Arizona Update February 22, 2010. 2 Arizona Update #1 276,500 50,000 80 Million 48% 35% 210,000 72.

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Presentation transcript:

Arizona Update February 22, 2010

2 Arizona Update #1 276,500 50, Million 48% 35% 210,000 72

3 Arizona Update (Answers) #1 In U.S. in % of employment lost 276,500 Jobs Lost since start of Recession 50,000 Surplus Homes 80 Million sq. ft. surplus commercial space 48% of mortgages “underwater” 35% decrease in General Fund Revenues 210,000 increase in Medicaid Enrollment 72 degrees outside while I am writing this

4 Arizona Eligibility Levels Note – This chart excludes income levels for optional programs like Freedom to Work and Breast and Cervical Cancer. KidsCare Medicaid Proposition 204 Expansion 200%

5 Budget Limitations Medicaid has 3 areas to cut: Eligibility/Enrollment - Federal Stimulus legislation established a maintenance of effort requirement limiting ability to reduce eligibility Rates - Substantive provider rate reductions and freezes were already included in the budget – Need to maintain Access to Care Benefits - Legislature did not make any substantive changes to benefits

6 Budget Changes to Date Arizona’s Program is $743 million less today because of budget policy decisions Rates - $635 million impact $505 million in reductions to provider rates freezes to statutorily mandated rate increases. $130 million in health plan reductions Example – eliminated $42 m in GME and $25.6 m in DSH Eligibility - $72.2 million impact Eliminated CHIP parents coverage for 9,000 adults and imposed cap and freeze in CHIP program – 8,000 kids on waiting list in first month Cost Sharing - $10.6 million – Administrative Reductions - $25 million

7 There are three interconnected problems Current year deficit – shortfall of $1.4 billion remains for FY 2010 Structural deficit – projected shortfall of $3.2 billion for FY 2011 and beyond Cash flow – treasurer borrowing $1.0 billion – state recently completed $735 million sales of assets What’s the Problem?

8 There are at least six reasons that led us to this point: The Economy Reduced Revenues Added Spending State Actions Constraints Imposed by the Voters The Federal Government How did we get here?

9

10 Office of Governor Janice K. Brewer What’s the Problem?

11 Growing Populations – Including FY 2011 Estimates Current revenues = FY 2004 Since FY 2004, Arizona has added 121,500 K-12 students and more than $1.0 billion in annual costs to the K-12 system. Since FY 2004, enrollment in State universities has increased enrollment by 18,100 students and annual General Fund costs of $393.5 million. Since FY 2004, Corrections has added 10,800 prisoners and annual General Fund costs of $405.4 million. Since FY 2004, AHCCCS has added 475,000 new members and annual costs of nearly $1.5 billion (General Fund). How did we get here?

12 Executive Budget Plan FY 2011 Solution

13 Executive Budget Proposal Baseline – Pop./Inflation $389 m General Fund (GF) ($1.1 B Total Fund) Federal Stimulus Backfill $202 million General Fund CHIP Elimination - $22.9 million GF ($119 million TF). Program currently provides health coverage for 46,800 children with incomes below 200% of FPL. The Executive proposes holding a special election and amending the federal waiver to eliminate General Fund support for optional adult expansion program as of January 1, An estimated 310,500 people will lose coverage State will lose $737.6 million in Federal matching funds GF will save $382.5 million in FY 2011, $1 billion in FY 2012 Provider rate reductions $57.1 million GF ($167 million TF) GME and DSH hospital subsidies - $21.1 GF savings ($60.2 million TF) Benefit Reductions $6.3 million GF ($18.3 million TF) Transferring Adult General Mental Health and Substance Abuse funding to Medicaid Acute plans ($43 million GF - $141 m TF)

14 Federal Policy Issues The Senate bill is projected to increase Arizona’s costs by $4.0 Billion from 2014 through Significant policy concerns regarding inequity of Senate bill on funding for childless adults in expansion states – Arizona is punished for expansion and taxpayers will pay twice – for local expansion and for other states Concern regarding both bills Maintenance of Effort Requirements. Increased Federal Funding for Medicaid Additional 6 month stimulus dollars would provide approximately $500 million for Arizona and provide policy alternative to some of the proposed reductions. Health Care Reform