More People Lose Health Insurance

After state cuts, 18% uninsured, 30% on AHCCCS

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The number of people without medical insurance continues its inexorable rise as cuts in the state’s medical program for the poor take effect.

Some 30 percent of the people who live in Gila County get their medical coverage through the Arizona Health Care Cost Containment System, including many childless adults and children affected by cuts approved by the Legislature this summer that went into effect last month.

Gov. Jan Brewer this week hailed a decision by the Arizona Court of Appeals that effectively upheld the Legislature’s decision to cut $500 million from the state’s Medicaid program by freezing the enrollment of childless adults, among other things. Health care groups had filed suit hoping to block those changes, which overturned a voter-approved ballot initiative.

Since the state froze a program to provide medical care for the children of the working poor, the number of children on the waiting list has grown to 120,000 statewide.

In addition, the U.S. Census Bureau reports that about 3,400 of the county’s 52,000 residents lack health insurance altogether. The county’s 18 percent rate compares to a national average of about 22 percent, according to the Centers for Disease Control.

The Payson Regional Medical Center has about 81,000 patients annually and writes off some $2.3 million in uncompensated care each year, mostly unpaid bills as a result of a lack of medical insurance.

The lack of insurance contributes to the deaths of 45,000 Americans annually, according to an analysis by researchers from the Harvard Medical School.

Still, health care advocates hope that federal health care reforms that go fully into effect in 2014 will reverse that trend — especially in hard-hit rural counties.

Currently, the state is debating whether to set up the required health care exchange to certify insurance plans or to let the federal government establish the health exchange for the state.

“We’re still waiting to see what a state-based exchange would be like,” said Matt Jewett, a policy analyst for the Arizona Children’s Action Alliance. “The idea is to provide one-stop shopping for anyone who needs medical insurance — with subsidies for anyone making about 200 percent of the poverty rate.”

The Arizona Hospital Association has protested some $570 million in state medical cuts. That includes a 5-percent reduction in AHCCCS rates for doctors and hospitals that will save $700 million annually.

The AHCCCS cuts could hit rural hospitals especially hard, given the high percentage of rural populations that lack insurance or rely on AHCCCS. In Gila County, that accounts for almost half the total population.

AHCCCS, Arizona’s version of Medicaid, plays an especially important role in counties that don’t have a public hospital or a trauma center, like Gila County. Normally, AHCCCS offers hospitals a crucial lifeline by picking up the bills for uninsured patients in an emergency who end up medically bankrupt.

Before the recession, Arizona had one of the broadest Medicaid programs in the country. All states have to provide coverage for families living below the poverty line — which is $18,500 for a family of four. The federal government provides about two thirds of the money for the basic program. Arizona voters some years ago approved two expansions of the program. The ballot measures extended coverage to childless adults living in poverty and to children in families making up to 133 percent of a poverty level wage.

The state sought and won federal approval to stop covering both of those added groups. The shift has added significantly to the roughly 1.1 million Arizona residents without health insurance, including the 120,000 children on the waiting list for the now-frozen Kids Care. Since the freeze took effect, the number of children covered has dropped from 62,000 to 16,000.

A coalition of Valley medical centers last week announced a plan to cover 20,000 children on the Kids Care waiting list. The medical centers put up $42 million to provide the state match, which will attract more than twice as many federal dollars.

However, few such options exist for already hard-pressed rural hospitals struggling to cope with the latest reduction in AHCCCS rates.

Health care advocates hope that the federal health care reforms that take effect in 2014 will provide coverage for at least half of the people currently uncovered.

However, crucial details remain unsettled in setting up the health care exchanges intended to make it easy for people to buy insurance and qualify for reduced premiums based on their income.

The Arizona Legislature last year considered but did not adopt two different bills to set up the state’s health insurance exchange. One bill would give insurance companies the controlling role in regulating the plans offered through the exchange. A second bill would give consumers more influence on the board that would set many crucial policies concerning the exchanges.

If the Legislature can’t settle on rules that comply with federal requirements, then the federal government would establish and regulate the exchange.

The state last month received a $30 million federal grant to begin setting up the Internet-based exchange, which would allow people to fill out applications online and find out whether they qualify for a government program or a subsidy of their health insurance premiums. They could also choose among an array of health insurance plans, which would all have to meet certain minimum requirements when it comes to core services offered, rates and the amount they spend on administration and overhead.

The system would allow people to buy insurance at group rates, with no exclusion for pre-existing conditions. Subsidies would reduce the cost of premiums for people making up to about four times the poverty level — about $88,000 for a family of four.

Once the new federal rules kick in, AHCCCS would expand coverage to anyone making up to 133 percent of a poverty level wage, with the federal government paying the full cost of the added patients.

The exchanges should make it much easier for people to shop for health insurance, with electronic records people can easily update.

“It’s supposed to have a one-stop shopping place, where you go and say ‘I am such and such a person and here’s my Social Security number,’” said Jewett. Currently, people fill out paperwork then must often wait 45 days to find out if they’re eligible for coverage.

“The idea is that there’s no wrong door. When you come into the exchange – whether it’s in person, or by telephone or online, they can determine your eligibility and enroll you right there. And they’ll find a subsidy if you’re eligible.”

The system will require people to pay a certain percentage of their income up to 400 percent of the poverty level, with higher percentages for some of the more comprehensive plans.

“It starts at something like 2.5 percent of your income and goes up to something like 9.5 percent,” said Jewett.

Employers can also use the exchange to provide group coverage for employees, although most of the people in the exchange will probably not have work-based coverage, said Jewett. However, employers will get new tax credits for providing health insurance.

In addition, people who don’t get health insurance will have to pay a fee once the system takes effect.

Jewett said projections suggest the system will cover about half of the people without insurance, dropping the rate to 11 percent. Some groups remain exempt from the insurance mandate, including undocumented immigrants and Native Americans, who have coverage through the Indian Health Service.

“We hope that virtually all children will be covered,” said Jewett, who noted that currently nearly 300,000 children in the state lack coverage.

“If all goes well, it’s going to shift the mindset from how do we keep people out to how do we get people insured,” he said.

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