Arizona’s Proposed Medicaid Waiver Jeopardizes Recent Health Coverage Gains

Arizona Governor Doug Ducey has proposed changes to the state’s Medicaid expansion that would make it harder for low-income people to stay enrolled in health coverage.  Gov. Ducey’s proposal goes far beyond the flexibility that the federal government has granted to other states and would almost certainly reverse the state’s dramatic health coverage gains under health reform.

Governor Ducey signed legislation in March directing the state to apply for an amendment to the state’s existing Medicaid waiver (also known as a “section 1115 demonstration project”), which governs Arizona’s entire Medicaid program, including its expansion under health reform.  The governor’s proposal includes three key provisions that aren’t acceptable in Medicaid:

• Premiums and out-of-pocket costs for people with little or no income.  Under Arizona’s proposal, all Medicaid expansion beneficiaries would have to pay a premium of up to 2 percent of their annual income and co-pays of up to 3 percent of their annual income.  People in poverty often don’t have enough money for rent, food, and clothing, and charging premiums and co-pays makes them less likely to enroll in coverage and seek needed medical care, a recent report by the Department of Health and Human Services (HHS) shows. 
• Conditioning eligibility on employment or job search activities.  As we’ve written, Medicaid’s purpose is to provide health coverage to people who can’t afford it.  HHS has rejected proposals in other states that would deny coverage or offer a lesser benefit package to people who cannot meet work requirements.
• Five-year lifetime enrollment limit.  Medicaid is a critical part of health reform’s continuum of coverage (which also includes employer and marketplace coverage), which assures non-elderly adults access to coverage even if their income fluctuates or their job status changes over time.  HHS has never allowed a time limit on coverage in Medicaid. 

If implemented, the proposal could devastate low-income Arizonans.  For example, it could force an Arizonan with a low-wage job to decide between paying the rent and paying the out-of-pocket costs to see a doctor for needed care.  Or, a working parent who’s unlucky enough to lose a job — and along with it, health coverage — during one or more recessions and consequently enrolls in Medicaid during those periods could be barred from the program for life due to the time limit.

Arizona’s adoption of the Medicaid expansion is a big reason why the state’s uninsurance rate has dropped by 30 percent since health reform’s major coverage expansions took effect at the beginning of last year.  Yet Gov. Ducey’s proposal would make it harder for people to access needed medical care and stay enrolled in coverage.