Robb: Hysteria over Medicaid cuts is overwrought.

The hysteria over the effect of Republican “Obamacare” replacement proposals on Arizona’s Medicaid program is badly overwrought.

The accusation is routinely made that they will toss 400,000 Arizonans off the Medicaid rolls. Some have even alleged that deaths will occur and the blood will be on the hands of Republican lawmakers who vote for the bills. I guess that’s their contribution to making political discourse more civil.

Let’s dive into the weeds of the Senate bill and dispassionately evaluate its probable effects on Arizona’s Medicaid program.

Arizona is in a unique situation. In 2000, voters approved Proposition 204, which included a requirement that Arizona’s Medicaid program, called the Arizona Health Care Cost Containment System, cover childless adults up to 100 percent of the poverty level. Under federal Medicaid rules, childless adults aren’t a mandatory population.

The Affordable Care Act, popularly known as “Obamacare,” offered an inducement to states to cover childless adults up to 133 percent of the federal poverty level. The feds would initially pick up 100 percent of the cost, declining to 90 percent in 2020. In Arizona, the federal match for the mandatory Medicaid population is roughly 70 percent.

A hospital bed tax pays Arizona’s share for both the Proposition 204 and the Obamacare expansion populations. It disappears if the federal reimbursement drops below 80 percent.

The Senate bill would reduce the federal match for these groups beginning in 2021. After 2023, the rate would be the same as for the traditional Medicaid enrollees, or roughly 70 percent in Arizona’s case.

This is an unobjectionable rationalizing of the federal role. Why should the federal government pay more for the health care of a healthy adult making more than the federal poverty level than for a disabled adult making less?

The hospitals wanted the bed tax to reduce their costs for uncompensated care. If that’s true for an 80 percent federal reimbursement level, it’s probably still true at 70 percent. The federal matching rate doesn’t drop below 80 percent until 2023, so nothing happens in Arizona’s Medicaid program until then. After that, the hospitals will probably be willing, eager even, to pick up the additional 10 percent.

But let’s assume, for purposes of discussion, that more than 20 percent is the point at which the hospitals would prefer to deal with uncompensated care. Presumably they would still be willing to pick up the 20 percent. Which would leave the state on the hook for just 10 percent of the overall cost, beginning six years from now. That’s neither an unreasonable nor unmanageable number.

In short, the odds are strong that no one will get booted off of Medicaid in Arizona due to this provision.

The bill would also cap what the federal government pays for Medicaid, beginning in 2020. States would have a choice. They could accept a cap based upon their current costs plus some measure of medical inflation until 2025, after which the cap would adjust by a general inflation measure. Or states could opt for receiving a 3 percent bonus for converting to a block grant in 2020, adjusted for general inflation thereafter.

AHCCCS estimated that this provision could cost the state $2.2 billion from 2020 to 2026, which is an eye-popping number. But it is also a pretty worthless number, being built upon supposition upon supposition upon supposition. The effect on Arizona’s Medicaid program will depend on which option the state chooses, and the relative differences three to nine years from now in national general inflation, national medical inflation, and increases in AHCCCS’s per enrollee costs. You might as well get your palm read.

A national cap of some sort is inevitable. Arizona’s Medicaid program, in which providers bid to provide managed-care services, does a good job of containing costs. Other states, not so much. When states dictate coverage and the feds pick up the lion’s share of the bill, there isn’t much incentive for economies. Changing that is necessary if the finances of the federal government are to be put on a sustainable footing.

So, Arizona’s Medicaid program won’t feel the effects of the reduced federal match for the Obamacare expansion groups for six years, and even then the effects are likely to be small to inconsequential. If the state doesn’t choose the block-grant option, the effects of the federal cap aren’t likely to bite until eight years from now. Hardly the stuff of panic and hysteria.

The Medicaid provisions aren’t a reason to vote against the Senate bill, even for an expansion state like Arizona. This, however, isn’t a brief for the bill. The reason to vote against the bill is that it fails to establish an individual health-insurance market that will offer better products or be any more sustainable than the imploding Obamacare exchanges.