Arizona's Medicaid, AHCCCS, undergoes huge changes

In Arizona, there were just under 1.8 million recipients of AHCCCS – the Arizona Health Care Cost Containment System, or the state's Medicaid program, as of April 2026. That's about 1 in 4 Arizonans.

Now, the agency is undergoing drastic changes in response to federal cuts and statewide efficiency efforts.

Between the implementation of the state program in 1982 and later, the Obama-era Affordable Care Act that expanded Medicaid's reach based on income levels, the rate of uninsured Arizonans has lessened significantly, according to Dr. Daniel Derksen, an expert on the Arizona healthcare system.

"What it really helped do was stabilize those communities that tend to serve a disproportionate share of people on (Medicaid) or uninsured," he added, explaining that the program removed some of the burdens of uncompensated or charity care.

Before AHCCCS, the rate of uninsured Arizonans was about 16%. Now, the state is at 10% – but that number is climbing.

Changes to AHCCCS have already started. President Donald Trump's One Big Beautiful Bill introduced Medicaid restrictions that look to redefine work and income level requirements by January 2027, and for the next decade after.

Who does it serve?

AHCCCS is divided into three distinct categories, Derksen said: ALTCS, or the Arizona Long Term Care System, which is designed for older adults and people with disabilities. Oftentimes, the older adults who use this program are also covered by Medicare.

There's also KidsCare – the statewide version of CHIP, or the Children's Health Insurance Program.

Then, there's the behemoth of the general AHCCCS population.

For the latter and largest group, "almost all of our Medicaid enrollment is re-channeled through private health insurance vendors," Derksen said.

This happens through a managed care model, where money flows from the government, to the state, to insurance companies that pay a monthly fee per member from AHCCCS. Finally, the money goes to the patient.

Derksen explained how many Arizonans might not even know they're on AHCCCS since the program heavily relies on the private sector to manage Medicaid enrollment.

How does Arizona's Medicaid program work?

It starts with an application, said Beth Kohler, the former deputy director of AHCCCS. She explained applicants have to prove eligibility through income requirements and immigration status.

"It's a common misconception that we have a lot of people on the program who are not citizens. Citizenship is a requirement to get Medicaid benefits," Kohler said.

Certain lawfully present noncitizens also may qualify for AHCCCS, including green card holders and refugees.

When people are kicked off of AHCCCS, they get a letter from the state explaining why they are being discontinued, and they then have 90 days to send the required information to determine continued eligibility.

Kohler emphasized that if Arizonans think they might meet the criteria, they should apply.

"If you don't have health insurance, and you don't have another avenue to get it, like your employer, you should apply," she said.

Kohler said the AHCCCS coverage pool is broad, ranging from people facing severe poverty to those who simply lack health insurance coverage: "For as long as I've been working in this system, I would never be able to look at someone as an individual and say, you will or you won't qualify."

What's changing for AHCCCS?

Kohler said the consequences of Trump's sweeping HR 1 legislation are already being felt, but knowing who exactly could be affected by the new Medicaid provisions remains up in the air.

"The individuals who will be impacted by the work requirements, for example, are people in specific federal eligibility categories that basically are working-age adults without dependent children and who are not seniors," Kohler said, adding that she doesn't believe most people will be impacted at all.

According to an email statement from AHCCCS, the agency "is focused on complying with evolving federal and state requirements while minimizing disruption for members and providers."

"Compliance involves a combination of policy, operational, and system-level updates, including adjusting existing eligibility and renewing business rules, refining verification logic, and enhancing reporting and audit capabilities within current platforms," the statement added.

AHCCCS is also in the midst of a modernization process that aims to speed up claim processing, strengthen confidential health data — through HIPAA and HITRUST — and improve overall efficiency.

"These systems provide stronger access controls, improved monitoring, and greater reliability to better protect sensitive member information," according to the email from AHCCCS.

"They've been working with a system that's needed some updating for some time. And those are really important things, especially for access to public benefits," Derksen said.

These changes, Kohler said, will likely come after the midterm elections, depending on what politicians campaign on in relation to the program.

Derksen sees the possible effects of HR 1 as reversible and only a chapter of the Arizona Medicaid story.

"We've been at 20% uninsured, and we've had closures of rural hospitals and clinics," Derksen said. "We don't have to go back and live through those really tough times for people in significant portions of our state."