State-Only Medicaid for Childless Adults: Costing More and Getting Less

May 13, 2013

Many of our conservative lawmakers are no fans of government health care and have suggested that instead of expanding Medicaid in line with the Patient Protection and Affordable Care Act (ACA) that Arizona continue its enrollment freeze on childless (non-custodial) adults while having the state take over financing the program, suggesting the rainy day fund with $450 million as a possible revenue source.

In this analysis The Grand Canyon Institute (GCI) explores the fiscal ramifications of that policy option and compares it to two Medicaid expansion scenarios.  One scenario where the federal government provides the matching funds as stated in the ACA, including an enhanced match for childless adults, moving from 85 percent in FY2015 to 90 percent in FY2017 and initial full coverage for those adults newly eligible for Medicaid up to 133 percent of the federal poverty line with a 5 percent state portion in FY2017 (see Table 2 in Appendix).

Throughout the Medicaid expansion debate, some conservative lawmakers have continually expressed concern that the federal government will not live up to its obligation due to financial constraints at the federal level.  So in the second scenario, GCI looks at a situation where the federal government pays the lowest amount in Governor Jan Brewer’s proposal, 80 percent, doubling the net cost to the state.  Each of the scenarios were examined over the first three full years of Medicaid expansion from fiscal years 2015 to 2017 (see Table 3 in Appendix).