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Don't let deficit preclude Arizona Medicaid expansion

April 29, 2013
Arizona Republic
Kevin McCarthy

The controversy surrounding Gov. Jan Brewer’s recommendation to expand health-care coverage to low-income Arizonans could leave a casual observer with the impression that she is proposing a massive public-policy change.
 

The truth is her proposal is a relatively minor expansion of the current coverage already required by Arizona voters through the passage of Proposition 204 in 2000, and it is a modest change in Arizona’s current financial relationship with the federal government. Moreover, opposition to the governor’s proposal ignores the current legal framework for Medicaid coverage and the relatively few realistic options that are available to Arizona.
 

Understandably, some of the resistance to Medicaid expansion is linked to broader opposition to the Affordable Care Act and the federal government’s expanding reach in health care. The new federal law requires states to offer Medicaid coverage to adults with income up to 133 percent of the federal poverty level. However, Prop. 204 already requires coverage to adults with income up to 100 percent of that level. The governor estimates that the expansion will add 57,000 people to the roughly 1.2 million who already qualify for coverage under Arizona law.
 

In addition to opposition to the federal health-care law, opponents have criticized Arizona’s participation in a program that is heavily federally subsidized. This ignores the fact that such revenue has been a major feature of Arizona’s state budget for many years. Consider that over the last 10 years, Arizona has spent $57 billion on Medicaid and Medicare. Nearly $37 billion, or 64 percent, of those expenditures were funded by the federal government. In fiscal 2013, with the current freeze for services for childless adults already in place, Arizona is still receiving $4.2 billion in federal funding for those budgets. To date, there is no organized effort to reject all of those funds on principle.
 

Whether we like it or not, public services for health care, education, transportation and many others are delivered through a mixture of taxes from federal, state and local governments. If Arizona decides to decrease its appetite for federal dollars, it would be a departure from our diet over the last 20 years. In 1990, federal aid to state and local governments in Arizona was $1.6 billion. By fiscal 2010, that funding grew 726 percent to $13.4 billion.
 

Opponents to Medicaid expansion rightly express concern about the federal budget deficit and the impact that the health-care law will have on our nation’s ability to address our federal debt. However, the reality is that it is now the law of the land and looks to remain so for the foreseeable future. The only question left is how Arizona should respond within the current legal framework that is largely outside of our control.
 

Finally, the Medicaid-expansion debate is complicated. But it would certainly benefit from a healthy dose of intellectual honesty about not only the limited options available, but also the legitimacy of claims that we should begin balancing the federal budget disproportionately on the backs of Arizonans.
 

Kevin McCarthy is president of the Arizona Tax Research Association.

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