Ariz. could lose billions of federal dollars by cutting kids health program
Ariz. wrestles with cutting SCHIP, losing Medicaid
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.