Medicaid: Arizona wants out

Yesterday's Washington Post mentions a new effort at cost savings in Arizona — they want to be released from Obamacare's Medicaid requirements. Gov. Jan Brewer, R, is requesting a waiver that would allow the state to cover only the very poorest  families who have children:

Beginning in 2014, the health-care law will require states to open eligibility to all individuals who earn up to 133 percent of the poverty level – with the federal government covering the lion's share of the extra cost. In the meantime, the law requires states to maintain their current levels of coverage, no matter how far above the original base line.

The waiver Brewer is seeking would effectively push out all 250,000 childless adults on Medicaid. An additional 30,000 parents whose incomes are above 50 percent of the poverty line would also lose their coverage.

Anticipating that the waiver would be granted six months into fiscal 2012, Brewer's staff projects that the move would save $541 million, then $900 million the following year.

This is not the first place you want to cut, and for a number of reasons. For one thing, states receive matching dollars from the federal government, and so a cut of one dollar from the Medicaid budget creates a cut in services larger than one dollar. In Arizona, the match rate in recent years has been above 65 federal cents for each state dollar. Second, no one wants to see the poor simply left to die.

But with the economic hard times simultaneously swelling Medicaid rolls and depleting the state's tax revenues, the Post article explains, Arizona is now spending 29 percent of its budget on Medicaid, up from 17 percent just four years ago (the number I found for 2006 was 16 percent, but you get the picture). That kind of growth is just unsustainable, and the demands under the new health care law will make it more so.

<p>States will receive lots of federal matching funds for the additional wards that come under Obamacare in a few years, but Arizona provides an example where current levels are unsustainable already. The states only have so many options for dealing with this. They can do what Illinois has done — raise taxes, drive away more jobs, reduce their tax base and take on more unemployed Medicaid patients as a result; they can cut teachers' pay; they can let roads deteriorate. It's not a pretty picture.

Barack ObamaBeltway ConfidentialMedicaidUS

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