Phoenix, AZ - Governor Katie Hobbs issued the following statement on a Republican bill that threatens critical Medicaid programs, slashes the developmental disability program, and paves the way for ending many Arizona health care programs entirely:

“Yesterday, I met with Arizonans who rely on the Division for Developmental Disabilities (DDD) program, a critical lifeline for Arizonans with disabilities including autism, Down syndrome and cerebral palsy. I heard stories of how these services have given them independence and helped them thrive. The DDD program has allowed them to live their lives with dignity.

“In the last 24 hours, since the legislative majority released their proposal, my office has also heard from hospitals, health care providers, health plans, housing advocates, community leaders, and business organizations who are opposed to the far reaching implications of this bill as written.

“I have had a plan to fully fund the DDD services since January 17th, when I released my budget proposal. When I updated our numbers to show the increasing costs of the ESA program on March 5th, the funding for DDD was once again fully included in my balanced budget proposal. After 80 days of inaction, Monday was the first time Republicans offered any budgetary response to this dire matter and what they are offering is irresponsible and inhumane. 

“After hearing from affected families and a wide range of organizations, I know the Republican proposal is not right for families, caregivers, or providers, and is not right for Arizona. This proposal comes from unserious lawmakers, but it will have serious consequences for everyday people. It reduces services for disabled Arizonans, adds red tape, and paves the way to ending the Parents as Paid Caregivers (PPCG) program altogether. It slashes funding for down payment assistance for middle class families. And this reckless Republican proposal will enable attacks on other critical Medicaid programs in the immediate future.

“This bill has made clear the legislative majority is leveraging a crisis of their own creation to gain the power to hold other Medicaid initiatives hostage—programs like KidsCare and housing services for people with serious mental illnesses, to name a few. Today, they are threatening to gut services for disabled Arizonans. Tomorrow, I have no doubt they will slash health care for middle class children, people with serious mental illnesses, and other populations. I won’t let them do that.

“As they have for months, the legislative majority is continuing to play reckless political games with some of the most vulnerable Arizonans. They’re engaging in pointless political theater while failing to produce a balanced budget plan, as I have repeatedly done. It’s time for them to end their manufactured chaos and hostage-taking, and pass a common sense bill to fund these critical services. It’s time for them to meet their moral and legal obligations to these Arizona families and get their hands off our health care.”

This inhumane and reckless legislation is fragmented and unstable budgeting, raises constitutional questions, and paves the way for Republican lawmakers to strangle the other waiver-dependent AHCCCS programs Arizonans need. 

The reckless and inhumane Republican plan gives lawmakers the power to hold health care for middle class kids and people with mental illnesses hostage.

• Since its inception, AHCCCS has operated on a Medicaid waiver and waiver amendments, which have permitted the State to leverage the expertise of private and nonprofit health plans so our members are given more options in their health care decisions. Arizona has long been one of the most innovative Medicaid programs in the country because of our administrations’ waivers and amendments. 
• The capitation rate adjustment process is a highly technical process that involves adjusting the fixed rates health plans are paid per member to account for changes in costs, risk, and member utilization and other demographics. 
• If the legislature is given approval over all waivers and capitation rate changes, they will have the power to hold Medicaid waivers like KidsCare expansion and Housing and Health Opportunities (H2O) hostage, just as they have with Parents as Paid Caregivers.
• The waiver amendment and capitation rate adjustment processes are complex, technical, and have been performed (without incident) by subject matter experts at AHCCCS for the entirety of the program’s 43-year history. 
• In Idaho, the legislature has the authority to meddle in waiver amendment processes and capitation rate adjustments, and it has paved the way for the elimination of a significant portion of Idaho’s developmental disabilities program. 

The Legislative Council’s own Bill Drafting Manual says the supplemental is unconstitutional.

• The bill should be limited to only include appropriations, and no policy reforms, otherwise it raises questions of constitutionality. The Legislature’s own Bill Drafting Manual states that “a supplemental appropriation is a specific appropriation and may not contain statutory or session law.” For years, the legislature’s own basic fact sheets have stated that “the Arizona Constitution prohibits substantive law from being included in . . . supplemental appropriations bills.”

HB 2945 and SB 1734 are mirror bills that violate several basic and fundamental rules of budgeting and financial management, and could potentially increase liability to the State. 

• Capitation rates do not belong in state statute. Capitation rate setting is a highly technical and actuarial process that ultimately does not impact the budget or spending levels. It is a tool used by managed care organizations to control costs, and is subject to change at regular intervals that do not align with the legislative session. If our health care actuaries determined that rates needed to be adjusted more than once a year, or when the legislature was out of session, it could lead to financial instability and threaten the actuarial soundness of our health care system. It serves no statutory or public policy purpose and is out of date in a matter of months. 
• You can’t spend the same dollar twice. The funding sources identified in the bill include dollars that have already been allocated, encumbered, and committed. Cancelling contracts would mean lost jobs, half-built housing projects, and significant legal liability. 
• The Arizona Competes Fund is used for economic development to create jobs and boost growth. 100% of the balances in the fund have been committed to ongoing projects over a multi-year pipeline. Cancelling $10 million worth of these projects due to the provisions of HB 2945/SB 1734 would result in the loss of thousands of jobs for the State of Arizona. The state would have to cancel existing agreements. 
• The Housing Trust Fund is used to increase affordable housing supply and support individuals who are homeless. 100% of the dollars in this fund have been awarded or publicly bid in a Notice of Funding Availability (NOFA). Sweeping $38 million worth of housing initiatives would cost the state thousands of housing units, and would result in rescinding awards and increasing the potential for liability and legal action against the state. A transfer of this level almost certainly means projects currently in construction could not be completed.