Ignoring a threatened lawsuit, the Republican majority in the Legislature gave final approval Thursday to asking the federal government to scale back the state's Medicaid program.
The measure, which awaits the anticipated signature of Gov. Jan Brewer, is the first step to accomplishing the governor's goal of cutting about 280,000 people from the Arizona Health Care Cost Containment System, effective Oct. 1. That would bring enrollment down below one million.
Arizona, under a 2000 voter mandate, currently provides free care for anyone below the federal poverty level, about $18,300 a year for a family of three.
But the federal government, which provides about two-thirds of the cash, does not require any coverage for childless adults. And eligibility for most others is only about a third of the poverty level.
The state, however, cannot simply alter eligibility. That's because the national health care law approved last year requires states to maintain their Medicaid programs as they were the day President Obama signed the bill.
This legislation specifically requires the Brewer administration to seek such a waiver. Legislative leaders have said the next step is to adopt a budget in the next few months cutting back the program.
Sen. Kyrsten Sinema, D-Phoenix, said the entire maneuver is illegal. She predicted the state will be sued - and that a court will void any effort to scale back eligibility, at least without asking voters.
The key is a constitutional provision which forbids lawmakers from repealing any program which voters have mandated. Sinema said the only way Brewer and the GOP lawmakers can make the change is to send the question back to the ballot.
But her bid to make that part of the legislation was rejected. Sen. Andy Biggs, R-Gilbert, insisted that's not necessary.
The legal fight will turn on the exact phrasing of that 2000 ballot measure.
As approved, the initiative requires that funding come from Arizona's share of a nationwide settlement with tobacco companies as well as proceeds from a cigarette tax. The governor's plan leaves those funds, about $150 million a year, untouched.
What Brewer wants to do is divert the general tax revenues now being used to pay the balance of the cost to instead fund other priorities.
Sinema said that runs afoul of the mandate of the voters. She pointed out the measure says the money from the settlement and tobacco taxes "shall be supplemented, as necessary, by any other available sources, including legislative appropriations and federal monies."
That, she said, cannot be changed simply by legislative action.
Biggs, however, said that interpretation ignores the fact that Arizona is collecting less in taxes than it spends.
"You don't have other ‘available funds,'" he said. Nor was he concerned about the threat of a lawsuit.
"I will find it very intriguing if any judge would say you don't have enough money to pay all of your bills that are due and yet we are going to require you to go further in the hole," Biggs said.
Sinema said that's not true.
She said the spending plan Brewer proposed last week includes funding increases for several state agencies, like the Department of Corrections.
"One could reasonably argue, and certainly hold legal claim to this, that there are other available funds," she said. "It's just that the governor in her budget proposal has chosen to spend them elsewhere."
Rep. Vic Williams, D-Tucson, said the state's budget situation leaves lawmakers with few choices.
"I believe the voters of Arizona are asking us to take dramatic and swift and decisive action," he said. "We're trying to fix an unfixable situation. We're trying to find the best and most humane possible way."
Sen. Steve Gallardo, D-Phoenix, said pushing ahead with a budget built on trimming AHCCCS funding is irresponsible, and not only because the move may be blocked by a judge.
"What happens if the federal government says ‘no?'" he asked.
Brewer has said eliminating the 280,000 people from AHCCCS on Oct. 1 will save $541.5 million this coming fiscal year alone. Gallardo said denial of the waiver would will leave the state with an unbalanced budget, and leave legislators looking to cut spending elsewhere, especially public education.