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12/11/2013 1:01:00 PM
Study shows expansion of state's Medicaid program will increase enrollees by nearly 90 percent

Howard Fischer
Capitol Media Services

PHOENIX -- A free-market advocacy group claims that the decision by Gov. Jan Brewer to expand the state's Medicaid program will immediately increase the number of people in the program by nearly 90 percent.

The report released Monday by the National Center for Policy Analysis also claims that the additional cost to Arizona taxpayers will hit $906 million in the coming decade, even with the federal government picking up most of the cost. And it says that the fallout from the Affordable Care Act will be fewer people who are buying their own insurance.

Gubernatorial press aide Andrew Wilder said he cannot comment on cost estimates because the report -- essentially a four-page briefing -- does not explain its assumptions.

But Wilder said the claim that Medicaid will add nearly 1.1 million people next year, on top of the close to 1.3 million now enrolled, makes no sense. He said that the number of people who will qualify under the expanded eligibility, plus those who will once again qualify after the law is changed, is only about a third of what the report claims.

Matthew Benson who represents the Arizona Hospital and Healthcare Association, supporters of expansion, agreed.

"They're seemingly pulling a lot of these figures out of the air,' he said.

But Michael Bond, a senior finance lecturer at the University of Arizona, one of the authors of the report, said the numbers are in line with what has happened in the past when Medicaid programs have been expanded.

The report comes ahead of the first court hearing on whether the expansion is legal.

Lawmakers who voted against the plan contend the assessment being levied on hospitals to pay the state's share is really a tax. That distinction is critical as a tax hike constitutionally requires a two-thirds vote of both the House and Senate, something the legislation did not get.

The governor disputes the characterization. And she contends, in a somewhat unique argument, that a simple majority of legislators can determine if a two-thirds vote is needed.

The lawsuit is a last-ditch attempt by foes to block Arizona's participation in the federal Affordable Care Act before it takes effect Jan. 1.

It lifts Medicaid eligibility to an adjusted figure of 138 percent of the federal poverty level, about $26,951 a year for a family of three. That is up from the current figure of $19,530.

The change also will mean that Arizona will once again start enrolling childless adults in the program, something it halted years ago in a budget-cutting maneuver.

Brewer cobbled together a coalition of Democrats and a handful of Republicans to get the necessary votes for expansion. The Republican governor said while she is opposed to what's been dubbed Obamacare, it makes no sense for Arizona to ignore the federal funding.

Christina Sandefur, representing the 36 legislative opponents, all Republicans, said voters approved the constitutional requirement for a two-thirds margin for tax increases as a safeguard. Sandefur said the lawmakers she represents constitute more than a third of both the House and Senate, something that, had the constitution been followed, would have been a sufficient margin to deny the measure the necessary votes.

But the governor, in her legal pleadings, did not address whether the hospital assessment is a tax. Instead, she is asking Maricopa County Superior Court Judge Katherine Cooper to toss the lawsuit, saying the dissident lawmakers lack legal standing to sue.

In fact, Douglas Northup, the governor's lawyer, said the only people who can challenge the legality of the assessment are the hospitals who are affected.

That is virtually certain never to happen: The hospitals themselves agreed to the levy based on projections from the Arizona Health Care Cost Containment System, the state's Medicaid program, that every hospital chain in the state affected by the levy would actually make money.

AHCCCS estimates hospitals will shell out $75 million for the first six months of 2014. But the agency contends they will get back that much, plus $108 million over the same period.

Monday's report deals not with the legalities but with Brewer's contention that Medicaid expansion will be a financial benefit to the state and the hospitals.

Bond said that immediate increase of 1.1 million is not just people who now will qualify for government-provided care. He said about a third of those now have private insurance but will abandon that once they find out they are now eligible for Medicaid.

Wilder, however, said AHCCCS estimates there are just 57,000 Arizonans whose income is above the poverty level but below the new income cap. And he said the state estimates there are 240,000 childless adults in poverty who qualify but until now have been turned away.

"The governor's office is confident in both these numbers,' Wilder said.

But Bond said none of that considers what will happen now that the federal government is heavily advertising the government-subsidized health care exchanges as well as warning people about fines for not having insurance. He said some people who try to get coverage through an exchange will find out they actually are eligible for Medicaid and perhaps have been all along.

He also said prior Medicaid expansions have resulted in a "crowd out' of private insurance. He said it is not unreasonable to assume that one person will drop private coverage for every three who enroll in Medicaid.

Bond said the analysis is not tainted by the fact that the NCPA, where he also serves as a senior fellow, is opposed to Medicaid and similar federal insurance programs.

"We're very free market oriented here,' he said.

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