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Updated Jul 10, 2012 - 12:55 pm

Brewer taking cautious path on Medicaid expansion

PHOENIX -- Arizona Gov. Jan Brewer was quick to criticize the U.S. Supreme Court's decision upholding the federal health care overhaul and again said the law should be repealed. But look for her to take her time charting a course on whether the state should implement a key provision.

The Supreme Court scrapped the overhaul's requirement that states expand eligibility for their Medicaid programs. That made the expansion optional, and Republican governors in states such as Florida, Wisconsin and Texas have already said they won't implement the expansion.

Under Brewer, Arizona was part of the multi-state lawsuit challenging the entire healthcare overhaul, and she argued even before Congress enacted the law that the state shouldn't be coerced into a costly expansion of its Medicaid program.

But a senior Brewer aide said it could be months before the governor and her staff get enough information to make an informed decision on the Medicaid expansion, particularly now that the court decision may open the door to changes on scope and timing.

"There's a lot of unanswered questions that we need guidance from the (federal Centers for Medicare and Medicaid Services) on how the voluntary expansion would be implemented if we choose to do that," said Don Hughes, Brewer's health policy adviser.

Hughes noted that the National Governors Association has asked Health and Human Services Secretary Kathleen Sebelius whether states could only do part of the expansion and phase it in -- and still get the extra federal funding originally promised.

At stake in Arizona is health coverage that could start in 2014 for over 300,000 low-income residents.

"Real lives are hanging in the balance and you have lots and lots of unknowns," said Children's Action Alliance President Dana Naimark, a supporter of the Medicaid expansion. "Our state now has to make a decision."

Preliminary estimates on initial added costs for the state range from $210 million to $250 million annually, with some costs due to new enrollments from people already eligible but newly enrolled.

However, legislative budget analysts acknowledged last week the fiscal impact remains unclear because of the lack of word from federal officials on how the optional expansion would work.

Arizona last year reduced eligibility for its Medicaid program because of a now-easing budget crisis, but Brewer has said the expansion's cost would be difficult for the state to shoulder at a time when the state would no longer be receiving revenue from a temporary sales-tax increase ending in 2013.

Hughes said Brewer's administration will consult legislators, care providers, business leaders and others as it considers options.

The Arizona Hospital and Healthcare Association said it welcomes Brewer's go-slow approach and the industry group is taking that approach itself.

The association wants more people covered by Medicaid to reduce the amount of uncompensated care that hospitals have to provide to people without coverage.

"We don't need to be hasty and drawing a line in the sand or picking a particular path," said association spokesman Pete Wertheim.

Some legislators see no reason to wait on staking out positions.

Many majority Republicans said the state can't afford to expand its Medicaid program.

"It doesn't look like it would be a possibility and not raise taxes," said Sen. Nancy Barto, chairman of the Senate Healthcare and Medical Liability Reform Committee.

Barto, R-Phoenix, said she hopes to avoid a fight over the expansion issue during the Legislature's 2013 regular session.

"I hope we can talk this through ... on what's best the citizens in terms of how we address this," she said.

The state would be better off if the overhaul is repealed, the federal government gives states flexibility in Medicaid programs and both levels of government adopt "patient-centered reforms" to make coverage more affordable, such as enhancing competition between insurers and restricting medical liability lawsuits that inflate health care costs, Barto said.

Democratic Sen. Linda Lopez of Tucson supports the expansion and notes that the federal government would pay most of the costs.

"I just feel it's very shortsighted of us not to do this," Lopez said. "Why wouldn't you want to take care of our citizens? Why wouldn't you want to do that?"

Both she and Barto said upcoming elections could determine the outcome.

Barto said Republican victories in the national elections would doom the overhaul and Lopez said that Democratic gains in the Legislature could help the proposed Medicaid expansion if the overhaul survives.

"This is not over," Barto noted.

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