• Arizona could have more say over private insurance and Medicaid under Obamacare replacement
• The state plans to reform Medicaid with work requirements, lifetime limits and health-savings accounts.

House Republicans this week pushed through legislation that seeks to dramatically overhaul the government-funded insurance program that covers nearly 2 million low-income and disabled Arizonans.

If the repeal and replacement of the Affordable Care Act passes the U.S. Senate, it could put difficult and expensive health-policy decisions on the shoulders of Gov. Doug Ducey and the Arizona Legislature.

The American Health Care Act aims to remake the rules of the private insurance market, also enabling states to decide whether insurers can charge consumers more based on their health status if the consumer's coverage lapses.

In a decision that could affect the coverage of more than half a million Arizonans, the GOP health plan would halt funding of the Medicaid expansion in three years. In 2020, Medicaid would be converted to a per capita funding formula that some experts warn could put states with more efficient programs like Arizona at a disadvantage.

"We’re very concerned," said Dana Wolfe Naimark, president and CEO of Children's Action Alliance. "Medicaid funds are being slashed. Every state is going to be under enormous pressure to cut."

No job, no coverage?

With more decision-making authority shifted to states, Arizonans could face tougher Medicaid eligibility standards.

Arizona already is on the path toward stricter Medicaid eligibility for the state’s poorest residents on government-funded insurance.

In 2015, the state enacted Senate Bill 1092, sponsored by Sen. Nancy Barto, which sought to require “able-bodied” adults on Medicaid to have a job or be looking for one in order to keep their coverage. The legislation also sought to cap lifetime eligibility at five years.

The law requires the state's Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), to file a "waiver application" by the end of March each year seeking permission to make those changes until the federal Centers for Medicare and Medicaid Services (CMS) allows them.

The Obama administration rejected most of Arizona's waiver application last year, deciding that co-payments, a five-year eligibility limit and locking out enrollees for up to six months for failing to pay premiums would "undermine access to care."

Arizona halted the application this year as Congress pushed through the GOP health-care bill.

"With the new administration and the prospect of an Obamacare repeal and replacement ... a delay is understandable," said Barto, R-Phoenix.

AHCCCS representatives cited possible changes in how President Donald J. Trump's administration handles waiver requests as one reason for the delay.

Health and Human Services Secretary Tom Price and Seema Verma, the administrator overseeing CMS, said in a letter to governors that Trump's administration would favor reforms to Medicaid coverage for able-bodied adults that help them "prepare for private coverage."

Among the items highlighted in the Price-Verma letter are reforms that Arizona sought last year, including making Medicaid recipients pay a small premium, health-savings accounts, co-payments for hospital emergency rooms and limits on non-emergency transportation.

The Price-Verma letter seemingly invites the same reforms the state previously sought. Before Trump appointed her to oversee the agency that regulates Medicaid and Medicare, Verma worked as a consultant and helped states such as Indiana, Iowa and Kentucky to overhaul their Medicaid programs with the types of conservative hallmarks Arizona is seeking.

Ducey's staff is still looking to rework Arizona's waiver based on what comes out of Congress.

"We are currently drafting the waiver after waiting to get a better idea what changes would be implemented from Congress," said Patrick Ptak, a Ducey spokesman said this week.

Some question how much the work requirement and establishing health savings accounts for some Medicaid recipients would cost the state to administer.

In Arizona's initial waiver application, the state said that its proposals would have a "positive effect on budget neutrality" without providing data to back up that claim, according to Joan Alker, executive director at the Center for Children and Families at Georgetown University.

"These are complicated things that are going to require the state to monitor many aspects of peoples' lives," Alker said. "In addition to being bad health policy, they are very complicated and expensive to administer."

Consumers brace for changes

The uncertainty has left Arizona residents who depend on Medicaid coverage unsure whether they will face stricter standards — or no coverage at all.

Mark McCully moved from Ecuador to Peoria last year, in part because of Arizona's expanded Medicaid program.

McCully built a career in advertising and marketing, but he said he said he's been unable to find a job after "getting locked out of positions because of my age."

He said he does not oppose Arizona's efforts to seek a work requirement, noting that he's pursued employment and filled out applications. But he also has health concerns, taking about a dozen medications daily to manage cardiac disease and diabetes.

McCully said he would be willing to relocate to another state if it were a matter of maintaining insurance coverage.

"People don't put themselves in other people's shoes," said McCully, a Pittsburgh native. "When you get in these types of situations, every day is a question mark ... If I lose (coverage) here, I will have to make a decision what state I'm going to live in — or which country."