Medicaid Cuts

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Laurie Liles, President and CEO of the Arizona Hospital and Healthcare Association, discusses the state’s proposed cuts to Medicaid and possible ways to avoid, or limit, those cuts.

Ted Simons: The governor's plan to eliminate Medicaid coverage for 280,000 adults would save the state about $541 million. But Arizona would lose over $1 billion in federal matching funds. To keep some of that federal money and limit the number of people who would lose their Medicaid health coverage, Arizona hospitals are proposing to tax themselves. Here to explain is Laurie Liles, president and CEO of the Arizona hospital and health care association. Good to have you here.

Laurie Liles: Good to be here. Thank you for having me.

Ted Simons: Before we get too deeply into this, what are your thoughts with regard to the feds saying the state didn't need a waiver to begin with?

Laurie Liles: Well, this was a significant development today. It was the latest in a series of letters exchanged between Governor Brewer and secretary Sebelius, and it was sort of -- sort after new twist on the issue, since the whole focus up to now has been on the state seeking a waiver from maintenance of effort requirements associated with the health care reform bill. And now the secretary's latest message to the governor is that they don't need that type of waiver, they could get a different type of waiver.

Ted Simons: And real quickly, the director also said that the feds would be able to help the state in establishing some kind of provider tax. Let's get to the provider tax. What exactly are we talking about?

Laurie Liles: Sure. Well, provider assessments are mechanisms that a number of states use to generate additional federal dollars toward their Medicaid program. And the proposal that we are prepared to support is very similar to some that have been enacted in other states. We think it's a great alternative to the AHCCCS eligibility cuts, because we're very concerned about people losing their health care coverage.

Ted Simons: How much of an assessment are we talking about here?

Laurie Liles: We have supported a proposal to assess the hospitals about $300 million, $200 million of that would go to support, AHCCCS eligibility as an alternative to the proposed eligibility cuts. We think it's important at this point, though, for people to have an open mind and be prepared to be flexible.

Ted Simons: What kind of time frame are we talking here as far as how long this assessment would be in acted?

Laurie Liles: We think it's important that it be temporary. The economy is starting to recover, we don't know what's going to happen with state revenues. So a temporary time frame is a really important concept.

Ted Simons: One year, two years?

Laurie Liles: I think -- again, very important for people to keep an open mind and be flexible, we want to make sure people do not lose their health care coverage and we think it's important for us to be flexible about how we get there.

Ted Simons: Talk more about that flexibility and what you're seeing as things that are on the table that can be moved around a little bit to get something done.

Laurie Liles: In terms of --

Ted Simons: the assessments.

Laurie Liles: We think it's really important for people to realize that hospitals are a major stakeholder in maintaining AHCCCS eligibility, but we're only one of several stakeholders. Very important for other provider groups. The plans that contract with health plans to step up and take a hard look at whether they could be part of a proposal as well.

Ted Simons: Talk about the impact to hospitals right now. What you're seeing right now, what could happen if the $541 million budget cut happens, and reimbursement is reduced. And these folks, there's so many things to ask. Reimbursement is one thing, what happens to these folks who are knocked off AHCCCS?

Laurie Liles: That's our primary concern. There is great human cost. Economic cost, certainly, but great human cost associated with the proposed eligibility cuts. Think about patients who may be undergoing treatment for diseases like cancer, or other chronic illnesses, they're right in the middle of their treatment, now they lose their coverage, we don't want to see that happen to anyone. So it's very important to keep our focus on the patients. And that's our primary concern. Beyond that, you mentioned what is the financial impact on hospitals, it's significant. Important for everyone to remember that when the state cuts $1, we lose $2 in federal matching funds. So the impact on hospitals and other providers and the economy as a whole is much greater. So your specific question, what is the financial impact on hospitals, we would lose $540 million in state and federal funds as a result of Governor Brewer's proposal to cut 280,000 people from the AHCCCS eligibility.

Ted Simons: OK. What happens in terms of the hospitals recouping some of that money? That's a lot of money that goes away, it's got to come back some way. How does it come back?

Laurie Liles: Right. So hospitals would be forced to make very, very difficult choices. They would have to look at their own work forces in this time when we are trying to retain and create new jobs. The legislature certainly very focused on that today. This would result in hospitals looking at their own work forces, making decisions about services they provide to their communities. And hospitals also have to shift those costs when they lose funds from state and from government payers, they have to shift those costs on to private payers. So you and I, all of us who purchase private health insurance, we end up paying more. It's a hidden health care tax.

Ted Simons: When you mentioned these kinds of things to lawmakers, what kind of response do you get?

Laurie Liles: We are talking about all of these things with legislators. And I think there is a recognition that the proposal to cut eligibility does have a direct impact on the economy. A number of legislators have expressed concern about the loss of jobs associated with that. Economists that have looked at the proposed eligibility cuts say that it would result in the loss of 30,000 jobs in the private sector. 13,000 of which would be in health care alone. So legislators are concerned about that. As they should be. There is a mixed reaction to the proposal that we've brought forward this essential assessment on hospitals. I think there is everything from appreciation that there's another alternative to, well, we need to learn more about this, and some folks who have criticized it, too little, too late is the comment we've heard. We just ask everyone to keep an open mind. We think it's a viable alternative, we'd like to see other provider groups join and be part of that as well. We need to make sure we keep eligibility. Where it is.

Ted Simons: So basically what you're telling us is that all ideas, again, are on that table, and everything is being considered. Is there a best way for Arizona to handle this situation? The governor and lawmakers say, we simply can't afford these folks that are on the expanded Medicare -- Medicaid rolls, and other folks are saying, we can't afford these people don't get help. what's the best way?

Laurie Liles: Well, you put your finger on it. There's no free lunch. Every choice that the legislature and the governor make has consequences. So what we're asking is, the fact-based look at the whole big picture, what's the human cost, what's the impact on health care providers. What is the cost in terms of jobs, and let's all come together, all stakeholders need to be a part of this process. We've again, we believe we have a very viable alternative, we just ask that people take a hard look at it.

Ted Simons: As far as other issues regarding the hospitals in Arizona, what are you seeing? What is the major concern? Obviously this is a biggie. What else is going on?

Laurie Liles: Well, while we're dealing with all of this, we're still struggling through the recession, like every other business in the state is, hospitals have already absorbed significant costs -- cuts from AHCCCS, some $700 million since the recession began. So they've had to make very hard choices up to now. Beyond that, while we're dealing with this latest challenge, with AHCCCS, and the recession, and those ongoing challenges, we have to implement health care reform. And so hospitals are very busy positioning themselves and partnering with other players and making sure that assuming health care reform goes forward as it's currently written, we need to be prepared to take care of our patients in that new environment.

Ted Simons: I was going to say, that new environment will look a lot like this environment coming up in just a few years, 2014, correct?

Laurie Liles: Right.

Ted Simons: So basically get ready then by seeing what's happening now and working toward it.

Laurie Liles: Yes. Well, we appreciate that the federal government kind of built in some ramp-up time, but in the meantime, everyone is just working very hard to make sure that they're in the best position to take care of their patients.

Ted Simons: It's a complicated topic, and there's so much going on. Thank you very much. Good to see you here. We'll hope to have you back again.

Laurie Liles: Thank you.

Laurie Liles:President and CEO, Arizona Hospital and Healthcare Association;

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