Feds say no to funding a leaner Ariz. Medicaid

Federal health officials dealt a blow to opponents of Medicaid expansion Thursday, saying they're unlikely to fund a slimmed-down version of the state's indigent-health-care program as the political battle over the issue intensified.

Gov. Jan Brewer declared the federal announcement a game-changer in the debate, which is holding up a new state budget. She told GOP legislative leaders to stop delaying a vote on Medicaid expansion and move swiftly to present her expansion plan to lawmakers.

Senate President Andy Biggs rejected the governor's calls, and during a rally on the House lawn, expansion opponents played down the news from the federal Centers for Medicare and Medicaid Services.

Local Republican Party officials and "tea party" members cheered as GOP lawmakers pilloried Brewer's plan and said Arizona can do better on its own.

"We don't have to expand," said Biggs, R-Gilbert, who has vowed not to bring Brewer's proposal to the Senate floor for a vote. "We have an alternate plan, a plan that will not unfairly burden our children and grandchildren to pay for medical care today."

Thursday's developments, which included a significant increase in legislative cost estimates for rejecting expansion, served only to further entrench both sides, with rumors flying about everything from the potential collapse of budget negotiations to a Senate coup to bypass Biggs.

Brewer spokesman Matthew Benson said nothing will change the governor's mind on Medicaid expansion.

"She's committed to this proposal and is prepared to see it through, regardless of how hot it gets," Benson said. "This is life and death. … It's not some petty political problem."

In a memo released Thursday, Centers for Medicare and Medicaid Services officials indicated federal matching funds would not be available to continue Arizona's enrollment-capped Medicaid program for childless adults. The federal officials said, "We do not anticipate that we would authorize enrollment caps or similar policies" under the program, which would mean no federal funding.

Brewer and lawmakers froze the childless-adult program in 2011, and it will be eliminated entirely on Dec. 31 barring federal approval of a new application. That would end health coverage for an estimated 60,000 Arizonans.

Biggs wants to maintain the freeze and use state funds to cover those people, who include thousands with serious mental illnesses and other chronic diseases.

Under the GOP leadership's alternative, people above 100 percent of the poverty level could get subsidized health coverage through online insurance exchanges set up through the federal health law.

Under Medicaid expansion as part of the Affordable Care Act, the federal government would pay all the costs of insuring people between 100percent and 133 percent of the poverty level.

Brewer seized on the federal memo to renew her push for her top legislative priority, saying it eliminated the leading alternative to broadening Medicaid eligibility.

"Today's clear guidance from CMS makes it apparent that there is really only one viable option," the governor wrote to Biggs and House Speaker Andy Tobin, R-Paulden. "It is time for us to complete the people's work."

But Biggs, Tobin and other GOP Medicaid-expansion opponents viewed the federal guidance as a "maybe" and refused to be deterred by it.

"Whether the feds chip in or whether they don't chip in, this is the best option that we have," Biggs said of forgoing expansion, continuing the freeze and insuring the poorest Arizonans with state money. "At bare minimum, we have three years to watch 'Obamacare' implode around the nation while we don't have to suffer."

Biggs and Tobin, who have become the main roadblocks to Brewer's expansion plan, say their GOP members oppose broadening Medicaid eligibility as fiscally unsustainable and politically poisonous.

They don't trust the federal government to keep its promise of covering nearly all the expansion costs, and members fear voter backlash in the 2014 primary if they support it.

Brewer, a longtime opponent of the Obama administration's health-care overhaul, is among eight GOP governors to support expanding Medicaid, the state-federal program that covers more than 1.2 million poor and disabled Arizonans.

Her plan would add roughly 400,000 people to the Arizona Health Care Cost Containment System, the state's Medicaid program, with $1.6billion in federal funding by fiscal 2015 and a tax on hospitals to cover the state's additional share.

She is backed by business leaders, non-profit organizations and the health-care industry, including hospitals caring for a growing number of uninsured Arizonans. But she is facing stiff opposition from legislative leaders and grass-roots GOP loyalists.

