AHCCCS/Medicaid Cuts Lawsuit

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The Arizona Center for Law in the Public Interest is preparing to file a lawsuit challenging state budget cuts to Arizona’s Medicaid program known as AHCCCS. Tim Hogan, the Center’s executive director, explains why he believes a lawsuit is warranted.

Ted Simons: Good evening, and welcome to "Horizon." I'm Ted Simons. Last week the governor signed an $8.3 billion budget that includes about a billion dollars in spending cuts. The biggest cut, about a half billion dollars comes from AHCCCS, the state's Medicaid health insurance program for lower income Arizonans. The bulk of that savings would be realized by freezing AHCCCS enrollment for mostly childless adults. But that's a group of people Arizona voters elected to cover back in 2000, when they passed prop 204, raising Medicaid eligibility to 100% of the federal poverty level. Now the Arizona center for law in the public interest is preparing to file a lawsuit challenging the cuts to AHCCCS. Here with more is the group's executive director, Tim Hogan. Good to see you again.

Tim Hogan: Good seeing you, Ted.

Ted Simons: OK. Will you file suit if these rollbacks happen?

Tim Hogan: Oh absolutely. We're ready to go. We've known for some time that the legislature and the governor were looking at either terminating coverage for this population, or freezing enrollment. And we still don't know which is going to happen, but no matter what happens, if they fail to cover the people that voters voted to protect in 2000, we'll - we're going to file a lawsuit.

Ted Simons: A lot of people thought the minute the governor signed the bill the ink wouldn't be dry, would you have already filed. What happened?

Tim Hogan: Well, the governor has a request pending with the federal government to approve her plan to freeze enrollment for the so-called proposition 204 population. That includes the childless adults and so-called higher income parents, if you can call poor people higher income. As of at least the childless adults, as of July 1st in the higher income parents as of October 1st. So we're going to wait and see what the federal government does in response to that request to implement that program. So it's not just the freeze on enrollment, there are a bunch of other changes to the AHCCCS program that the governor has proposed to the federal government as well.

Ted Simons: Talk about the complexities involved. You mentioned the federal government, and everyone is waiting to see what will happen there, and just the idea of how complex this issue is because of that federal component as the feds run Medicaid.

Tim Hogan: It's a system that's been around for a long time. I think it was enacted in 1965, Arizona became the last state to participate in 1982, I think, and you can imagine over, what, 45-plus years the complexity of the system has just increased. To the point where kind of perversely the state wouldn't need any permission at all as we found out this year to just terminate coverage for this population as of October 1st. But to freeze enrollment and continue to cover the existing participants does require federal approval.

Ted Simons: And let's talk more about now exactly what prop 204 says and why this particular freeze, this particular action, would in your mind violate prop 204 in the state constitution.

Tim Hogan: Sure. This goes back to the tobacco tax settlement, where states across the country sued the tobacco industry and recovered billions of dollars. There was a debate in Arizona about what to do with Arizona's share of that recovery. And so in 2000, proposition 204 proponents said let's take that money and supplement it with whatever we need to to be able to raise our federal poverty limit in Arizona, which was very low at the time, 200% of the federal poverty level. So everybody who is at the federal poverty level or below would be covered with health insurance. There was a competing proposition on the ballot which didn't do that. Took the tobacco settlement money and spent it on health care programs. Educational type programs. In fact, the proponents of that initiative criticized proposition 204, saying, well, it was going to be too expensive because the tobacco settlement money wouldn't cover the cost of providing health care coverage to these people up to the federal poverty level. So that's all very clear from the history here. Voters knew that we were going to have to supplement the tobacco settlement money with general fund money, and we've been doing that over the last 10 years. We've been providing coverage to this population. The proposition itself is very clear. It says you're eligible for health care coverage under AHCCCS up to 100% of federal poverty level.

Ted Simons: The measure also says shall be supplemented as necessary as any other -- federal monies. The governor and lawmakers say there are no available sources. They say the budget has been cut by over a billion dollars the last three years, that's indicative of the fact the state has no available funding as required by this measure. How do you respond to that?

Tim Hogan: Pretty simply. You mentioned it already. The budget was 8.3 billion dollars that were spending this year. We stand to save, if that's the right word, $200 million, just a fraction of that budget, by freezing enrollment for the proposition 204 population. The money is there, they just chose to spend it some other way and once they spend it, they say, well, it's gone, there's no other available source of funding.

Ted Simons: Do you think -- another argument from the other side is that voters may not -- you mentioned voters knew because there was a competing proposition, that this may not -- the tobacco money may not cover all this. Granted, but what about the intent of voters should a huge economic crisis happen and a budget crisis happen?

Tim Hogan: The answer to that is simple, and the governor night answer a year ago in January of 2010 in her state of the state message when she said we need to ask voters to roll back proposition 204. They've known for a long time what the problem is, and if they thought this was the solution to act against the voters' wishes as expressed 10 years ago, then they could have easily called an election to do that. I have a feeling what happened was they saw the election results last November with first things first and thought, well, we don't trust the voters to do what we want them to do, so we're going to do it ourselves.

Ted Simons: What happens there? Give us a timetable. What's going on here as far as, basically we're waiting for HHS to come back with some sort of ruling or decision?

Tim Hogan: Right. I think that will be reasonably soon on the proposition 204 population. Within the next few weeks at the most, I think. Some parts of this request may take longer, but given the fact the freeze is proposed to start on July 1st, I think HHS is going to be responsive and try and act on that relatively quickly.

Teed Simons: All right. Tim, good to see you. Thanks for joining us.

Tim Hogan: You're welcome.

Tim Hogan:Executive Director, Arizona Center for Law in the Public Interest;

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