These Arizonans may be the most vulnerable to Medicaid cuts in Big Beautiful Bill

Key Points: 

• The One Big Beautiful Bill Act, signed into law on July 4, could impact Medicaid enrollment, particularly for childless adults in Arizona.

• The law increases renewal requirements and adds work requirements, potentially creating barriers to maintaining coverage.

• Concerns exist that the added red tape and documentation requirements could lead to eligible individuals losing coverage, despite working or meeting exemptions.

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Dallas O’Banner is in treatment for opioid disorder, just rented a house, and is hopeful that after prolonged struggles with addiction, homelessness and unemployment, his life is headed toward stability.

What O’Banner and his wife, Lauren O’Banner, can’t fathom is losing the health coverage that helped get them to this point. Both are enrolled in Arizona’s Medicaid program, which is called the Arizona Health Care Cost Containment System, or AHCCCS, pronounced “access.”

The O’Banners are in a population of Medicaid enrollees in Arizona that’s disproportionately affected by the One Big Beautiful Bill Act President Donald Trump signed into law July 4.

A preliminary estimate from the Congressional Budget Office projects the bill would reduce federal spending for Medicaid and the Affordable Care Act’s provisions about $1 trillion over a decade, resulting in nearly 12 million more people becoming uninsured by 2034, according to KFF, which is an independent health care policy, research and news organization.

Medicaid is a federal government health insurance program primarily for vulnerable and low-income Americans that began in 1965 and enrolls about 80 million Americans, including nearly 2 million Arizonans. AHCCCS is a $22 billion program that gets about 70% - 75% of its funding from the federal government, which is why cuts to the program are of such high significance. 

While their Medicaid enrollment appears to be secure, at least for now, the new law adds red tape and more opportunities for enrollees like the O’Banners to fall through the cracks and lose coverage.

The law was signed quickly after it passed through the Senate and then was sent back to the House to approve the Senate's changes. Analyses of its impact from the Congressional Budget Office had not been released as of July 8

AHCCCS officials by July 8 had not responded to The Arizona Republic's July 7 request about how the bill could affect Arizona's Medicaid enrollees.

Most changes in the One Big Beautiful Bill Act don’t take effect until at least Dec. 31, 2026, which is after the midterm elections.

It’s far enough away for Will Humble, who is executive director of the Arizona Public Health Association, to wonder if it's as bad as many feared.

“A lot of these things I don't think will happen,” Humble said. “A lot of this is a shell game. ... I can’t see the gloom and doom of this, especially immediately.”

However, University of Arizona public health professor Dr. Dan Derksen is less optimistic. He is still analyzing the new law but said there must be cuts coming, including losses of health-care coverage, which can cause a cascade of problems, including hospital closures, personal bankruptcy and delayed care.

“You can’t get to $1 trillion in savings without throwing a lot of people off,” said Derksen, who is director of the UA’s Center for Rural Health. “You can’t do it unless you eliminate coverage or reduce the federal Medicaid funding to states.”

‘If you like red tape more than health insurance coverage, this bill is for you’

The Medicaid expansion population, which includes the O’Banners, is “the most vulnerable group to the One Big Beautiful Bill Act’s onerous eligibility and enrollment requirements,” Derksen said.

The O’Banners are what’s known to program administrators as “childless adults,” though that label is somewhat misleading since many of the people in the program do have children, but they aren’t dependent children, meaning they may not have custody of them, or their children are older than 18.

Childless adults and a group of adults who earn between 100% and 138% of the federal poverty level (up to $21,597 for an individual per year) are part of Arizona’s Medicaid expansion population. They were added to AHCCCS in 2014, when most provisions of the federal Affordable Care Act took effect.

The federal government funds Arizona’s Medicaid expansion population with a 90% match rate. That match rate did not change under the new law, though that had been previously proposed.

The federal law increases renewal requirements from annual to twice a year for the Medicaid expansion population. It also adds work requirements that make enrollment in the program for “able-bodied” people ages 18 to 64 contingent on proving they are in school, working 80 hours per month, doing community service, or that they qualify for an exemption.

