Arizona Tries To Close Budget Hole By Cutting 280,000 Residents From Medicaid

Last week, the Kaiser Family Foundation reported that Arizona was the only state to cut health insurance for children and one of two (along with New Jersey) to reduce services for low-income families in 2010. Now, Gov. Jan Brewer (R-AZ) — who has been criticized for cutting mental health programs and transplant coverage — has proposed to balance the state budget by dropping 280,000 residents from Medicaid. Later today, the Arizona legislature will meet in a special session to allow Brewer to seek a two-year waiver “from a requirement under federal health-care reform that states maintain current eligibility levels”:

The governor’s spokesman did not respond to a request seeking an interview with Brewer about her budget, which starkly painted her response to the federal constraints: Seek a way out from under federal rules so she can reduce the Arizona Health Care Cost Containment System, the state’s Medicaid alternative, and save the state $1.5 billion over the next two years. She wants a waiver that would allow Arizona to drop coverage of childless adults and curb funding to some low-income parents, and blind and disabled people.

If approved, the coverage reductions would last two years. After that, federal Medicaid dollars would help cover Arizona patients under the terms of federal health-care reform. […]

Brewer’s plan is silent on emergency funding for certain medical transplants that Democrats and others have pushed, and it does not address the anticipated impact of any of the tax cuts and incentives Brewer and lawmakers have promised as a way to energize the economy.

Several conservative governors have asked the feds for a waiver to cut back on their existing Medicaid program without losing federal funding, and Arizona has previously jumped through some fairly small legislative hoops to avoid giving up this revenue stream. In March, the Arizona legislature eliminated funding for KidsCare, the state’s CHIP program, only to reestablish it months later in order to avoid losing billions of dollars in federal matching funds. The health law requires states that want to continue receiving federal health care funds to maintain eligibility in Medicaid and CHIP.

Arizona is cutting back its health care programs while challenging the constitutionality of federal health care reform — the Arizona Attorney General has now joined the Florida-led multi-state challenge against the law — and asking the federal government to leave health policy to the states. It’s one heck of a deal for the 280,000 residents who could be eliminated from the state’s program — Arizona is going to eliminate their state coverage and then argue that the federal government should be allowed to step in and help.