nearly a third of the state budget and provides coverage for approximately 1.4 million people.

Brewer also is taking two other approaches to seek relief from the health care overhaul’s mandates. One is to ask Congress to change the federal law, and the other is participation in a multistate lawsuit challenging the overhaul.

Arizona is among states hardest hit by the recession. The current $8.5 billion budget faces a midyear shortfall estimated at $825 million. A $1.4 billion shortfall is projected for the fiscal year that starts July 1.

Under a budget-balancing plan approved earlier this year by Brewer and the Republican-led Legislature, more than 250,000 people would have lost Medicaid coverage as Arizona lowered its eligibility threshold that is now above the federal minimum.

But Arizona then reversed that cutback because the health care overhaul was enacted with a requirement that states not reduce their program’s eligibility.

The 250,000 people are among approximately 310,000 people covered by AHHHCS under a 2000 eligibility expansion approved under a voter-approved law known as Proposition 204.

However, any cutback of Proposition 204 eligibility likely would not affect all of the AHCCCS enrollees covered by the expansion. That is because the state still would be obligated under state law to maintain coverage for those whose care can be covered with dedicated funding from tobacco tax and tobacco settlement money.

If Proposition 204 eligibility were to be reduced by approximately 250,000 people in 2011 for the next fiscal year, the state would save approximately $750 million, said Richard Stavneak, the Legislature’s budget director.

A National Conference of State Legislatures official said governors can request eligibility waivers after Dec. 31.

A governor requesting an eligibility waiver would have to certify that his or her state is in deficit or is going to be in deficit, said Joy Johnson Wilson, an NCSL lawyer based in Washington.

Wilson said she was unaware of any governors making certifications.

Any reduction of Proposition 204 eligibility is almost certain to be challenged in state court on grounds that the Arizona Constitution generally bars the Legislature from repealing or acting in contrary to voter-approved laws. Republican legislators who back the Proposition 204 reduction said wording of the 2000 law gave them leeway to make the change.