“If you like red tape more than health insurance coverage, this is the bill for you,” Harvard economist and former Biden administration appointee Benjamin Sommers said during a virtual briefing about the new law July 8. “Imagine having to file your income taxes two or three times a year instead of once a year. A whole lot of us would struggle with that ... If you do that with an eligibility redetermination, you become uninsured.”

A vast majority of the “able-bodied” people ages 18-64 who are on Medicaid already work, do community service, are in school, or meet one of the federally allowable exemptions for the work requirements outlined in the One Big Beautiful Bill Act. Critics fear those enrollees will still lose coverage anyway because of the documentation and what University of Pittsburgh health policy expert Miranda Yaver calls the “hassle factor” that it will take to regularly prove they meet the requirements.

When Arkansas implemented work requirements in 2018, about 18,000 lost coverage within six months and there was no corresponding increase in employment, Yaver said during a recent web briefing hosted by the Scholars Strategy Network.

‘Without AHCCCS, we’d be screwed’

Lauren O’Banner doesn’t get health care through her job, and Dallas is looking for work. They say they’ll ideally earn enough money or get enough hours to either get health insurance from an employer or purchase it themselves. For now, AHCCCS is their lifeline.

Dallas grew up in Arizona foster care and recalls spending his 18th birthday in an abandoned condominium because he’d aged out of the state system and had nowhere to go. He eventually turned to selling drugs to make money, was incarcerated and became dependent on fentanyl, which is a synthetic opioid.

AHCCCS pays for the daily methadone doses Dallas gets to wean him off opioids, and it also paid for him to enter a 90-day inpatient program, when he became certified to provide peer support to others in recovery, he said. 

AHCCCS also pays for care for Lauren’s hip, which was shattered in a car accident, and paid for her trauma therapy, and her recovery from opioid dependence, she said.

“Without AHCCCS, we’d be screwed. We’d be lost without it,” said Lauren, 35, who works as an in-home caregiver. “We’d be in big trouble,” said Dallas, 29.

Without the AHCCCS that’s paying for her treatment and counseling, Danica Enfantino, 35, worries that she’d go back to using illicit drugs. Enfantino has been doing so well with treatment that she recently regained custody of her toddler. Enfantino was unaware of possible cuts to AHCCCS. 

“I didn’t have AHCCCS before and I went back on drugs,” Enfantino said. “The withdrawals are really bad.”

‘My credit got destroyed’: Arizonan got sick, was frozen out of Medicaid

Arizona legislators froze the childless adult population out of AHCCCS for 2 1/2 years. Phoenix resident Jacquie DeVita will never forget those 2 1/2 years. DeVita, who is a college-educated visual designer, had never intended to be on AHCCCS but found herself needing it as a stopgap after losing her $70,000-per-year job during the Great Recession, and because her federal COBRA insurance for people who have lost their jobs was expiring. She couldn’t afford private insurance, so she became uninsured.

As someone with Type 1 diabetes, being without health insurance was “treacherous,” said DeVita, who is in her 50s. She ended up hospitalized while uninsured after using unfamiliar insulin supplies, she acquired from Facebook. Then she couldn’t pay the hospital bill.

“My credit got destroyed,” she said.

She continued working freelance and looking for full-time work, but the hospitalization was a huge financial hit, and she eventually lost her apartment. Without a consistent place to live, it became more difficult to work and to look for a job. She spent a night in a homeless shelter.

“I was desperate ... I didn’t think I would make it, honestly,” she said. “Everything was difficult.”

By the time Arizona restored childless adults to AHCCCS in 2014, DeVita had spent more than two years avoiding health care. Once she had coverage, she found out she had breast cancer and opted to get a double mastectomy, which AHCCCS covered. She’s been employed full-time since 2020 and now has her own apartment and employer-sponsored health care.

It’s upsetting for DeVita to think that others may endure what she went through. She’s never forgotten the months she spent living on friends’ couches, the night she spent in a homeless shelter, nor the bargaining she had to do with herself as she struggled to decide which bill to pay.

“I was constantly in situations where I couldn’t pay for insulin. I had no credit, so I couldn’t pay with my credit card,” DeVita said. “Once the ACA went into effect, I enrolled in Medicaid ... It paid for my insulin. It saved my life.”

This article was originally published by the Arizona Republic