Arizona and the ACA’s Medicaid expansion

CMS has a approved a work requirement, which can take effect January 2020. But they rejected Arizona's request for a five-year limit on Medicaid coverage for people who don't comply with the work requirement

arizona Medicaid guide

Medicaid expansion in Arizona

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Arizona accepted federal funding for Medicaid expansion under the leadership of former Governor, Jan Brewer, a Republican. Largely as a result of Medicaid expansion, the state’s uninsured rate dropped from 17.1 percent in 2013 to 10 percent in 2016. It climbed slightly, to 10.1 percent in 2017, which mirrored the nationwide increase in the uninsured rate (from 8.6 percent to 8.7 percent) in 2017.

As of October 2017, there were 398,519 people enrolled in expanded Medicaid in Arizona, according to the state’s waiver proposal requesting additional eligibility rules (details below; the waiver proposal was approved in January 2019). Total enrollment in Arizona Medicaid and CHIP as of October 2018 stood at nearly 1.7 million people.

Arizona’s Medicaid program, called the Arizona Health Care Cost Containment System, or AHCCCS, utilizes private insurers that provide managed care services to Medicaid enrollees. AHCCCS announced in March 2018 that seven insurers had been awarded AHCCCS managed care contracts for five-year periods starting in October 2018.

Arizona lawmakers have pushed for changes to Medicaid eligibility and benefits since 2015

In the 2015 legislative session, Arizona lawmakers passed Senate Bill 1092, which made an effort to dial back the state’s expansion of Medicaid. SB1092 requires the state to submit an 1115 waiver request to CMS every year, asking for approval for new Medicaid eligibility guidelines. [H.B.2228, which was enacted in 2018, calls for the exemption of Native Americans from any new Medicaid eligibility rules that are implemented as a result of Arizona’s waiver process; the Trump Administration’s approval of Arizona’s Medicaid waiver in 2019 includes an exemption from the new rules for Native Americans, but only if they’re enrolled citizens of their tribes.]

Lawmakers wanted the new eligibility rules to include a five-year limit on Medicaid coverage for able-bodied adults, along with a provision requiring enrollees to be working or involved in job training or school. In August 2015, Ducey unveiled his proposals for Arizona’s first Medicaid waiver proposal, including a work requirement and the five-year lifetime limit on Medicaid coverage for able-bodied adults. The idea was that Medicaid would remain a solid safety net for children and disabled adults, but that it would become a more temporary program for able-bodied adults. Ducey’s waiver proposal also included a requirement that enrollees pay increased premiums and cost-sharing and establish health savings accounts, and participate in various wellness programs like flu shots and glucose screening.

There has been support for the idea of modernizing AHCCCS, but many advocates for low-income Arizona residents were worried that Ducey’s proposal would simply serve to as a setback, chipping away at the hard-won gains the state has made in reducing the uninsured rate.

Obama Administration approved Arizona’s new Medicaid waiver, but with several provisions removed

The state continued to work with CMS to come to an agreement on a new waiver, and in July 2016, Arizona published a revised version of their proposed Medicaid modernization waiver. In September 2016, CMS approved Arizona’s waiver proposal, but eliminated the most conservative aspects of it. The new waiver runs for five years, through September 2021, and includes the following provisions:

  • A new AHCCCS CARE program for enrollees with income above the poverty level (between 100 percent and 138 percent of the poverty level, as those individuals are eligible for Medicaid under the ACA’s expansion). The program requires modest contributions to a health savings account, but the premiums can be deferred for six months if members complete various wellness and preventive care requirements.
  • A job search program that’s offered but not mandatory (as described below, this has been changed to a community engagement requirement, under the terms of the updated waiver approval granted by the Trump Administration).

The Obama Administration CMS declined several provisions of the original waiver proposal, including the five-year limit on AHCCCS benefits for able-bodied adults, and the work/job search requirement (it was changed to a program in which beneficiaries are automatically enrolled, but AHCCCS benefits are not eliminated for those who don’t actively participate).

CMS also refused to allow Arizona to charge premiums for beneficiaries with income under the poverty level, lock people out of re-enrolling in Medicaid for six months if they don’t pay their premium contributions to the health savings account, or charge fees for missed medical appointments.

All of the details about Arizona’s 1115 waiver proposal and the response from CMS are available here.

Trump Administration approves Arizona’s work requirement proposal with a 2020 effective date

The Trump Administration clarified in early 2018 that they were open to work requirements, and has approved them for several states. In late 2017, Arizona submitted their AHCCCS Works waiver proposal as an amendment to the already-approved waiver the Obama Administration had granted in 2016 (an additional amendment, submitted in April 2018, proposed eliminating retroactive coverage).