While Tobin has not ruled out an eventual vote on Medicaid expansion, Biggs said he will not bring any legislation to the floor of the Senate if it includes the federally funded expansion.

In an interview with The Arizona Republic, Biggs said it's his responsibility as the Senate leader to stand firm against a policy that fellow Republicans oppose.

He said beyond his own objections to the federal health law, recent polls, constituent communications and conversations with lawmakers prove it is wrong for Arizona and for the GOP.

"I'm not going to put (Medicaid) expansion on the floor. The Republican Party in this state has said, 'Don't do this,'" he said. "Republicans hate this, and they're not going to vote for a Republican in a primary who's (supported) this."

Biggs said even GOP senators who support the expansion -- and there are at least three and perhaps as many as six or seven -- aren't eager to vote on it. But he conceded that there are other ways for a Medicaid bill to come to the floor, and he expects that it will.

"At this point at least, I'm not ready to give up," Biggs said. "At the bare minimum, we have an obligation to rationally discuss with the executive branch … (our) position and why."

Brewer's office, however, said Biggs' alternative is neither financially nor politically viable.

"He doesn't have the votes for that," Benson said. "There are enough votes in the Senate for the governor's plan. … But if legislators would prefer to do this later as opposed to sooner, that's their option."

Brewer met with 15 to 20 Republican House and Senate members last week. Many GOP lawmakers say they're undecided, but there appear to be just enough votes for a simple majority in the House, where Tobin said he isn't ready to advance Brewer's plan.

"I don't like her bill," he said this week.

Tobin said he is open to alternatives but conceded it would be difficult, if not impossible, to find a middle ground between the governor's proposal and the concerns raised by opponents.

"If there's a middle, it would be the first in the country," he said.

But Tobin said there must be changes to Brewer's plan, both to win GOP support and to ensure an expanded Medicaid program won't run out of control.

At the Capitol rally, physician and Sen. Kelli Ward, R-Lake Havasu City, said she supports good quality, accessible health care for as many people as possible, but she believes that Medicaid offers "substandard care" and that expanding it reduces the incentive for people to improve their circumstances and get off the public dole.

Ward said she doesn't know exactly what alternative Medicaid legislation would look like, but it would include funding to keep childless adults insured. Voters in 2000 expanded AHCCCS to cover everyone living below the poverty level, but more than 150,000 people have fallen off since the program was capped.

Also Thursday, legislative budget analysts significantly increased their estimates of the cost to insure poor, childless adults without using federal funding, surpassing Brewer's cost projections.

The Joint Legislative Budget Committee now estimates it would cost $266million to cover 55,800 people who would remain on the program Dec. 31, compared with the governor's estimates of $200million and 60,225 people for fiscal 2014.

Lawmakers had been working with much smaller numbers, projecting coverage for just 35,000 people at a cost of $83million in fiscal 2014.

Under the new JLBC estimates, keeping the freeze on the childless-adult program would cost $880million through fiscal 2016. Brewer's budget office puts that number at $863million.

The cost of expansion has been a sticking point, with opponents maintaining the state can afford to reject federal funding and supporters saying infusion of billions of federal dollars would be a boon to the economy.

While Biggs and Tobin have the authority to decide what bills are voted on, there are ways around them.

Brewer's proposal isn't officially a bill yet, but several parliamentary strategies are being discussed behind the scenes to turn Medicaid expansion into formal legislation, including adding it to an unrelated health-care measure as an amendment during floor debate or combining it with bills in a conference committee.

Biggs could not prevent those moves, but he likely would refuse to schedule the amended bill for a formal vote of the full Senate. That's when a majority of senators could vote to suspend the rules, insist that the bill be brought forward for a vote or even replace the president.

A majority vote in the House also is required to force a vote on a bill that hasn't been scheduled by the speaker.

Barry Aarons, a longtime lobbyist who doesn't have a client on either side of the debate, said there are "so many moving pieces," including Medicaid's connection to the budget, that the endgame is difficult to predict. "This is not a policy issue anymore. This is a mechanical issue," he said. "This is not a monolithic up-or-down vote on Medicaid expansion."

Republic reporter Mary Jo Pitzl contributed to this article.

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