Senate health bill to cost Arizona $7.1 billion

PHOENIX – The new Senate health care plan would cost Arizona at least $2.9 billion between next year and 2026 – and perhaps as much as $7.1 billion – according to a new analysis by the Ducey administration.

Or the state could avoid most of those costs simply by cutting off health care for more than 400,000 who got coverage in 2013 when Arizona took advantage of a provision in the Affordable Care Act – the very law Congress is working to repeal.

The analysis by the Arizona Health Care Cost Containment System, the state's Medicaid program, shows the Senate proposal is only marginally better than the one approved by the House. That has an Arizona price tag of $3.3 billion over the same period.

That $2.9 billion is just in lost federal dollars that provides care for nearly 320,000 childless adults with income below the federal poverty level, about $11,800 a year for a single person. Plus there are another 82,000 adults considered the “working poor,” earning up to $16,400 a year, whom the feds would no longer fund.

That's only a piece of the picture.

If federal funding goes away, the assessment on hospitals that lawmakers approved in 2013 to pay the state's costs for those people automatically self-destructs. That means the loss of another $2 billion over the same period, money the taxpayers would have to pick up.

And another provision in both the House and Senate bills would limit federal payments to states for other Medicaid recipients. AHCCCS officials that would cost the state another $2 billion to the state through 2026.

There is a way for the state to avoid close to $4.9 billion of those costs: Scale back its Medicaid program.

“If you're willing to give up coverage on the 400,000 people, most of that (cost) goes away,” said AHCCCS Director Tom Betlach. But there's also a political reality: Some of those could be classified as truly needy.

That includes 28,900 people who have cancer or tumors and another 80,800 with mental health problems, including about 11,000 with serious mental illness. And a third of the population is 50 and older – but not old enough to qualify for Medicare.

And Betlach said the hospital assessment that would disappear also pays for care for some others, including about 130,000 parents who also get coverage because their children are enrolled in a separate Kids Care program.

But Betlach said there's more at stake than the health of those who would lose coverage.

Arizona hospitals agreed to fund the state's share of the costs when coverage was expanded in 2013 for what could be considered self-serving reasons: More people with health insurance means fewer people turning up at their doors needing treatment but with no ability to pay. In fact, the assessment was crafted so every hospital chain would pay less than what had been their “uncompensated care.”

Betlach said if hospitals are again hit with those costs, some could go under.

So are lawmakers and the governor willing to make those coverage cuts?

“Everybody knew this day was coming,” said House Majority Leader John Allen, who opposed the 2013 legislation that both restored coverage for single adults who had been cut from the program two years earlier to balance the budget and expanded eligibility beyond the federal poverty level. He said it's “an open question” whether the Republican-controlled legislature will choose to find the billions needed or simply repeal the 2013 law.

“There are two very well-established sides on this,” Allen said of the issue. “The side that will probably win the day is the one that is able to convince the public that there is no other choice.”

And where does Allen stand?

“I fall on the 'you should never have done this and we should back away from it,’” he said.

Gubernatorial press aide Daniel Scarpinato sidestepped questions of whether his boss favors spending more dollars or cutting coverage, saying the hope is to keep it from coming to that decision. Ducey has been in contact with both Jeff Flake and John McCain, the state's two U.S. senators, expressing his concerns. “The governor is recommending amendments to the bill to protect our budget and those currently covered,” Scarpinato said.

Then there's the legal question of whether the state can legally scale back coverage.

A 2000 ballot measure requires AHCCCS to provide coverage to everyone up to the federal poverty level. And because it was approved at the ballot, it cannot be altered or repealed by the legislature.

“The voters of Arizona were very clear that they wanted this population covered in our Medicaid program,” said Rep. Heather Carter, R-Cave Creek, who chairs the House Health Committee.

But lawmakers, facing a $1.7 billion deficit in 2011, did find a loophole: The coverage was contingent on the legislature appropriating “available sources” of revenue to supplement other dollars. And the Court of Appeals ruled that question of whether there is sufficient cash is political, saying judges would not “second-guess the complexities of decision-making and priority-setting that go into managing the state's budget.”

It was the passage of the federal Affordable Care Act, the law Congress is now working to repeal, that allowed Arizona to restore coverage. Betlach said if the state once again tries to rescind coverage “you can assume it would probably be litigated again.”