Arizona Bill Would Drop 160,000 People From Medicaid

Arizona, which made national headlines last February when Gov. Jan Brewer asked the federal government if it could drop 280,000 people from its Medicaid rolls, remains a battlefield over the government health program for the poor.

The governor last week signed a bill that would cut the state’s contribution to the program by $500-million in the 2012 fiscal year—prompting immediate threats of a lawsuit and a new advocacy campaign by nonprofit and other hospitals.

As in many other states, Arizona lawmakers said Medicaid costs are spiraling out of control and they have to trim them to close a giant budget shortfall. This plan is less drastic than the one originally proposed by Ms. Brewer, but nonprofit advocates said it would still cut a huge hole in the state’s safety net.

Tim Schmaltz, coordinator of Protecting Arizona’s Family Coalition, a group of health and human-services organizations, said this is the third year that Arizona has made “severe cuts” to programs that help vulnerable people.

The state’s biggest nonprofits—hospitals—will bear the brunt of this year’s cuts, he said, but they will have a “trickle down” effect.

“If hospitals can’t provide services, people will turn to the seriously underfunded social-service organizations,” Mr. Schmaltz said.

The new budget, which takes effect on July 1, would gradually cut 160,000 people from the Medicaid rolls by freezing new enrollment for childless adults and for parents earning more than 75 percent of poverty level. It would also cut reimbursements to health-care providers by 5 percent.

The Arizona Center for Law in the Public Interest is expected to file a lawsuit aimed at a part of the plan that eliminates childless adults and higher-income parents, said Timothy Hogan, the center attorney who is readying the lawsuit. He said those cuts, which add up to about $190-million, are illegal because Arizona voters passed a ballot initiative in 2000 to expand Medicaid coverage using money from a $3.2-billion tobacco settlement, running through 2025.

But Matthew Benson, spokesman for Ms. Brewer, disagrees that the measure is illegal, saying there’s some wiggle room in the original ballot measure because of a clause about “available funds.”

“We believe that clause was included to give the state an out where funding isn’t available, and we believe that is the situation where we are at this point,” Mr. Benson said. “We have just approved a state budget with $1.1-billion in cuts. That comes on top of a large number of cuts the past three years. We don’t believe the state has the funding to prop up the Medicaid provision.”

Eddie Sissons, executive director of the Arizona Foundation for Behavioral Health, in Phoenix, says she is worried because many of the childless adults in Medicaid have mental-health problems and can have trouble keeping all of their Medicaid paperwork together as they move from home to home. The new rules for Medicaid in Arizona would require people to prove eligibility every six months instead of annually. Her organization is planning a campaign to notify poorer Arizonans that they need to stay enrolled or risk being frozen out.

Last month, the administrators of several of Arizona hospitals, including the nonprofit giants Banner Health and St. Joseph’s Hospital and Medical Center, began planning a campaign to bring more federal Medicaid money to the state–and are taking their campaign directly to the public through advertisements in major newspapers, e-mail blasts, and a new Web site, www.savehealthcarejobs.com.

They are proposing a new tax of sorts on themselves: a 4.2 percent assessment on hospital, health-plan, and nursing home revenues, which they estimate would raise more than $465-million. That money would then qualify for a federal two-to-one match, which could be used for health-care organizations and plans to provide care to the poor.

The plan’s boosters say more than 40 other states already have these assessments in place or are looking at them.

However, because the plan is technically a tax increase, it would need a two-thirds majority in both the Arizona House and Senate. Some conservative legislators oppose any additional taxes on principle.

The hospitals are playing up a study by Arizona State University researchers estimating that Medicaid cuts could result in job losses, including 13,600 in hospitals and others in construction and retail.

Ms. Brewer has forwarded the state’s new Medicaid plan to federal authorities for approval. It could take several months, Mr. Benson says, but lawmakers are optimistic the changes will be approved.

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