Saying the state can't count on future federal funds, a legislative panel voted Wednesday to make Arizona the first -- and only -- state to withdraw from the federal Medicaid program.
The plan, approved on an 8-5 vote by the Senate Appropriations Committee, would abolish the Arizona Health Care Cost Containment System, this state's version of Medicaid, effective Oct. 1. In its place, SB 1519 would direct the Department of Health Services to set up a program to provide care for the needy.
But that definition of "needy'' would be far more narrow than it is now.
Current AHCCCS enrollment, in all its programs, now exceeds 1.3 million. But AHCCCS officials said that, with people coming into and leaving the system, it provided care to about 1.8 million Arizonans last year.
By contrast, the plan by Sen. Andy Biggs, R-Gilbert, would provide free care for only about 80,000.
Some of those not in that group would be able to stay. But it would cost them, with Biggs envisioning a system of premiums, deductibles and co-pays. And he said the state could penalize program participants who seek costly emergency room care for non-emergency situations.
All that is now precluded under federal Medicaid regulations -- regulations Arizona would no longer be required to follow if it stopped taking federal dollars.
Biggs said he does believe there is an obligation to provide for the "most vulnerable'' in society.
"But 1.8 million Arizonans can't all be the most vulnerable,'' he said.
Even if it were, Biggs said, the current system is unsustainable. He said that, at some point, the federal dollars that finance about two-thirds of the cost will disappear.
"We're burdening future generations to pay for health care costs today,'' Biggs said. "I think that's immoral and perverse.''
The move is getting a fight a fight from Gov. Jan Brewer who instead is proceeding with her plan to scale back eligibility for AHCCCS, dropping 280,000 people from the program. She said Biggs' legislation "is going to have some real severe impact'' on the state.
That was underlined by AHCCCS Director Tom Betlach.
In prepared comments, he said the health care system in the state is built on that $7 billion a year of federal Medicaid funds flowing into Arizona.
"Hospitals would shut down beds, meaning fewer spaces for all Arizonans to receive care,'' Betlach wrote.
He also said the math doesn't add up.
Biggs figures the state would still have the $2 billion a year it now spends on AHCCCS. He said charging premiums alone could raise $200 million a year.
Betlach said that $2.2 billion would cover only 50,000 elderly, physically disabled and developmentally disabled, the group Biggs does include in the most needy. Betlach said that leaves nothing for everyone else, resulting in those who cannot afford health insurance getting the care they need from hospitals who would be unable to collect the bills.
"Talented doctors, nurses and others in the health care field would flee the state, and Arizonans would be left with a health care system inadequate to meet our needs,'' Betlach warned.
Even some of those who support the idea of scrapping Medicaid warned that the measure, as approved, might be too much, too soon.
"We need to start heading in the direction of having some serious talks about how we reform the program,'' said Sen. Sylvia Allen, R-Snowflake. "But we can't have this happen in October,'' she said, saying if Arizona moves in this direction it has to be more gradual.
And Sen. Don Shooter, R-Yuma, said many rural hospitals are financially dependent on the Medicaid program and the patients whose care the system finances.
But Sen. Lori Klein, R-Anthem, said Arizona may need to take action that quickly, especially if Brewer's plan to drop 280,000 from the AHCCCS rolls does not occur. While federal officials have said the state doesn't need a waiver, a court may conclude lawmakers cannot scale back the eligibility standards which were approved by voters in 2000.