from: http://www.azcentral.com/arizonarepublic/news/articles/0413ahcccs13.html
Cost soars for state Medicaid system
Legislators try to rein in health program for poor
Chris Fiscus
The Arizona Republic
Apr. 13, 2003 12:00 AM
It has become the monster of the state budget crisis, described by one legislator as "an enormous vacuum that is sucking up dollars."
Enrollment in the Arizona Health Care Cost Containment System has been jumping annually by about 150,000. That's the equivalent of three World Series crowds at Bank One Ballpark.
AHCCCS enrollment
Enrollment in the Arizona Health Care Cost Containment System has soared since 2000, when voters approved Proposition 204. It expanded the eligibility for state health care to those with an income of up to 100 percent of the federal poverty line.
Now, almost one in five Arizonans is enrolled in AHCCCS. Here is how the system has grown:
January 2001: 575,000
January 2002: 727,000
January 2003: 902,500
The cost to the state next year could increase by well over $100 million. That would be enough to fully fund the state's tourism and arts programs, offer services to thousands of developmentally disabled children, provide substance abuse programs for more than 10,000 Arizonans and pay for adult education classes for thousands more - with plenty of money left over.
For AHCCCS, there is no easy way out.
An economic upturn would help substantially, but deeper issues remain. Many services to the poor and disabled cannot be cut. Cuts to others could aggravate social problems. In coming years, more responsibility for indigent health care may fall to employers and employees through higher co-pays and premiums.
Amid all this, lawmakers are considering deep cuts, wholesale reforms or both as they deal with a $1 billion state budget deficit for fiscal 2004. They are looking for ways to rein in a state Medicaid system shackled by federal rules and a mandate passed by voters in 2000.
House Speaker Jake Flake, noting that health care costs once broke the backs of counties throughout Arizona, observed, "Now, it's breaking the state."
Proposition 204, approved by Arizona voters in 2000, dramatically increased the number of people eligible for AHCCCS, and a souring economy further increased enrollment.
Since January, countless budget battles have been waged at the Capitol involving programs that cost a few million dollars or less. But those battles have been tiny compared with the dollar amounts swirling around AHCCCS.
The General Fund price tag for AHCCCS already climbed from $483 million in 2000 to $612 million this year. Gov. Janet Napolitano has proposed spending about $796 million next year, and Republican legislative leaders have proposed a figure of $703 million.
Traditionally, AHCCCS has provided health care to the poor and disabled: low-income mothers whose premature babies need treatment for pneumonia, for example, or adults who can't afford prescription drugs.
"In any kind of a civilized, caring society, you find a way to pay for these things," said Roger Hughes, executive director of St. Luke's Health Initiatives, a public foundation focusing on health policy.
But more and more, the system also serves not just the poor but thousands of other Arizonans, including college-educated workers down on their luck because of the slumping economy.
Now, almost one in five people in Arizona is enrolled.
Budget options
Senate President Ken Bennett, a Prescott Republican, acknowledged that legal requirements dictate much of the coverage mandated under AHCCCS. Still, the state does have budget-cutting options.
"We're looking at whether or not some non-mandatory programs can be eliminated, whether you can change co-pays, whether you can implement waiting lists, whether you can charge a small enrollment fee or something, just to try to recoup a little bit more of the cost," he said.
Lawmakers also are considering more frequent checks to make sure people in the program still qualify. State money flowing into the program also could be capped.
The governor is proposing a premium tax on health plans that contract with AHCCCS, a move that could save about $47 million from the General Fund.
Some, like Rep. John Huppenthal, R-Chandler, say it's about more than just making some cuts. He wants enrollment forecasts for coming years, even indications of whether services through AHCCCS have helped reduce breast cancer rates or death rates.
"I have a whole lot of questions. I question whether we're seeing any benefit at all," he said. "We need to know if it's all working."
Although state cuts could save millions, advocates note that moves would cost Arizona millions in federal dollars that would simply be handed to other states. Such a move also would weaken the health care safety net for the state's neediest and most vulnerable.
"I think it's a moral injustice to continue to do budget cuts on the backs of people who are already suffering and struggling to make ends meet," said Marie Sullivan, executive director of Arizona Women's Education and Employment, a local non-profit that serves working poor clients, including those on AHCCCS.
Possible cuts to Medicaid programs are hardly just an Arizona problem.
