Status of Medicaid Expansion

STATUS OF MEDICAID EXPANSION

 

Background

*On January 14, Arizona Governor Jan Brewer announced a proposal to expand Arizona’s Medicaid program, typically known as Arizona Health Care Cost Containment System (AHCCCS).  The Arizona Hemophilia Association strongly supports the Governor’s proposal to provide health care services to thousands of low-income, uninsured adults throughout the state.  This is particularly important to childless adults, who are represented by  young adults with bleeding disorders who cannot afford the expensive premiums because of this high cost of treatment.

*Affordable Care Act mandated that Medicaid would be expanded to 133% Federal Poverty Level (FPL) for all citizens. The state would receive:

 - 100% federal match for expanding coverage for parents and childless adults from 100% - 133%FPL

      - 85% federal match (growing to 90%) for restoring eligibility for childless adults below 100% FPL

 

*The Supreme Court ruled that Medicaid expansion could not be mandated and states could choose. Governor Brewer and several organizations have endorsed the Medicaid Expansion, now being called ‘Medicaid Restoration’ because it would essentially provide coverage to the childless adults that have been frozen out.

 

*There are mandated provisions with the Affordable Care Act that must be implemented whether or not Arizona expands. These include coverage for children and

*In order for the expansion to move forward, the Arizona Legislature must approve the Governor’s plan. AHA is part of a coalition to encourage our legislators to support the expansion. She is proposing:

            1. Covering adults up to 133% FPL

                - this would only add 57,000 people to the population already covered by proposition 204.

            2.  Instituting a Safeguard, called a circuit breaker, that discontinues the expansion if the federal match goes below 80%. States are able to opt in and out of the program at any time

            3. Provider assessment:

                  - Allows hospitals to assess a reimbursable fee upon themselves – using that revenue to leverage federal assistance.

                  - Will pay for the childless adults covered under Prop 204 so General Funds can be released for other state priorities.

 *If this plan goes through, more than 240,000 Arizonans will be able to obtain insurance coverage. This will have a dramatic impact on our state’s rate of uncompensated care and the quality of life for the people of Arizona.

 

STATUS

We are now past 100 days of the Arizona legislature being in session. There continues to be dissention in the Arizona Legislature among the Republican party regarding support for the Medicaid expansion. The arguments against the expansion seem to be based on ideological arguments about small government, not contributing to the federal deficit and being against ‘Obamacare’. The expansion (now called the Restoration because it essentially restores coverage to childless adults) makes sense from a moral, fiscal and economic standpoint. 

The moral argument requires little discussion. Many of those impacted have chronic care conditions, serious medical conditions such as cancer, or serious mental illness. Not having coverage for these childless adults would increase healthcare costs for all taxpayers, cripple our emergency rooms and cause significant issues to the healthcare system. As you will see below, fiscally the expansion just makes sense for Arizona. If we do not expand, we will be either cut existing health coverage or will bear the cost of coverage to those remaining on AHCCCS costing the State millions. It will exhaust the rainy day fund that the state has accumulated by cutting programs the past few years. The economic impact will be profound because if the state uses its rainy day funds, there will be reduced funds for education, public safety, etc, that could impact the attractiveness of Arizona for business growth.  

There is a question on whether or not there are enough votes in favor of the expansion to get it passed on the floor. The problem is that the President of the Senate (Senator Biggs) and the Speaker of the House (Rep. Tobin) are both very opposed to the expansion and are gatekeepers to progress. They are key stakeholders in the process and are not calling for a vote.  There is a question on whether the expansion decision will be decided during the budget negotiations (because the State budget relies significantly on what happens with the expansion), voted on  at the legislature, or delayed until it can be put on the ballot for the general public vote.

The choice that the Legislature makes will chart the course that will play a large role in dictating the health and well-being of hundreds of thousands of Arizonans, impact our ability to fund other critical State services and help determine the future of Arizona’s economic competitiveness.

On April 25th Governor Brewer sent a letter to Senator Biggs and Representative Tobin advising that she received notice from the federal government that if Arizona does not expand, the federal government will not continue to give federal funding to maintain coverage for childless adults AHCCCS members. This means that if Arizona does not expand, starting in January 2014 Arizona will have to fund 100% of the current childless adults enrolled in AHCCCS or those individuals will all lose coverage.  This will cost the state millions of dollars.

 

From a purely financial argument, not expanding will cost millions of dollars from the state general fund. Arizona will have to bear the cost of these childless adults from this fund and will also have to cover those whose coverage will expand as mandated by the Affordable Care Act without any federal funding. Many argue the amount, but it could significantly impact the ‘rainy day fund’ that the state has generated from cuts the past few years. In turn, this could impact education and other much needed services that require state funding. It would also have an economic impact

 

 

Governor Brewer put forth four options to the Legislature:

 

Option 1.                                Continue the AHCCCS enrollment freeze and cover remaining childless adults using State-only funds.

 

General Fund Cost:                 $850 million over 3 years

 

This violates the clear intent of Arizona voters who, with the passage of Proposition 204 in 2000, expressed their will to provide AHCCCS coverage to childless aduilts living below the Federal Poverty Limit (FPL).

 

Option 2.                                Restore AHCCCS coverage for all Childless adults

 

General Fund Cost:                 $1.3 billion over 3 years (with 2-1 federal matching)

 

This proposal would end the freeze on enrollment of childless adults, but decline to tap into additional federal support via the Governor’s plan. As a result, this option would drain Arizona’s Rainy Day Fund and intensify pressure upon the General Fund as health care services compete for scarce State dollary with education, public safety and other core State functions.

 

Option 3.                                Terminate childless adult coverage and drop 63,000                                                                                 Arizonans from AHCCCS

 

 

General Fund Cost:                 $0

 

With this option, Arizona on January 1, 2014, would terminate AHCCCS coverage for an estimated 63,000 Arizonans currently receiving care, regardless of health condition or manner of ongoing treatment. This would include cancer patients, our community members with bleeding disorders and those with serious mental illness. This choice would also eliminate any chance of AHCCCS coverage for another 240,000 Arizonans that voters, via passage of Proposition 204, indicated should receive care.  The Governor calls this option morally repugnant and fiscally irresponsible.

 

Option 4.                                The Governor’s Medicaid Restoration Plan

 

General Fund SAVINGS:          $100 million over 3 years

 

This proposal would restore Prop. 204 coverage to 240,000 childless adults living below the Federal Poverty Level (FPL) and expand coverage to 57,000 adults earning up to 133% of FPL. This would allow Arizona to access a higher federal matching rate in order to help the State fund Prop. 204 and reduce its pressure upon other State services. Through a collaborative efforts with the hospital industry, this coverage can be funded through a provider assessment. There would be no cost to the General Fund, and a circuit breaker in the plan ensures the State’s participation in the federal health reform act would automatically cease if the federal government walks away from its funding promises.