Arizona Lawmakers Reverse Cutbacks in Medicaid Enrollment

The Arizona Legislature, which this year sought the removal of about 300,000 enrollees under the state-run Medicaid alternative program, changed its course to ensure it did not lose $7.8 billion in federal health care funds. The Legislature, which adjourned on April 29, worked to patch a $3 billion gap in the state spending plan for the next fiscal year, which begins July 1. Earlier in the session, the Legislature and Brewer agreed to eliminate KidsCare and drastically cut AHCCCS coverage as part of a fiscal year 2011 state spending plan.

Gov. Jan Brewer (R) May 6 signed legislation (S.B. 1043) that authorizes the state to accept $385 million in federal stimulus funds for the Arizona Health Care Cost Containment System (AHCCCS), the state-run Medicaid program. It also authorizes the state to accept about $49 million in funds for Arizona's plan under the Children's Health Insurance Program, KidsCare.

Without this bill, an estimated 30,000 children under KidsCare, and about 300,000 adults under AHCCCS, would have lost eligibility beginning on Jan. 1, 2011.

Under S.B. 1043, the repeal of the rollback in eligibility not only prevents the state from losing federal money for health care, but also calls on the federal government to cover the expanded health care costs. The House passed the bill 55-4, on April 28, and the Senate approved it, 18-10, the following day.

But a structural deficit in the state's budget remains, despite voter approval on May 18 of a state sales tax increase that officials estimate will bring in about $1 billion annually over the next three years. Lawmakers will have to resolve that deficit when the Legislature convenes in January 2011.

The Legislature will try to change eligibility requirements, given the maintenance-of-effort provision required under the federal law.