Leaders, experts gathered to assess Arizona’s health care landscape. Here’s what they had to say

Arizona’s public health system is entering a period of fiscal and structural uncertainty, driven largely by recent federal policy changes, health leaders said at a Feb. 17 forum focused on rural care access.

Public health officials, medical professionals, nonprofit leaders and state representatives gathered to assess how federal legislation and administrative shifts could affect health care delivery in rural Arizona.

Speakers described a mix of concern and cautious optimism. While many warned of funding losses and administrative challenges ahead, they also highlighted state initiatives such as the Rural Health Transformation Program and Arizona’s Housing and Health Opportunities program as potential bright spots.

Here’s what to know.

What does the One Big Beautiful Bill Act mean for Arizonans?##

Arizona faces an estimated $34 billion reduction in federal Medicaid funding over the next decade, according to state officials.

The cuts stem from the One Big Beautiful Bill Act — also known as House Resolution 1, or HR1 — signed into law on July 4, 2025. The measure calls for roughly $1 trillion in federal Medicaid reductions nationwide over 10 years.

A key financing tool that allows hospitals to levy provider taxes to draw down additional federal matching funds is scheduled to be phased out, said Marcus Johnson, deputy director of community outreach for the Arizona Health Care Cost Containment System, the state’s Medicaid agency.

Medicaid provider taxes have previously allowed states to levy fees on hospitals and other providers to fund the non-federal share of Medicaid, generating more than $24 billion annually to draw down federal matching funds.

HR1 imposes significant new restrictions on states’ ability to generate Medicaid provider tax revenue, including prohibiting all states from establishing new provider taxes or from increasing existing taxes as well as reducing existing provider taxes for states that have adopted the Affordable Care Act Medicaid expansion. “It’s going to have very, very significant impacts, particularly to our rural providers who are struggling just to make ends meet right now,” Johnson said.

State officials said the financial impact is expected to reach into the billions beginning in 2028, with full implementation by 2032.

Beginning in January 2027, the law will require states to conduct eligibility redeterminations twice a year and implement work requirements for certain Medicaid recipients.

Those changes could leave as many as 400,000 Arizonans uninsured, according to Dr. Daniel Derksen, director of the Arizona Center for Rural Health, which is based at University of Arizona.

More frequent eligibility reviews can lead to coverage losses, even among people who remain eligible, due to missed notices or incomplete paperwork.

Congress also did not renew enhanced advanced premium tax credits for Affordable Care Act marketplace plans after the credits caused the longest federal government shutdownin U.S. history. State officials cited estimates suggesting Arizonans could see a 30% increase in their average monthly benchmark marketplace premium.

Experts at the forum said the state’s rate of uninsured people — currently about 1 in 10 residents — could rise significantly if coverage losses materialize.

Still, Derksen noted one provision he supports.

"There were 17 pages of the 870-page HR1 that I like,” said Derksen. “And it's the Rural Health Transformation Program." The program is expected to provide Arizona approximately $167 million annually for five years. Funds are intended to support rural health workforce development, maternal health services, chronic disease management and telehealth expansion. However, some state officials said the funding represents a small share of the projected Medicaid reductions. Meaghan Kramer, a health policy adviser to Gov. Katie Hobbs, called the rural funding “a fraction” of the broader cuts. “It is a distraction from the car wreck that is happening all around us, which is the evisceration of Medicaid and the return to the times before the Affordable Care Act,” Kramer said.

Changes to federal health agencies raise concerns

Speakers also pointed to shifts within federal health institutions.

The United States formally exited the World Health Organization on Jan. 22 after the Trump administration initiated withdrawal proceedings last year.

The U.S. Department of Health and Human Services underwent a restructuring that consolidated 28 divisions into 15, a move federal officials said would streamline operations and save $1.8 billion annually.

Kramer said federal instability is affecting public confidence.

“By the day, things are changing very rapidly,” Kramer said. “We are losing credibility — not because of our professionals but because of our federal government — and it’s having real impacts already on patients.”

James Hodge, director of the Center for Public Health Law & Policy at ASU’s Sandra Day O’Connor College of Law, said changes to federal vaccine advisory structures could influence how professional organizations respond to future immunization recommendations.

The federal government removed the 17 sitting members of the CDC’s Advisory Committee on Immunization Practices and replaced them.

“We’re talking about the rise of vaccine-preventable conditions, not because of a lack of vaccines, because of misinformation,” Hodge said.

Public health data show increases in certain infectious diseases.

Whooping cough cases have quadrupled nationally, and Arizona reported nearly 1,000 cases in 2025 — the highest total in 12 years, according to the Arizona Department of Health Services.

Arizona has also reported an ongoing measles outbreak along the Arizona-Utah border since August.

Arizona’s labor and delivery units face crisis

Speakers said rural labor and delivery services are especially vulnerable because they often operate on narrow financial margins

“What worries me the most is labor and delivery units closing. It just seems like the thing that is most likely to happen,” Kramer said.

Reductions to provider tax mechanisms beginning in 2028 could reduce federal matching dollars that hospitals rely on to maintain services.

Hospital leaders have warned that labor unit closures could force expectant mothers in rural parts of the state to travel long distances — to Tucson or Phoenix — for delivery care.

Small community health centers reported that maintaining on-call labor support can cost as much as $2.9 million annually, an expense administrators say is increasingly difficult to sustain.

State programs cited as sources of optimism##

Despite the concerns, speakers emphasized areas of innovation within Arizona’s health system.

Johnson described the Rural Health Transformation Program as “a great investment in our state.” “We’re looking to leverage those dollars in the best way that we can,” he said.

Johnson also pointed to Arizona’s Housing and Health Opportunities program, known as H2O, which integrates housing assistance with health care services for Medicaid members experiencing housing instability.

According to AHCCCS data shared at the forum, participants in the program have seen a 67% reduction in daily health care costs. Housing provides stability, which allows for a shift from high-cost crisis management to more affordable, preventative care, Johnson explained.

“By getting people access to housing … we can hopefully start to bend the health care cost curve in ways that we haven’t in the past,” Johnson said.

In an interview with Arizona Public Media, Derksen said he left the forum encouraged by collaboration among health leaders.

“We certainly get knocked down … and we get back up, dust ourselves off,” Derksen said.

The article was originally published on AZPM