(and a simple solution)
Some in congress and the incoming administration have suggested they’ll be making major changes to Medicaid this congressional session – especially those elements that were associated with the affordable care act like the expansion population – in particular how the expansion population was funded (persons between 100% and 138% of poverty).
While Arizona did expand Medicaid to that population the legislature made the expansion contingent on the federal government paying at least 80% of the cost of the expansion population.
Importantly, the legislature also tied the hospital assessment, which pays the state match for the more than 450,000 childless adults to the federal government continuing to pay at least 80% of the expansion population.
In other words, the childless adult coverage (made possible by the hospital assessment) would also end if the fed’s stop paying for at least 80% of the expansion populations costs.
The Human Costs of Rolling Back Medicaid in Arizona
Medicaid is a lifeline for more than 2.5 million Arizonans, including 500,000 childless adults who regained coverage through a $570M assessment on hospitals which pay for the state match to the feds to fund coverage for childless adults. Thousands of who face significant behavioral health challenges, including serious mental illnesses.
The funding for this population hinges on a critical provision: the federal government must cover at least 80% of the costs for the Medicaid expansion population.
If this threshold isn’t met, AHCCCS coverage ends for both the expansion population and childless adults because AHCCCS would no longer be able to collect the hospital assessment that pays for the state portion to cover childless adults.
Behavioral & Public Health Impacts
For childless adults, access to Medicaid often means access to life-saving care, including treatment for substance use disorders, mental health counseling, and medications.
Without this coverage, many individuals with SMI would face a grim reality: untreated illnesses, emergency department visits, and increased rates of homelessness and incarceration. And yes, death.
Behavioral health services aren’t just a moral imperative; they’re a cost-saving measure. Research consistently shows that access to Medicaid reduces uncompensated care costs for hospitals and lowers overall healthcare spending by addressing health issues before they escalate.
The Financial Reality
Arizona’s Medicaid expansion is funded through a $570M hospital assessment that covers the state’s share of costs. However, this funding mechanism is tied to the federal government maintaining at least 80% coverage of the expansion population. If federal funding drops below this threshold, the hospital assessment would no longer be valid.
The state would then face two choices:
- Decouple the hospital assessment from the 80% requirement: This would allow Arizona to continue funding Medicaid expansion, but it would require legislative action, which may face significant political hurdles.
- Cover the $570 million state match through the general fund: Given Arizona’s budget constraints, this scenario is unlikely, leaving hundreds of thousands without coverage.
The Broader Impact
Losing Medicaid coverage for childless adults would strain Arizona’s healthcare system and social services. Hospitals would see an increase in uncompensated care, driving up costs for all Arizonans. Public safety systems would also bear the burden, as untreated behavioral health issues often lead to incarceration, repeated hospitalizations, homelessness and death.
AZPHA urges the Arizona State Legislature to proactively protect coverage for childless adults this legislative session by decoupling the hospital assessment from the requirement that the federal government pay at least 80% of the costs for the distinctly different expansion population.
We Need a ‘Childless Adult and Behavioral Health Protection Act’
Failure to proactively act to decouple the hospital assessment from the expansion population match requirement would jeopardize the health and well-being of our most vulnerable residents and strain our healthcare infrastructure beyond repair… and it’s a simple fix – simply eliminate ARS 36-2901.08(E) – let’s call it the Childless Adult and Behavioral Health Protection Act by simply deleting ARS 36-2901.08(E).
36-2901.08. Hospital assessment
E. The administration shall not collect an assessment for costs associated with service after the effective date of any reduction of the federal medical assistance percentage established by 42 United States Code section 1396d(y) or 1396d(z) that is applicable to this state to less than eighty per cent.
AZPHA has been doing some pre-session work to ensure that such a bill is filed this session. More to come when we know the bill’s number.
Medicaid funding cuts could put thousands of Arizonans in peril