Guest ContributorFollowing the Senate’s passage of H.R. 1, the One Big Beautiful Bill Act that contains huge portions of President Trump’s domestic policy agenda, Arizona business leaders are reminding officials on Capitol Hill of the consequences of the bill’s health care provisions.
The legislation, which advances deep federal spending cuts to offset the extension of tax reforms originally passed in 2017, as well as new tax reductions, could lead to major pressures on state budgets.
The version of the legislation passed by the Senate would dramatically decrease states’ access to a tool that helps them finance their portion of Medicaid, the state-federal safety-net insurance program.
According to a report released last spring by the Arizona Chamber Foundation, cuts borne by AHCCCS, Arizona’s Medicaid program, would mean more than just fewer people with health coverage, but also risks triggering recession-level consequences across the broader state economy.
“The Medicaid cuts under consideration aren’t just a health care issue. They’re a statewide economic risk,” said Arizona Chamber of Commerce & Industry President and CEO Danny Seiden. “Hospitals, rural clinics, small businesses, and state tax revenue all take a hit under the scenarios modeled in the research. Unfortunately, since our report was written, the impacts emerging from Washington have only gotten more alarming.”
AHCCCS, the Arizona Health Care Cost Containment System, covers more than 2 million residents and draws nearly three-quarters of its $21.1 billion budget from federal funding.
Because of a voter-approved initiative, Arizona is legally required to maintain coverage for residents earning at or below the federal poverty line, even if federal support decreases.
The potential fallout is significant. According to the Chamber Foundation’s research, a $1.0 billion reduction in Medicaid spending would cost Arizona over 36,000 jobs, cut $1.7 billion in labor income, reduce economic output by $3.7 billion, and slash $138 million from state and local tax collections.
The impacts would be felt statewide, particularly in rural communities where Medicaid enrollees make up a large portion of the population. In counties like Apache, Graham, and Santa Cruz, more than 40% of residents are enrolled in AHCCCS.
The business community is also sounding the alarm about rising costs for employers. A reduction in Medicaid coverage would increase the number of uninsured residents, leading to more uncompensated care and cost-shifting to private insurance plans. For small businesses, that could mean higher premiums or difficult decisions about whether to continue offering coverage.
“As employers face higher costs, the risk is a downward spiral: more uninsured Arizonans, more pressure on providers, and a less stable health care infrastructure,” Seiden said.
If federal matching funds shrink, state officials could be forced to sharply limit eligibility, trim benefits, or raise taxes to close the gap, options that carry their own set of difficult tradeoffs for state lawmakers.
“Most states are going to face tremendous pressures on their budgets,” Seiden said. “We’re not the feds; we can’t print money, and we can’t run deficits.”
Ciscomani and House members cite concerns with Senate version
Having narrowly passes the Senate on Tuesday, the bill is now back in the House, where representatives must determine whether to accept the Senate version or further amend the legislation.
In a letter sent last week to Senate Majority Leader John Thune (R-S.D.) and Speaker of the House Mike Johnson (R-LA), Ariz. Republican Rep. Juan Ciscomani joined 15 of his GOP colleagues in sharing their concern over the Senate’s move to make deeper cuts to Medicaid than what were contained in the bill when it was first passed in the House in May.
“The Senate proposal also undermines the balanced approach taken to craft the Medicaid provisions in H.R. 1—particularly regarding provider taxes and state directed payments. The Senate version treats expansion and non-expansion states unfairly, fails to preserve existing state programs, and imposes stricter limits that do not give hospitals sufficient time to adjust to new budgetary constraints or to identify alternative funding sources,” they wrote.
They go on to say, “Therefore, we cannot support a final bill that threatens access to coverage or jeopardizes the stability of our hospitals and providers.”
Seiden said he appreciated Ciscomani’s willingness to state his position.
“Rep. Ciscomani deserves credit for weighing all aspects of the bill and working with Arizona leaders to understand how the bill will affect the state,” he said.For more information, visit www.azchamberfoundation.org.
Joseph Kavetsky
Add comment