Facing a threatened $7.8 billion loss in federal funds, state lawmakers Thursday agreed to restore the health care they had previously cut for about 350,000 Arizonans.
The measure most immediately repeals a provision in the new state budget which kills funding for Kids Care. That program is designed to provide nearly free health insurance for children of parents who earn too much to qualify for Medicaid but are still considered "working poor.''
About 36,000 youngsters now in the program would have lost coverage on June 15 without the change.
The bigger piece of the pie is reversing the decision to scale back who is eligible for the Arizona Health Care Cost Containment System, the state Medicaid program. As approved earlier this year, that change would have eliminated care for about 310,000 individuals at the end of the year.
Lawmakers made the moves as part of a bid to plug a $2.6 billion gap between revenues and expenses for the coming fiscal year. Eliminating Kids Care saved about $18 million; kicking people out of AHCCCS half way through the budget year saved another $385 million.
While both programs are subsidized with federal funds, legislators said the state just couldn't afford it's share -- about 33 percent for AHCCCS and 25 percent for Kids Care.
What happened in the interim, though, was President Obama signed new health care legislation. That law eventually will provide extra cash to help Arizona with health care costs.
But that law also says states must maintain their health care programs as they were the day he signed the bill, not only to get future increases but even to maintain existing federal aid.
Legislative budget staffers pegged the loss at $7.8 billion a year.
Even with that threat, several legislators still were unwilling to go along.
Sen. Sylvia Allen, R-Snowflake, said the state remains in "fiscal crisis.'' She said it would be irresponsible to spend money now that the state doesn't have.
Senate President Bob Burns, R-Peoria, agreed with the sentiment.
"We cannot do everything for everyone,'' he said.
Not all the objections were for fiscal reasons.
Rep. Matt Heinz, D-Tucson, said he wants the programs kept around. But he said the legislation is flawed: While it restores funding for Kids Care, it does not repeal an enrollment cap.
That cap, he said, prevents new, eligible youngsters from enrolling even if others no longer need the services. Ultimately, Heinz said, the program will self-destruct unless that cap is lifted.
Gov. Jan Brewer, who urged legislators to restore the programs, is expected to sign the legislation.