According to the Kaiser Commission on Medicaid and the Uninsured, 40 states are planning to implement prescription drug cost controls this fiscal year. Fifteen states are reducing Medicaid benefits this fiscal year, and 18 states are reducing or restricting Medicaid eligibility.
Greater flexibility Arizona launched its version of Medicaid in the early 1980s, creating a program with more flexibility than was the norm. By 1984, state leaders made AHCCCS its own agency with fewer restrictions and with the goal of approaching things the way a company would be run.
Arizona uses a contracted managed-care system, with health plans delivering medical or long-term care and AHCCCS not providing direct health care services.
The agency's budget by fiscal 1987 was $380 million. Over time the program grew, adding long-term care and behavioral health services. Then came the explosion of the past few years, when enrollment grew from 575,000 in January 2001 to 902,500 in January 2003.
The slumping economy pushed many toward AHCCCS. The economy also has forced many companies, especially smaller ones, to cut back on insurance plans for their workers. Local agencies are ripe with stories of people who pass up higher salaried jobs with little or no insurance, staying in current lesser-paying jobs to keep AHCCCS coverage.
But the largest factor for the agency's growth, at least according to many state lawmakers, is Proposition 204.
Approved by voters in 2000, the proposition expanded the eligibility for state health care to those with an income up to 100 percent of the federal poverty line. That's about $18,000 for a family of four.
Before, adults didn't qualify if their income was more than about 40 percent of the federal poverty level.
With the proposition in place, the number served by AHCCCS skyrocketed. Lawmakers say the state simply cannot afford to pay for Proposition 204.
It is one of a string of examples of initiatives and mandates, Flake said, that handcuff the Legislature by making programs and services off-limits to cuts.
But a closer look into the budget, some believe, shows the Proposition 204 argument is overblown.
In fiscal 2001, the state General Fund was tapped for about $202 million to fund the so-called medically needy medically indigent population within the agency. The General Fund hit for that population likely will be less than $200 million in fiscal 2004.
More federal funds
Proposition 204 also opened a massive pipeline to federal dollars. For every dollar spent on AHCCCS, 66 cents now are federal funds. AHCCCS gets about $750 million in federal funds for that population.
So although the state General Fund hit for this part of the AHCCCS population is about the same, or actually less, the number of people served has gone from about 19,000 in 2001 to about 188,000.
"Instead of paying 100 percent out of the General Fund, you're paying 33 percent out of the General Fund," said Leonard Kirschner, who led AHCCCS for more than six years. "That's a pretty good deal."
As lawmakers and state leaders begin to sort through the budget mess, AHCCCS officials, health care executives, advocates for the poor, and those in the program urge the state to move cautiously.
They know the system wears a target but say steps being considered by lawmakers could have drastic effects.
Increasing co-pays for someone with little or no money, for example, could make many skip preventive visits, increasing problems in the long run. Reducing funding for breast or cervical cancer treatment programs, for example, also could save money but could cause more long-term problems.
And to a large degree, there's only so much that can be cut. Consider an emergency room. Under federal law, those who need help, insured or not, must be served.
"The fact of the matter is, at the end of the day, the way we've always operated in this country, these services are going to be provided," said Hughes, of St. Luke's Health Initiatives. "In this country, if somebody is dying in their home or dying in the street, we're going to help them. Everybody knows that. We're going to find some way to help them."
After two decades, Arizona's Medicaid program is lauded by some for its efficiency, and other states, such as Hawaii, are looking to the desert for ideas. To some observers, it's just a matter of time until the state's economy improves and AHCCCS becomes much less of a drain on the state budget.
The agency, though, still has its skeptics.
"There is so much fraud and abuse in this program," said Rep. Russell Pearce, a Mesa Republican. "This whole thing is out of control. We all know that."
Some could get off the program, he said, but "why should they" when their care is paid for?
AHCCCS enrollees disagree. Scott, a 33-year-old Phoenix man who asked that his last name not be used, said he would prefer to get off the agency's rolls.
"This is the thing. The biggest, biggest drive for me to get off the program and on with my life is I want my American dream. I want my life," he said. "I want to be an assistance to my family, not a burden. I have some pride. . . . I don't own anything. I don't earn anything. I have no road to my American dream."
He knows the program has a heavy cost.
"Find a way to make it happen," he said. "It saves lives. It's saying there's no throwaway people in Arizona."
Reach the reporter at chris.fiscus@arizonarepublic.com or (602) 444-8155.