Arizona 1st State to Drop CHIP Program

Arizona Gov. Jan Brewer (R) has signed budget legislation that removes the statutory authorization for the state Children's Health Insurance Program (CHIP), thus making Arizona the first state to do so amid fiscal constraints. Brewer and Republicans who control the Arizona Legislature said the elimination of the program, known here as KidsCare, was necessary to help close the state's budget deficit, which is pegged at $2.7 billion in fiscal 2011 beginning on July 1. KidsCare would lose funding June 15.

Meanwhile, Arizona House Democrats, led by Minority Leader David Lujan and Assistant Leader Kyrsten Sinema, are working to head off the program's demise.
They asked House Speaker Kirk Adams (R) in a letter dated March 22 that the authorization be reinstated, and that funding be provided through repeal of a sales tax exemption on retail warranties.

The elimination, Democrats argue, may also have consequences beyond children's health, jeopardizing an estimated $7 billion in federal Medicaid matching funds to the state.
The federal health overhaul plan signed March 23 by President Obama requires states to continue “maintenance of effort,” or providing health care at the same funding level as when the legislation was signed. Elimination of KidsCare would put Arizona in violation of that new law, Democrats argue.

Other states, including California, have considered eliminating their CHIP programs, but none has done so.