After months of uncertainty, Gov. Jan Brewer this week has proposed a fresh set of middle-of-the-road budget cuts in the state’s medical program for the poor, which provides coverage for nearly one in three Gila County residents.
However, this week the Senate adopted a budget that included Brewer’s original,, deeper cutbacks.
On the other hand, the senate shelved a plan to eliminate AHCCCS entirely.
instance, one now-shelved state Senate bill would have eliminated the whole program — saving the state
between $1 billion and $2 billion, but dropping medical care for 1.34 million Arizonans and foregoing $7.5 billion in federal funding. According to the Rim Country’s representative, Senate Pro Tem Sen. Sylvia Allen, that bill is in committee, but now says she would vote against it on the floor.
Gov. Brewer herself had proposed deeper cuts earlier this year, including the immediate cutoff of 280,000 impoverished, childless adults. That cut would have cost an estimated 4,000 Gila County residents their health care.
Gov. Brewer’s latest proposal would cut state spending by about $500 million — less than the $540 million reduction in her earlier proposal.
The new plan would stop enrolling poor, childless adults, which will shrink the AHCCCS roles by an estimated 100,000 in the next year as people already on the program leave.
Brewer also wants to cut payments to doctors and hospitals by 5 percent, increase co-pays for patients, impose no-show fees for missed appointments, eliminate extras like free taxi rides to doctor’s offices and clinics and try to recover $40 million owed to the state by Medicare for past eligibility errors.
The proposal would also eliminate payments to hospitals for the emergency room treatment of undocumented residents. Currently, AHCCCS covers the emergency room bills for the “medically indigent,” people without insurance whose hospital bills far exceed their ability to pay them. Since federal law requires hospitals to treat people in an emergency even if they can’t pay, the proposal would shift the cost from AHCCCS back onto the hospitals.
AHCCCS plays a vital role in keeping rural hospitals afloat by covering those emergency room bills. However, Payson Regional Medical Center reports relatively few undocumented residents in its emergency room, so it may not suffer too much from the new policy — beyond the 5 percent cut in AHCCCS rates.
Brewer said her plan takes advantage of the flexibility federal Health and Human Services Secretary Kathleen Sebelius gave the state after a recent meeting.
“State spending on Medicaid has increased 65 percent in four years. We simply cannot afford it,” said Brewer. “Nothing about this plan is pain-free. But it strikes a balance by creating a Medicaid program that is more fiscally responsible while keeping its core promises to Arizonans who depend on it.”
Fortunately, the 16,000 Gila County residents who depend on the program for their medical care have avoided the most drastic cut — the elimination of the whole program proposed by Sen. Andy Biggs, which drew Sen. Allen’s vote in the Appropriations Committee.
Now, Sen. Allen says Biggs has agreed to let SB 1559 die in the Senate Rules Committee.
“In committee, I said ‘I’m not going to vote for this on the floor.’ But it was the chairman’s statement that we need to solve the problems we have with health care,” said Allen.
Low-income children account for half the people on AHCCCS, with medically indigent nursing home residents and the chronically mentally ill accounting for a large share of the budget. The state’s share of the more than $9 billion program totals some $2 billion, which isn’t enough to even cover the 50,000 elderly and developmentally disabled people on the rolls.
However, the cost of the program has been rising faster than any other state program, with enrollment up 133 percent since 2000 and by one-third since the start of the recession. The cost of AHCCCS has continued to rise despite repeated cutbacks and staff layoffs right through the downturn. The only other state programs whose costs have continued to rise have been prisons and debt service.
In 2007, AHCCCS accounted for 17 percent of state spending. But deep cuts in most other programs mean that AHCCCS will account for 29 percent of state spending in Fiscal 2012, according to a budget summary released by the governor’s office. In that same period, the share of the budget spent on education will decrease from 41 percent to 37 percent.
The steep rise in unemployment and the state’s poverty rate has driven the increases in AHCCCS enrollment and costs. The program operates as a health maintenance organization, with some of the lowest prescription drug costs and per-patient costs in the country.
Gov. Jan Brewer’s budget for Fiscal 2012 proposed big cuts in AHCCCS in an attempt to cope with a projected $1.1 billion deficit. The cuts include a proposed $90 million cut in payments to doctors and hospitals and the elimination or reduction of coverage for low-income, childless adults.
Arizona voters in 2002 approved the expansion of AHCCCS to include that group. Gov. Brewer won permission from the federal government to drop those patients, since Arizona was one of only seven states in the country that had expanded its program to provide that coverage.
Gov. Brewer is reportedly also exploring the potential savings from simply shutting the door on adding any impoverished adults to the rolls. The federal poverty line for a single adult stands at $10,800.
The state already adopted that approach to enrolling uninsured children with family incomes between 100 percent and 130 percent of the poverty line, another category in which Arizona had expanded the program beyond the federal minimums. The state froze new enrollments in Kids Care last year and the number of children enrolled dropped from about 66,000 to about 22,000.
AHCCCS has already also cut payments to medical providers, laid off more than 10 percent of its staff and cut off coverage of things like transplants for many patients. The reduction in funding for transplants has resulted in the deaths of several patients and national coverage.
Several public interest groups have already threatened to sue Arizona to reverse some of the program reductions.
Sen. Allen said Arizona should press the federal government to gain more flexibility in running the program. “What we really need is for the federal government to give us a block grant,” to provide medical care for the poor. “We need to introduce some personal responsibility to the system,” she added. She said too many people set up corporations and take other actions to hide their income, so they can qualify for AHCCCS.
“They’re not really poor. The targeted population for AHCCCS are the indigent and the poor among us. When you have 1.3 million people in Arizona on AHCCCS — we don’t have that many people in Arizona that are indigent.”
The Arizona Inspector General’s Office reports it recovers about $1.5 million each month as a result of investigations of AHCCCS fraud, involving both patients and providers.