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CHIP, Medicaid cuts in Arizona on hold for now

The state is counting on Congress to provide an additional $400 million in Medicaid funding, or it will reinstate planned program cuts.

By Doug Trapp — Posted May 18, 2010

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Arizona will not end its Children's Health Insurance Program and has tentatively reversed Medicaid eligibility cuts adopted in March.

Arizona Gov. Jan Brewer signed legislation on May 6 reinstating CHIP and continuing Medicaid coverage for about 300,000 low-income adults, part of the state's 1.3 million program enrollees. The Legislature adopted the measure in the final days of its 2010 session, which ended April 29.

The cuts -- adopted as part a fiscal 2011 budget bill -- would have saved the state about $385 million in fiscal 2011 and helped close a $1.3 billion deficit. However, they also could have led to the loss of several billion in federal health care funds. The federal health reform law -- adopted days after the cuts were approved in March -- requires states to maintain their Medicaid eligibility through at least Dec. 31, 2013, or risk losing matching funds.

"Republicans and Gov. Brewer had a choice when they passed their harmful budget that eagerly cut jobs, education and health care," said House Democratic Whip Chad Campbell. "They made the wrong choice."

Arizona's Medicaid cuts would have reduced eligibility for adults beginning in January 2011. The reversal assumes that Congress will provide an additional six months of stimulus Medicaid funding, through June 2011. If Congress does not act, the cuts still would take effect.

Federal lawmakers are working on legislation that would extend enhanced Medicaid funding for six more months at a cost of $25 billion, $400 million of which would go to Arizona. The House and Senate have approved the measure in separate bills, but they must approve identical legislation before it can head to the White House. President Obama supports the provision.

Reinstating CHIP -- which was scheduled to end June 15 -- will cost the state $9 million. Enrollment, however, is frozen. The program covered about 34,000 kids as of May 10, according to Monica Coury, assistant director of intergovernmental relations for the Arizona Health Care Cost Containment System, the state's Medicaid agency.

However, Brewer and the Legislature did not reverse a 5% cut to physician Medicaid pay approved for fiscal 2011.

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