The proposal was partially approved in January 2019, allowing Arizona to implement the following changes:

  • Work requirement (effective no earlier than January 2020): Medicaid expansion enrollees between the ages of 19 and 49 will have to work (or participate in other “qualifying community engagement activities”) at least 80 hours per month, and report their compliance to the state. Non-compliant enrollees — including those who are working but not reporting their work hours to the state — would have a three-month grace period, after which they would lose their Medicaid coverage for two months. Exemptions will apply for various groups, including pregnant women, homeless people, full-time students, victims of domestic violence, and parents caring for minor children.
  • Waiver of retroactive eligibility, meaning that coverage would take effect the month the person applies, instead of taking effect up to three months prior to the month the person applies. The waiver of retroactive eligibility won’t apply to pregnant and postpartum women, or to children under the age of 19.

But the Trump Administration did not approve all of Arizona’s proposals. Notably:

  • HHS did not approve the state’s proposed five-year limit on Medicaid coverage for expansion enrollees who don’t comply with the work requirement.
  • HHS also did not approve the state’s request to have the federal government pay for the bulk of the cost of implementing the work requirement. The federal government pays most of the cost of providing medical care to Medicaid expansion enrollees (93 percent in 2019, dropping to 90 percent in 2020 and future years), and Arizona wanted the federal government to use that same funding rate to help the state cover the cost of setting up the system to administer the work requirement. HHS declined.

Who qualifies for AHCCCS?

Arizona has taken a somewhat unique approach to income limitations for covered Medicaid populations. While many states cover children at much higher income level than adults, Arizona has established income limits that are relatively consistent across covered groups.

The Medicaid program in Arizona is called the Arizona Health Care Cost Containment System (AHCCCS, which is pronounced “access”). AHCCCS is available to:

  • Children birth to 1 year with family income up to 147 percent of the federal poverty level (FPL)
  • Children 1 to 5 years with family income up to 141 percent of FPL
  • Children 6 to 18 with family income up to 133 percent of FPL
  • As of July 2016, children not eligible for Medicaid but with family income up to 200 percent of FPL are eligible for KidsCare (CHIP)
  • Pregnant women with family income up to 156 percent of FPL
  • Parents with family income up to 138 percent of FPL
  • Childless, non-elderly adults with family income up to 138 percent of FPL (Medicaid expansion population)
  • Elderly and disabled individuals who have special requirements and meet certain income limits

Arizona froze enrollment in KidsCare—its version of the Children’s Health Insurance Program— in 2010, and discontinued KidsCare at the end of January 2014 due to lack of funding. For more than two years, Arizona was the only state that didn’t have CHIP. But in July 2016, CMS approved Arizona’s proposal to re-open CHIP. Enrollment began July 26, and coverage took effect as early as September 1, 2016. The state expected 30,000 to 40,000 children to be newly-eligible for CHIP.

To check if you qualify for AHCCCS, you can use the Quick Screener on the Health-e-Arizona Plus website. The site houses the on-line application for medical, food/nutrition, and cash assistance programs, and it connects with the federal health insurance marketplace, HealthCare.gov.

How to apply for Medicaid

The quickest way to apply for AHCCCS is online at www.healthearizonaplus.gov.

Or you can enroll through healthcare.gov.

You can also print an Application for Benefits form, complete it, and submit it by mail (to P.O. Box 19009, Phoenix AZ 85005) or in person. Use the locator tool to find a nearby office.

If you need help completing an application, call 1-855-HEA-PLUS (1-855-432-7587) or search online for a community assistor.

Medicaid expansion continues in Arizona after appeals court rejected lawsuit over funding

On February 14, 2017, the Arizona Court of Appeals heard a case, brought by Republican lawmakers, challenging whether the state’s assessment on hospitals ($265 million a year, used to fund the state’s portion of Medicaid expansion costs) was legal. But in March 2017, the appeals court rejected the lawsuit, ruling that the assessment is legal and that Medicaid expansion can continue.

The issue, which had been ongoing for years, revolved around whether the levy is a tax or simply an assessment to fund a specific program. New taxes require a two-thirds majority in the state legislature, which the assessment did not receive (it passed with just a simple majority). But Arizona’s Medicaid program argued that the levy is not a tax, but rather an assessment, and didn’t need the approval of two-thirds of the state’s lawmakers.

