Repeal Of Health Care Law Could Force Tough Decisions For Arizona's Medicaid Program

By Will Stone
Published: Monday, February 27, 2017 - 8:42am
Updated: Monday, February 27, 2017 - 3:53pm
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Connie Dotts is a big fan of her insurance

"I like that we can choose our own doctors. They also have extensive mental health coverage,” the 60-year-old Mesa resident said.

Dotts isn’t on some pricey plan, either. She’s among the nearly 2 million people enrolled in Arizona's Medicaid program - the Arizona Health Care Cost Containment System (AHCCCS).

Her eight prescriptions are cheap, she has no copays or premiums. Those benefits have allowed her to stay on top of her emphysema, depression and osteoarthritis
“I have torn ligaments in my ankles and I can’t take the time off work to go to physical therapy or surgery,” she said.
Dotts works retail and lives paycheck to paycheck. Without Medicaid, she said she couldn’t afford to see a doctor. But she also doesn’t want to stay on the program indefinitely.
“I’m prepared to make the transition, Yes, it will hurt a little bit,” she said.
That financial shock could come sooner than she expected. Dotts is eligible for Medicaid because Arizona used enhanced funding tied to the Affordable Care Act to restore coverage for some single adults and to raise eligibility. Lawmakers had frozen eligibility for "childless" adults during the recession.
As Congress overhauls the health care law "a state like Arizona might actually suffer" said Swapna Reddy, a professor at Arizona State University's School for the Science of Health Care Delivery.

“The folks that are on Medicaid in our state actually utilize it and they are high utilizers and it’s a high need population,” Reddy said.
Republican leaders have not settled on one plan yet, but they’ve made it clear that Medicaid will not be an open-ended entitlement program anymore. Instead, they want to cap state spending.

While that can lower costs, Reddy said it could also come with some trade-offs.

“What if that money is not enough? What happens to those folks? What happens to their care? What happens to the quality of their care?” Reddy said.

The two popular options are either give states a lump sum, known as a block grant, or set a per-capita limit on enrollees.
“If you are really going to transfer this risk. Then we need to change the statutory structure around things like being able to change eligibility, being able to change how we pay for services and what services we offer,” said Tom Betlach, AHCCCS Director.

That could take many forms, Betlach said: rolling back or freezing eligibility for some adults, imposing lifetime limits, work requirements, premiums and copays – the kind of changes that Arizona has wanted to do for years.
The irony is that Arizona could actually be a victim of its own success and lose out under Republican legislation. The state already has one of the most efficient, lean programs in the country. There aren’t a lot of extra benefits to trim. The result could be that Arizona gets locked in at a lower funding level than other states.

"If they are able to achieve improved outcomes and reduced costs, they are able to capture those savings," Betlach said. "Versus we actually get penalized for being a good steward of taxpayer funds.”
Betlach outlined these concerns in a letter to Congress recently and said any new funding mechanism should not be based solely on the current costs of Arizona's program.
Dr. Leonard Kirschner ran the state’s Medicaid program in the late '80s and early '90s. Back then, he said, it was predominantly women, children and people with disabilities.

"It has changed dramatically. It’s no longer a welfare model," Kirschner said. "It takes care of lots of people who can’t get insurance in the current environment that we’re in.”
Instead, those patients would end up in the emergency room and hospitals were left with the bill. Since Arizona expanded Medicaid - in part, by imposing a fee on hospitals - the cost of uncompensated care has fallen sharply.
“They have a primary care doctor," Kirschner said. "They have a clinic they go to. You can take care of things before they get to be a problem and you take care of them in a more efficient and less expensive place than the ER."

But these gains could be in jeopardy.

A draft bill from the U.S. House that was recently leaked proposes phasing out the extra Medicaid funding in the coming years.
That will put Republican governors like Doug Ducey in a tricky situation.

After all, Ducey was against the expansion and supports a repeal of the ACA. But he’s also inherited the more than 600,000 Arizonans who now have coverage through Medicaid and the marketplace. A repeal could cost the state's Medicaid program anywhere from 300 million dollars to more than a billion dollars.

Republican Senate President Debbie Lesko said she thought this day would come.
“I voted against Medicaid expansion, not because I don’t want people to get health coverage, but because I’m a realist and I know how much we can afford in our budget,” Lesko said.
What a state like Arizona can afford may ultimately be decided in Washington.

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