State hospital group eyeing tax to fund AHCCCS

PHOENIX — Arizona voters may be asked to hike their own taxes a second time this year, this time to keep the state from reducing the number of people who get free health care.

The Arizona Hospital and Healthcare Association is working with consultants to craft an initiative to go to voters in November to raise the money necessary to stop the state from cutting more than 310,000 people from the Arizona Health Care Cost Containment System, the state's Medicaid program.

Exactly what form that levy would take has yet to be worked out. Laurie Liles, the organization's lobbyist, said consultants and pollsters are looking at what kind of levy would be most palatable to voters.

"We do think that we need a long-term solution,'' she told Capitol Media Services. "And that will likely involve some type of dedicated funding stream.''

Put simply, that means higher taxes.

Liles said she understands the conclusion by Gov. Jan Brewer and Republican legislative leaders that next year's anticipated $2.7 billion deficit leaves them with few options to pay for all of the 1.3 million people who now get care from AHCCCS.

The move to slash AHCCCS enrollment would save the state $385 million in just the first six months. That means any new source of cash would have to generate at least $770 million a year.

By contrast, the governor's proposed one-cent hike in state sales taxes — a measure voters will decide in May — would generate about $950 million in its first year. And the cuts to AHCCCS will take place even if that is approved, with the cash from that levy earmarked for other programs, mainly aid to education.

But Liles said she doesn't believe that voters, perhaps having just approved that sales tax hike, will be averse to yet another increase if her organization decides to proceed.

Time is running out: Backers would need to gather 153,365 valid signatures by July 1 to put the measure before voters this year.

"I believe the voters do not support cutting AHCCCS,'' she said. "And I believe the voters will agree to support some type of tax increase to preserve AHCCCS.''

The first half already has been proved: Voters mandated in 2000 that the state should provide free care for everyone below the federal poverty level. That now translates to about $18,310 for a family of three.

But the measure was sold, at least in part, on the promise that much of the increased state cost would be borne by Arizona's share of the nationwide settlement with tobacco companies. In fact, those dollars this year total only about $118 million.

The plan approved Tuesday by the House and Senate Appropriations committees would cut the AHCCCS enrollment of nearly 1.3 million back to what those tobacco settlement dollars would fund; the 310,000 who would lose coverage is the difference.

Liles said more than care for these people is involved. Her organization funded a study which concluded that the cuts to AHCCCS ultimately would result in the loss of 42,000 jobs.

The hospitals do have a financial interest in the issue.

Fewer people enrolled in AHCCCS means more Arizonans without health insurance. Liles said many of these are likely to wait until their conditions become serious — and expensive to treat — before showing up in hospital emergency rooms. And federal law precludes hospitals from turning away those in life-threatening situations regardless of their ability to pay.

But Liles said that should be of concern to businesses, as any unreimbursed costs they incur will be passed along to those who can pay, including the insurers who provide coverage for private companies.

The party-line vote to trim AHCCCS funding came over objections of Democrats who said there are other considerations that Republicans are not taking into account.

Rep. Kyrsten Sinema, D-Phoenix, said Congress is considering a six-month extension of one element of the stimulus package which provides extra dollars to states to help them pay for their Medicaid programs. In the case of Arizona, she said that extra aid would be $480 million, or $95 million more than the state is trying to save.

 Sinema said the state would not qualify for the aid if it reduces eligibility.

But gubernatorial press aide Paul Senseman said the eligibility cut is set up in a way to allow it to be automatically reversed if the extra federal dollars are available.

The related question is whether the move to cut the voter-approved program is legal.

As approved in 2000, the measure said it would fund expansion of AHCCCS with tobacco settlement dollars "and shall be supplemented, as necessary, by any other available sources including legislative appropriations and federal monies.'' Sinema predicted a lawsuit if Brewer signs the bill into law.

Rep. John Kavanagh, R-Fountain Hills, said the state's budget deficit shows there are not other funds "available.''