PHOENIX — Federal officials have rejected a bid by Arizona lawmakers and Gov. Doug Ducey to require Medicaid recipients to work and to limit their lifetime coverage to five years.
In a letter Friday to state officials, Andrew Slavitt, the acting administrator for the Centers for Medicare and Medicaid Services, said such limits would “undermine access to care and do not support the objectives of the program.”
Slavitt also rebuffed the state’s attempt to impose a charge on recipients who earn less than the federal poverty level.
But his agency did agree to permit a fee of up to 2 percent of household income on those who are above the poverty level — $20,160 a year for a family of three — but still eligible for the Arizona Health Care Cost Containment System, the state’s Medicaid program. For that same family of three, the cutoff is $27,820.
That fee, with a $25 a month maximum, would go into a “health savings account” which AHCCCS enrollees could use for noncovered services like dental, vision and chiropractic care, recognized weight-loss programs, nutrition counseling, gym membership and even sunscreen.
The agency also gave its blessing to financial incentives in the form of waived fees to promote healthy behavior. And while it rejected work requirements, the agency did approve letting the state automatically enroll AHCCCS recipients into job-seeking programs.
Even with that, the rejection of the work requirement and five-year limit is a setback for the Republican-controlled Legislature’s vote in 2015 to seek the limits and for Ducey, who signed the measure.
Ducey press aide Daniel Scarpinato said at the time that the package will “ensure that we have a responsible Medicaid program that protects taxpayers and provides care to those who need it the most.”
Scarpinato had a different statement Friday after being informed of the federal rejection.
“We knew that approval would be challenging for that piece,” he said. Scarpinato said that’s why the package included the fallback position of the automatic enrollment in the work-search program.
AHCCCS, fueled by a 2-1 match of federal dollars, provides health care to those whose income is below 138 percent of the poverty level. At last count there were more than 1.8 million Arizonans enrolled at a cost to state taxpayers of $1.7 billion.
During debate last year, state Sen. Nancy Barto, R-Phoenix, said there is a “serious problem of welfare benefits becoming an incentive not to work.” She said the money being spent on this is “unsustainable.”
Legislative budget staffers said at the time that the estimated savings to the state if all the waivers were granted would probably be less than $2 million a year. But Barto said it’s not just state dollars that concern her or legislators, here and elsewhere.
“What we’re trying to do as states … is to take control in some way and some incentivizing for those people that use it in that respect.
“We want certain controls in order to help the federal government keep its obligation that they’ve made, contract with the poor, receiving health care,” Barto said. “But we want to make sure that we’re really serving those that are needy.”
The rejection of the work requirement and lifetime limit should come as no surprise.
Federal agency spokesman Aaron Albright said at the time that waivers require “keeping faith with the law’s goals and consumer protections.” He specifically said that his agency has never granted waivers like the work requirement or the lifetime limit.
Ducey, in a prepared statement, cheered the waivers that the federal government did approve.
“With these one-of-a-kind, first-in-the-nation reforms, Arizona has provided a template for the rest of the country to follow,” he said.
“We’re taking AHCCCS into the 21st century, allowing Arizonans to take charge of their own health, providing enhanced services not currently offered under the Medicaid program, and better protecting taxpayer dollars.”
