Nearly one-third of Gila County residents have a life and death stake in the mushrooming battle between the state and federal governments about wholesale cuts in medical care for low-income residents — especially children.
About 30 percent of Gila County residents rely on the state’s Medicare program for their health coverage — about 16,000. The Legislature’s effort to reduce the Arizona Health Care Cost Containment System (AHCCCS) rolls by about one-quarter has now run afoul of key provisions in the just-enacted federal health care reform package.
The number of people seeking help from AHCCCS has risen 12 percent in Gila County in the past year, largely as a result of the stubbornly high unemployment rate. Statewide, the number of people on AHCCCS has jumped 15 percent — or by 181,000.
Republican Gov. Jan Brewer has appealed to the federal government to make immediate changes in the health care reform legislation and vowed to join with other states that have sued to block its implementation.
“I have asked the Arizona congressional delegation to admit the true costs of this mandate and to provide the federal funds to pay for it if they continue to support it,” said Brewer in a prepared statement.
The state Legislature had been on the brink of throwing 38,000 children and 300,000 adults out of AHCCCS — including an estimated 4,000 residents of Gila County. But then Congress adopted sweeping health care reforms that banned any cutbacks in state Medicaid programs.
The already approved state cuts would have saved Arizona $400 million next year and nearly $1 billion annually after that. However, those cuts would have cost the state some $2 billion to $3 billion annually in federal funding for Arizona’s version of Medicaid, according to Monica Coury, AHCCCS assistant director of intergovernmental relations.
The $9 billion state AHCCCS program provides medical care to 1.35 million Arizonans — about 20 percent of the population.
It mostly provides coverage for families with incomes below the poverty line, but also pays the bills for elderly and disabled people who have exhausted their resources, but need nursing home levels of care.
AHCCCS has long been cited as a national model, since it contracts with doctors and hospitals to provide complete care for a flat monthly, per-member fee. Audits and studies have lauded AHCCCS for having among the best care and lowest per-member costs of any Medicaid program in the country.
The federal health care reform package requires states to eventually expand Medicaid to cover families making up to 133 percent of a poverty level wage. Currently, the poverty line is set at $903 a month for an individual ual and $22,000 a year for a family of four.
However, the federal reform package also prevents states from cutting back their existing programs.
The state spent a full year trying to balance its budget, but just missed the deadline for approving cuts in AHCCCS before the federal restrictions took effect. The state had previously expanded AHCCCS beyond the federal minimums.
Arizona found itself in an ironic dilemma — effectively penalized by the fine print of the federal rules because it expanded its Medicaid program beyond the bare minimum.
The Legislature had previously approved a largely federally funded program to provide coverage for uninsured children in families making up to twice the poverty line. At one time, the program covered some 49,000 children, but that declined to about 38,000 as a result of a freeze on new enrollments imposed in October. Moreover, back in 2001, voters approved an initiative that provided coverage for uninsured adults with incomes below the poverty line, which added about 300,000 people to the rolls.
The Legislature didn’t move to repeal that voter-approved law, but did vote to simply not approve the money to provide the care. Legal experts are divided on whether the Legislature’s action violated state law.
Ironically, the federal reform package effectively penalizes Arizona for those expansions of the program.
The federal effort to provide coverage to some 32 million uninsured Americans relies heavily on expanding Medicaid programs. To sweeten the deal for states, the reform plan pays 100 percent of the cost of people added to the systems to comply with the new standards, instead of the standard 66 percent. As part of the economic stimulus package, the federal government had this year temporarily increased its share of Medicaid to 75 percent.
However, Arizona was one of about five states that had already expanded its program to cover many of the people that other states will now have to add.
But instead of getting those people covered at 100 percent for the first few years, Arizona would get 75 percent initially and then probably 66 percent once the extra money from the stimulus bill falls off. That extra money will go away in December, unless the Senate approves a six-month extension already approved by the House, said Coury.
As a result, Arizona would get nearly $1 billion a year less than most other states with the same number of people in the program, according to AHCCCS estimates.
Gov. Jan Brewer and many Republicans, including Sen. Sylvia Allen who represents Rim Country, have already urged the state to sue the federal government to prevent the health care reforms from taking effect.
All told, AHCCCS provides medical care for about 30 percent of Gila County’s population. Nearly 10 percent of the county’s population would lose their coverage if the proposed changes take place.
If Congress doesn’t modify the just-adopted provisions, Arizona will have to come up with an extra billion dollars a year to balance its dwindling budget.
State lawmakers set up a chorus of protests about the potential impact on an already shattered state budget. It took the Republican governor and the Republican-dominated Legislature a year and seven special sessions to balance this year’s budget and approve a ballot measure asking voters for a temporary 1 cent increase in the sales tax. That deal included the proposal to cut back AHCCCS to the minimum level allowed by the federal government.
On the other hand, health care advocates say the proposed cuts in AHCCCS would have inflicted lethal damage on many patients and on the state’s economy.
For starters, the $1 billion state savings would have cost the local health care system an additional $3 billion in federal funds.
Moreover, studies show that people without insurance are much more likely to die of preventable conditions. Some studies suggest that perhaps 45,000 Americans die annually for lack of medical coverage.
Moreover, people without medical insurance tend to ignore medical conditions until they pose an emergency and then go to the emergency room. Once in the emergency room, they typically face much higher bills. If they become medically bankrupt as a result, they can then qualify for AHCCCS — which often ends up paying much more than it would have had the person had preventive and maintenance care.
If AHCCCS doesn’t provide coverage in those cases, then the hospitals typically get stuck with the bill, which can itself prove fatal to many struggling hospitals as the economic downturn drives up the cost of this uncompensated care. Even with nearly a third of the population covered by AHCCCS now, Payson Regional Medical Center racks up nearly $1 million annually in uncompensated care.
Finally, cutting off medical benefits as soon as someone gets even a low-wage job that pays less than $10,000 annually provides a disincentive for people on AHCCCS to take a low-wage job because doing so means losing medical coverage for their children, AHCCCS advocates say.