AZ Health Coverage Has Turned a Corner for Children. Don’t Cut Health Care Now.

Arizona was the last state in the country to adopt Medicaid, creating the Arizona Health Care Cost Containment System (AHCCCS) in 1981. In 1999, the state created KidsCare, Arizona's Children's Health Insurance Program (CHIP). Each of these leaps forward were crafted with bipartisan support to grow strong children and a strong health care system. And while we still have plenty of work to do to eliminate our share of uninsured children, Arizona has made some real progress in recent years, through a combination of employer coverage and federal and state initiatives.

But just as we've seemed to turn a corner and made children's health coverage a priority, the U.S. House of Representatives has passed a budget bill that will decimate health coverage through AHCCCS/Medicaid and the private Affordable Care Act (ACA) marketplace.

Arizona ranks 49th out of 50 states for the share of kids with health insurance - meaning only one state in the entire nation has a higher percentage of uninsured children, according to the newly released KIDS COUNT Data Book from the Annie E. Casey Foundation. The most recent data tells us that 9% of all young people - aged 18 and younger in Arizona – lack health insurance. This is alarming news. And yet, our ranking should be read in the context of the past two decades because our current rate is a big improvement over the 13% rate of uninsured children we had in 2010, before the Affordable Care Act's expansion of Medicaid eligibility and its aligned enrollment process with children's health insurance programs.

In Arizona, 48% of children are insured through a parent's employer-provided insurance, an increase from 44% in 2010. This is an encouraging sign, as jobs with full benefits make for stronger and healthier families. With the creation of the ACA, families also gained coverage for children by purchasing private insurance through the ACA marketplace. Nationally, children make up 10% of total enrollment in marketplace plans, and in Arizona, a higher than average percentage of ACA enrollees are children. Finally, many children who would otherwise be uninsured find a lifeline through public health insurance. In Arizona, 40% of people enrolled in AHCCCS are children. AHCCCS coverage through Medicaid and KidsCare is especially crucial in the many small towns and rural areas of our state, where it provides health insurance to more than half of children. For example, 42% of all children in Cochise County have public health insurance coverage.

Even with these pathways in place, Arizona has a stubbornly high share of uninsured children compared to the national rate. In 2022, we took a step in the right direction when the state legislature and Governor Katie Hobbs passed a bipartisan expansion of KidsCare to increase eligibility for more children in working families by raising the income limit. This expansion was approved by the U.S. Department of Health and Human Services in 2024, which made an additional 10,000 children eligible. That's potentially thousands of busy parents who can sleep better at night knowing their children have health insurance.

But just as Arizona has started to really chip away at the high rate of uninsured kids in our state, the federal budget bill now under debate can undo the progress we've worked so hard to achieve. It calls for restricting provider taxes, which are important to the sustainability of Arizona's health care system, to finance the non-federal portion of Medicaid funding. Many Arizonans will have to recertify their eligibility for AHCCCS coverage every six months rather than annually, while adhering to inflexible new paperwork requirements, virtually ensuring that people will be dropped from coverage despite being eligible. On top of that, if ACA-enhanced tax credits are allowed to expire, Arizonans will lose coverage because they will no longer be able to afford to purchase private marketplace plans. If you think none of this impacts children, think again. Past enrollment trends have demonstrated that when parents lose health coverage, their children do also, further harming our kids' well-being.

In total, if the U.S. Senate allows the U.S. House budget to pass in its present form, the budget bill is estimated to result in more than 300,000 Arizonans losing coverage through either Medicaid or Affordable Care Act private marketplace plans. Furthermore, massive cuts to the nation's most effective anti-hunger program, the Supplemental Nutrition Assistance Program, will leave struggling Arizona children, families, and seniors without the groceries they need to stay healthy. All this as economic uncertainty looms.

Children with Medicaid coverage grow up to be healthier adults, and on the way to adulthood are healthier adolescents, with lower rates of eating disorders, drinking and mortality. They are less likely to drop out of high school and more likely to graduate from college. All of these outcomes are a smart return on investment.

The current federal budget bill will reverse decades of slow but steady progress for Arizona's children and families. Arizona has a long way to go in making sure all of our kids can access health insurance, but we can't do it if this federal budget bill is enacted. Our state already lags behind the rest of the nation when it comes to health insurance coverage for children, let's move forward, not backwards. It is common sense that our state is stronger when our kids are healthy.