The lawsuit challenging the hospital levy was brought by the Goldwater Institute (a conservative organization) and 36 Republican lawmakers who had voted against the levy to fund Medicaid expansion. The case was initially dismissed, and the dismissal was appealed to the Arizona Supreme Court. The court ruled in December 2014 that the challenge could proceed.

In a victory for Medicaid expansion advocates, a judge ruled in May 2015 that patients with Arizona Medicaid coverage would be allowed to take part in the lawsuit in defense of Medicaid expansion. The lawmakers who brought the suit had argued that patients shouldn’t have a voice in the case. And in August 2015, a Maricopa County Superior Court Judge sided with Medicaid expansion advocates, ruling that the hospital fee to fund Medicaid expansion is an assessment, rather than a tax.

Brewer did not run for re-election in 2014 due to a term limit, and new Gov. Doug Ducey, a Republican, prominently featured his opposition to the Affordable Care Act (ACA) in campaign literature. He appointed Christina Corieri as his policy advisor for health and human services issues. Immediately prior to her appointment, Corieri was with the Goldwater Institute, which is the organization that filed the challenge against Medicaid expansion.

Ducey’s office was tasked with defending the legality of the hospital assessment, but there were concerns that the defense could be less-than-vigorous. The defense also included an attorney representing Arizona residents who would lose coverage if the state were to pull the plug on Medicaid expansion. Ultimately, the defense succeeded, and Medicaid expansion in Arizona will continue. The federal government is paying 93 percent of the cost in 2019. After that, from 2020 onwards, the federal government will pay 90 percent of the cost of Medicaid expansion.

If Medicaid expansion in Arizona had unraveled — either as a result of the challenge to the hospital assessment, or because of ACA repeal under the Trump Administration — there are roughly 400,000 people in the state who would have lost coverage. Instead, their coverage continues uninterrupted, and additional people who become eligible for expanded Medicaid can continue to enroll.

History of Medicaid in Arizona

Arizona was the last state to implement a Medicaid program, establishing AHCCCS in October 1982.

Medicaid expansion under the Affordable Care Act was signed into law in Arizona in July 2013. Arizona was one of the first states led by a Republican governor to sign on to expansion.

AHCCCS enrollment grew from about 144,000 individuals in 1985 to about 1.6 million as of October 2014. By October 2016, there were 1,735,807 people enrolled in AHCCCS and CHIP. But by December 2017, enrollment had dropped to 1,716,236. From late 2013 (just before Medicaid expansion took effect) to December 2017, total enrollment in Arizona’s Medicaid program grew by 511,466 people — a 43 percent increase. As of 2017, nearly 400,000 people were enrolled in Medicaid as a result of expansion.

Arizona’s Medicaid program has operated for more than 25 years under a Section 1115 waiver that allows the state to use capitated managed care. More than 85 percent of Arizona’s Medicaid beneficiaries receive services through managed care arrangements. Medicaid managed care helps states provide access to health care providers, improve quality of care, and control financial risk. New AHCCCS managed care contracts, effective October 2018, were awarded to seven insurers in early 2018.

In December 2014, CMS approved a new 1115 waiver for Arizona’s Medicaid program, although they declined to approve some aspects of the proposal, including a proposed $200 fee for non-emergency use of an emergency room for Medicaid enrollees with income above the poverty level.

In September 2016, CMS approved another waiver proposal, but did not agree to some of the state’s requests, including a work requirement and lifetime limit on Medicaid eligibility. The waiver created a new AHCCCS CARE program for enrollees with income above the poverty level, with enrollees required to make modest contributions to a health savings account. There’s also a voluntary job search program.

Arizona submitted a new waiver proposal to the Trump Administration, which called for a work requirement and a five-year limit on Medicaid eligibility for the Medicaid expansion population if they failed to comply with the work requirement. The Trump Administration has approved the work requirement, which can take effect as of January 2020, and is allowing Arizona to eliminate retrocative Medicaid coverage for most enrollees. But they rejected the five-year limit on Medicaid expansion coverage, and declined to pay the bulk of the cost for the state to set administer the work requirement.


Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

How to apply in AZ

Apply online at healthearizonaplus.gov; submit an Application for Benefits by mail (to P.O. Box 19009, Phoenix AZ 85005) or in person; or call 1-855-432-7587 for help applying, or search online for a community assistor.

Eligibility: Children 0-1 with family income up to 147% of FPL; age 1-5 with income up to 141% of FPL; 6-18 with income up to 138% of FPL; pregnant women with family income up to 156% of FPL; parents with family income up to 138% of FPL; childless, non-elderly adults with family income up to 138% of FPL; elderly and disabled individuals who have special requirements and meet certain income limits.

Arizona section