Gov. Jan Brewer signed legislation Friday setting the stage to roll back eligibility standards for the Arizona Health Care Cost Containment System.
Brewer said only by eliminating 280,000 people from the program can the state balance its budget. She figures the change will save the state about $540 million this coming fiscal year.
But Brewer conceded there is no Plan B if the Obama administration denies her request for a waiver from provisions of the last year's federal health care law which precludes states from scaling back their programs.
In fact, the budget she proposed is built on the waiver coming through by Oct. 1. But there is no wiggle room built into the spending plan if there is no answer from Washington by then.
"I'm optimistic,'' she said. "We've got to give it a shot.''
Brewer also said she will meet with Kathleen Sebelius, the Secretary of Health and Human Services, in several weeks.
"At that point in time I hope that something has been moved in some direction,'' she said.
The governor said that if an outright waiver of the "maintenance of effort'' requirement is not granted, she would ask for at least some "flexibility'' in how Arizona runs its Medicaid program.
"We cannot afford to pick up the tab for the federal government,'' Brewer said, saying she wants to "free Arizona from these federal fiscal handcuffs.''
The situation is particularly acute in Arizona, she said, because Arizona's Medicaid program provides care to a greater portion of its population than most other states. That is the result of a 2000 voter-approved initiative requiring the state to cover everyone below the federal poverty level, currently about $18,300 a year for a family of three.
The cutoff figure in most states is only about a third of that. And there is no obligation under Medicaid, which pays about two thirds of the total cost, to provide care at all to childless adults.
Brewer's budget already proposes sharp cuts in state aid for higher education, one of the largest areas outside of AHCCCS in the budget. And there are no plans to trim spending at the state Department of Corrections.
That leaves only one other significant expenses: state aid to public schools. The governor's budget proposes a slight overall increase, though not as much as otherwise would be required to fully compensate for inflation. And there also is no money for maintenance and repair.
Brewer said, though, she considers this money sacrosanct, even if Washington denies the waiver request.
"I will never sign a budget that cuts money to Arizona schoolchildren to fund the federal Medicaid mandates,'' she said, "not today, not tomorrow, not ever.''
Democrats who opposed the legislation said it is illegal to scale back AHCCCS eligibility to pre-2000 levels. They cite a constitutional provision forbidding legislators from altering anything mandated by voters.
The governor, however, said she reads that mandate to say the state is required to cover more than the basics only to the extent there are "available funds.'' She said Arizona's current budget situation means there is no extra cash.