Ariz. could lose bil­lions of fed­eral dol­lars by cut­ting kids health pro­gram

Ariz. wres­tles with cut­ting SCHIP, los­ing Med­i­caid

Modern Healthcare - - Front Page - Re­becca Ve­sely

The state of Ari­zona is at risk of los­ing $7.8 bil­lion in fed­eral Med­i­caid funds if it moves for­ward with a plan to elim­i­nate its chil­dren’s health in­sur­ance pro­gram and cut 300,000 peo­ple from Med­i­caid.

Ari­zona’s co­nun­drum is the lat­est ex­am­ple of how the new fed­eral health­care re­form law is up­end­ing state de­ci­sions on how and whether to pro­vide cov­er­age to low-in­come res­i­dents.

Un­der the fed­eral health­care re­form law signed by Pres­i­dent Barack Obama on March 23, states must show a “main­te­nance of ef­fort” for Med­i­caid and State Chil­dren’s Health In­sur­ance Pro­grams in or­der to re­ceive fed­eral sup­port. In other words, if states make even small cuts to th­ese pro­grams af­ter March 23, they will lose all tar­geted fed­eral dol­lars.

Ari­zona is the most ex­treme ex­am­ple of the Med­i­caid main­te­nance-of-ef­fort is­sue, but other states also will have to con­sider this pro­vi­sion when com­plet­ing their bud­gets this spring for fis­cal 2011, ac­cord­ing to the Na­tional Con­fer­ence of State Leg­is­la­tures.

The CMS con­firmed in a let­ter sent April 1 to Ari­zona of­fi­cials that ter­mi­na­tion of its SCHIP pro­gram, called Kid­sCare, will trig­ger the loss of all fund­ing.

The new health re­form law “pro­vides ad­di­tional re­sources to the states to pay for health ser­vices for chil­dren and low-in­come work­ing fam­i­lies,” wrote Bar­bara Richards, act­ing di­rec­tor for the State Chil­dren’s Health In­sur­ance Divi­sion at the CMS, in the let­ter. But lack of state sup­port for th­ese pro­grams, “would re­sult in a loss of Med­i­caid fund­ing for Ari­zona,” Richards wrote.

Ari­zona made the cuts to help fill a $1.1 bil­lion short­fall in a bud­get pack­age ap­proved last month. Elim­i­nat­ing Kid­sCare ef­fec­tive June 15 was ex­pected to save about $23 mil­lion. Kid­sCare serves about 38,000 chil­dren whose fam­i­lies earn be­tween 100% and 200% of the fed­eral poverty level, or $22,050 and $44,100 for a fam­ily of four.

Rolling back Med­i­caid by about 300,000 peo­ple, in­clud­ing child­less adults and par­ents, ef­fec­tive Jan­uary 2011, would save the state $385 mil­lion an­nu­ally.

Providers in the state are now wait­ing for the Leg­is­la­ture to in­tro­duce and ap­prove a bill to halt the cuts to Kid­sCare and Med­i­caid.

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