Health care reform could cost AZ $7 billion - East Valley Tribune: News

Health care reform could cost AZ $7 billion

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Posted: Monday, March 22, 2010 6:51 pm | Updated: 3:27 am, Sat Oct 8, 2011.

The new federal health care plan could cost Arizona $7 billion a year if lawmakers here don't restore the cuts they made to insurance programs. Rep. Kyrsten Sinema, D-Phoenix, said the scheduled elimination of Kids Care on June 15 would put the state at odds with a provision in the federal measure that requires states to maintain their programs as they are when President Barack Obama signs the bill.

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The new federal health care plan could cost Arizona $7 billion a year if lawmakers here don't restore the cuts they made to insurance programs.

Rep. Kyrsten Sinema, D-Phoenix, said the scheduled elimination of Kids Care on June 15 would put the state at odds with a provision in the federal measure that requires states to maintain their programs as they are today when President Barack Obama signs the bill.

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She said this isn't simply a question of losing the $3 of federal cash for each dollar of state funds for the program that provides nearly free care for the children of the working poor. Sinema said it makes Arizona ineligible for all federal Medicaid funds - a figure she pegged at $7 billion a year with the state funding care for everyone up to the federal poverty level, about $18,300 a year for a family of three.

What's worse, Sinema said, is that beginning in 2014 the federal legislation requires all states to provide health care for anyone earning up to 133 percent of the federal poverty level, about $24,350 in current dollars. She said if Arizona has not maintained its program between now and then - and at current levels - then the entire burden of this expanded program would be on Arizona taxpayers.

Paul Senseman, press aide to Gov. Jan Brewer, said she is looking at legal options to challenge what's in the federal law, specifically "unfunded mandates" to provide care with money the state does not have. And that includes filing suit against the federal government.

The just-approved state budget eliminates coverage for more than 300,000 of the approximately 1.3 million now enrolled in the Arizona Health Care Cost Containment System, the state's Medicaid program.

That change is set to take effect at the end of the year unless the federal government comes up with additional stimulus dollars to help underwrite the state's costs. The savings to state taxpayers over the second half of the fiscal year are estimated at $385 million.

More immediately, the new budget eliminates the Kids Care program. That provides health insurance for about 38,000 children whose parents make more than the federal poverty level - about $18,300 a year for a family of three - but less than twice that amount.

That change is set to take effect June 15. The state's share of the cost of that program is about $21.1 million a year.

Sinema and Brewer agree that making that change would put the state in violation of language in the new federal health care bill, which bars states from cutting back their own programs while the new federal system is being ramped up.

House Democrats have a solution: Expand the state sales tax so that it covers the cost of buying extended warranties for everything from appliances and electronics to cars and trucks. Sinema said that could raise more than enough for the state's share of Kids Care.

But some key hurdles remain.

One is procedural: No new legislation can be introduced this late in the session without permission. House Speaker Kirk Adams, R-Mesa, said Monday afternoon he was still studying the question.

The other is a simple matter of numbers. Any tax increase takes a two-thirds vote of both the House and Senate. And it remains to be seen whether a majority of the Republicans who control both chambers are willing to hike taxes, even under the threat of losing all the federal Medicaid dollars.

Brewer said all this proves that she was right all along in opposing the health care legislation.

"This federal bill is not even 24 hours old, and yet some of Arizona's legislative Democrats are already proposing a tax increase to pay for its increased costs," she said in a prepared statement.

Even if lawmakers restore Kids Care, whether through higher taxes or finding the cash elsewhere, that's only the beginning of the problem.

The ban on scaling back health care services also extends to the regular AHCCCS program itself. If nothing changes in federal law, that means state lawmakers will need to undo the rollback of eligibility they approved, the one that saves $385 million over six months by removing more than 300,000 people from the rolls.

Senseman said that crisis may be delayed even beyond January.

He noted Congress is considering an extension of the federal stimulus aid for Medicaid programs until June 2011. That would bring in more than $400 million, more than enough to cover the state's costs.

Longer term, though, Brewer has estimated that the requirements of the law would force Arizona to spend an extra $4 billion between 2013 and 2016.

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