Legislature Reverses Itself On Ahcccs Funds

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None of the nearly one in three Gila County residents who rely on the state’s AHCCCS program for their health care will lose their coverage this year after all, thanks to federal threats and a state retreat.

Earlier this year, the Arizona Legislature voted to cut more than 310,000 people from the Medicaid rolls to save money. Those cuts could have cost at least 4,000 Gila County residents their health coverage. The cuts could have saved the state $1 billion a year, but also cost some $3 billion in federal funding.

However, the state backed down after the federal government warned that the attempt to cut Medicaid rolls by one quarter would actually cost the state more than $7 billion in federal funding.

“We won’t be able to make any changes” in eligibility, said Monica Koury, AHCCCS assistant director of intergovernmental relations. “So the questions for policy makers next year is how they fund the program.”

AHCCCS provides health coverage for 1.35 million Arizonans, including 16,000 residents of Gila County. That amounts to 30 percent of the total county population.

The Legislature wanted to eliminate coverage for two groups the state had previously added above the federal minimums. That included about 300,000 impoverished adults voters added when they approved a ballot initiative, and 36,000 children without insurance whose families made up to twice the poverty line. Those families have to pay up to 5 percent of their income to get that coverage.

But just as the Legislature prepared to approve the cuts, the passage of the comprehensive federal health care reform package barred states from reductions in state-administered Medicaid programs.

In fact, the federal reforms will require states to expand Medicaid to families making 133 percent of a poverty line wage by 2014, which will add an estimated 200,000 more Arizona residents to the AHCCCS rolls.

The federal government will pay the full costs of adding those people for the first three years. Ironically, states that had already made their programs more generous before the federal reforms passed will be penalized, said Koury. The states that expand programs to the 133-percent of poverty level will get full coverage, but those who had already expanded their rolls will get closer to 75 percent during the phase-in.

The first round of federal stimulus funding cushioned the impact of the required expansion of Medicaid by increasing the federal share of the program from 66 percent to 75 percent. Once the new rules take effect, the federal government will pay about 82 percent of the Medicaid costs.

AHCCCS and other federally required health programs account for about 20 percent of the state budget, which faces a multi-billion-dollar deficit — even if voters approve a temporary one-cent sales tax increase.

The state’s AHCCCS program is something of a model nationwide, since the state contracts with a network of health plans to provide coverage for roughly one in 5 residents statewide and more like one in three residents of Gila County.

AHCCCS pays a flat rate per enrollee, which makes it operate more like a health maintenance organization. Studies that compare different Medicaid programs have consistently found that AHCCCS provides better care than the majority of other state plans at a significantly lower cost.

Children account for about 60 percent of the people covered by AHCCCS.

The program also provides medical coverage for sick and disabled people who need nursing home care. That population accounts for about 4 percent of the people enrolled, but about 20 percent of the cost of the program. AHCCCS has proven especially adept at providing in-home nursing and support services to keep people out of nursing homes. Many other states spend 70 percent of their AHCCCS budget on nursing home care.

The AHCCCS rolls have risen about 15 percent in the past year due to the recession, as people lose their jobs and their health insurance as they plunge below the poverty line.

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