Medicaid cuts mean more struggles for Arizona hospitals

With hospitals in Arizona already scrambling for ways to save money thanks to state cuts to the Arizona Health Care Cost Containment System--the state's Medicaid program--news Thursday that Gov. Jan Brewer definitely plans to ask for a waiver under the health reform law to cut down its Medicaid rolls isn't likely to go over too well. 

Brewer is looking to lower healthcare costs for the state, which faces an $825 million midyear shortfall on an $8.5 billion budget, the Associated Press reports. For the fiscal years beginning July 1, a $1.4 billion shortfall is anticipated. An attempt earlier this year to lower the Medicaid rolls by 250,000 that would have saved the state $750 million was reversed once health reform was passed, since the law currently requires states to maintain the program's eligibility. 

"We need flexibility from the federal government in order to get our state budget in line," Brewer said, according to the AP

In addition to low-income organ transplant patients losing coverage for already approved procedures, the state's cuts have caused hospital systems like Banner Health, Arizona's largest, to have to eliminate pay raises for more than 28,000 employees next year. Other hospital cuts include John C. Lincoln Health Network doing away with a baby-delivering unit in early 2011 and St. Joseph's Hospital and Medical Center sending some of its ER patients to outpatient clinics. 

"We're very concerned," St. Joseph's vice president of external affairs Suzanne Pfister told the Arizona Republic. "This is not just about indigent care. This is about an industry that has kept the economy strong and stable." 

Tension between the hospitals and the state's Legislature aren't helping matters, according to Phoenix Business Journal reporter Mike Sunnucks. In a post on the Phoenix Business Blog, Sunnucks points to proposed tax increases by the hospital industry on beer, wine and liquor in 2008 to pay for children's healthcare programs as a starting point for the "bad blood." 

"That ran into some resistance and wasn't helped by the fact it would have impacted [beer distributor] Hensley & Co.," Sunnucks wrote. "The big Anheuser-Busch distributor is headed by Cindy Hensley McCain--the wife of U.S. Sen. John McCain, who was running for president at the time." 

An idea for a 1 percent income tax increase on wealthy state residents also was met by Brewer with disdain, according to Sunnucks. The governor instead backs a sales tax that would affect the poor and the working-class. 

"There have also been new tax and fee plans floated every so often at the Legislature that would impose new fees and taxes on hospitals and other healthcare providers that treat AHCCCS patients or provide those services," he added. 

To learn more:
- read this Associated Press piece
- here's the Arizona Republic article
- check out the Phoenix Business Blog post