Arizona weighs Medicaid expansion

PHOENIX (AP) — It’s almost a case of starting over for Gov. Jan Brewer as she weighs whether to ask legislators to provide government-paid health coverage to hundreds of thousands of additional low-income Arizonans.

The U.S. Department of Health and Human Services (HHS) recently issued guidance eliminating a middle option that was seen as potentially palatable for Brewer and at least some cost-conscious majority Republican legislators.

The state’s policymakers are now faced with what could be an all-or-nothing decision with big ramifications for the state treasury and people lacking health care coverage.

The “all” would be to provide expanded Medicaid eligibility as envisioned under an expansion included in the Patient Protection and Affordable Care Act (PPACA). Including changes that are mandatory for states, that course would add coverage for an additional 300,000 people in the 2013-2014 fiscal year.

The “nothing” would be to keep the state’s Medicaid program — the Arizona Health Care Cost Containment System — and would have the state reject all optional increases and add only 130,000 people, most of whom are already eligible but not enrolled.

HHS Secretary Kathleen Sebelius has effectively eliminated the possibility of getting the same generous “enhanced” funding rate from Washington for a partial expansion for 170,000 people that would be included in the full expansion.

“This changes the game quite a bit,” said Brewer spokesman Matthew Benson.

The lack of more generous funding for a partial expansion is something Brewer “will weigh heavily in her decision,” Benson added. “It’s well over a $300 million difference. This isn’t some academic difference.”

The federal government is heavily subsidizing the Medicaid expansion, but there are state costs also.

The Legislature’s budget staff estimates it’d cost the state $135 million in the 2014-2015 fiscal year to implement the full expansion, with Washington picking up the entire tab for some of the additional people covered.

But the partial expansion, which would restore an eligibility threshold to where it was before a cutback made during the Great Recession budget crisis, now carries a 2014-2015 pricetag of $478 million under the new federal decision.

That has some advocates of increased eligibility arguing it makes economic sense for Arizona to push ahead with full expansion to provide coverage for more people and secure more federal dollars for the state, its financial struggling health care providers and its overall economy.