Arizona Medicaid Reduction Is Approved by Sebelius, Governor Brewer Says

Arizona Governor Jan Brewer said U.S. Health and Human Services Secretary Kathleen Sebelius has granted permission to cut people from the state’s Medicaid rolls.

Brewer, 66, has proposed eliminating 250,000 childless adults from the joint state-federal health-care program for the poor to help save $541.5 million in the coming fiscal year.

“Secretary Sebelius’s letter clearly indicates that Arizona may take the steps it requires to manage its Medicaid program and balance its budget,” Brewer said in a statement yesterday, referring to a document dated Feb. 15.

The 16th-largest state by population faces a $1.2 billion budget deficit for the year that begins July 1. More than 70 percent of that is due to Medicaid costs.

The health overhaul that President Barack Obama signed last year requires states to maintain coverage for their Medicaid- eligible populations. Brewer, a Republican, asked permission from Sebelius last month to drop some recipients from the rolls to cut costs.

The state has a federal waiver that expires Sept. 20 allowing it to cover childless adults, according to Monica Coury, a spokeswoman for the Arizona Health Care Cost Containment System, which administers Medicaid.

Any reduction in eligibility caused by the expiration wouldn’t violate the overhaul’s rules, Sebelius said in her letter.

Expiring Waivers

Jessica Santillo, a spokeswoman for the Health and Human Services Department, referred to the letter when asked for comment. No other states have asked to drop people from Medicaid, said a department official who asked not to be identified because the person wasn’t authorized to speak.

Under Medicaid law, states don’t have to renew waivers they have used to expand Medicaid coverage and can trim people from their rolls by allowing waivers to expire.

“The federal government will be torn on this issue,” said Vernon Smith, a health-policy consultant in Lansing, Michigan and former director of Michigan’s Medicaid program. “I think they realize the enormity of the fiscal problems in the states.”

Indiana uses a health plan with high-deductible insurance and a savings account for medical expenses to cover childless adults up to 200 percent of the federal poverty level. That program expires at the end of 2012.

Minnesota has a waiver that expires in June and expands Medicaid to some pregnant women and children up to 275 percent of the federal poverty level.

Delaware, Hawaii, Massachusetts, New York and Vermont have similar waivers to expand coverage, according to Coury.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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