Gov. Katie Hobbs has outlined a series of cost saving measures for a state Medicaid program for disabled Arizonans that is at risk of going bankrupt in the coming months, but a top Republican lawmaker said the changes don’t go far enough.
Hobbs and Republican lawmakers have been engaged in a stalemate for weeks over an emergency funding request by the Department of Economic Security for its Division of Developmental Disabilities, which could run out of money by May unless lawmakers approve a $122 million supplemental funding package.
Hobbs has repeatedly called on the Legislature to immediately send that money to the department.
But Republicans who control the legislature have repeatedly blocked Democratic efforts to do just that, alleging the Hobbs administration mismanaged its budget and needs to bring cost cuts to the table before the funding will be approved.
Now, Hobbs says she has done just that.
“The administration has been working for months to implement these administrative changes to the program that will both save taxpayer dollars and ensure that we're delivering critical health care to Arizonans with disabilities,” Hobbs spokesman Christian Slater said.
The governor announced a series of “actions to control costs” that were developed with service providers, health insurers and parents, according to a press release.
That includes capping reimbursements for a program that pays parents who act as caregivers for their children at 40 hours per child per week. Republicans have blamed that program for the lion’s share of cost overruns in the department, claiming Hobbs continued running the program even though it was not funded in the budget.
Under that plan, children who need additional care beyond 40 hours per week could still receive it from a caregiver who is not their parent.
The governor also plans to improve assessments for any caregiver paid with public money to ensure they are providing “extraordinary care,” and improve its billing processes to better track costs specifically attributed to the parent as paid caregiver program.
“Now that I have implemented cost-control measures, they need to pass a clean supplemental bill and give Arizonans with disabilities and their caregivers the certainty that they deserve,” Hobbs said in a statement. “If they refuse to pass this routine and necessary supplemental, they need to stop the political games and show Arizonans their budget plan.”
But Rep. David Livingston (R-Peoria), who chairs the Arizona House committee that reviews spending bills, said Hobbs measures don’t do enough to cut the department’s spending.
He pointed out that the 40-hour-per-week cap for parent caregivers has been in the works since the federal government approved the Arizona program last year.
“So this is nothing new; it is a good change,” Livingston said.
Slater said the governor’s office anticipates cost savings in the “tens of millions” of dollars. However, he said the full financial impact of the new policies won’t be known until they go into effect.
The 40-hour payment cap for parent caregivers and billing improvements will go into effect on July 1. The improved assessments for caregivers will begin on October 1, according to the governor’s office.
Even though it has been in the works since last year, the new payment cap for parent caregivers will likely result in savings when it actually goes into effect in July, Livingston acknowledged.
“It is a cost savings, because we don’t know exactly how many parents are getting paid more than 40 hours a week at home,” Livingston said.
Livingston praised the Hobbs administration’s decision to improve its billing practices to better keep track of expenses specifically related to the program, saying that, and other changes, mirror suggestions made by Republicans on his committee.
“Better reporting would be nice, because there’s almost no reporting now,” he said. “So we’ve been asking for detailed information, such as how many parents are getting paid over 40 hours … and they have not been able to provide any answers to those questions.”
But none of that will solve what he sees as a structural imbalance in the governor’s budget.
“So we've doubled the number of parents in the program in the last 18 months, but she shows no growth to pay for this in the next three years,” Livingston said. “It just doesn't add up.”
Meanwhile, parents and advocates for the DDD community continue to visit the Capitol to call on lawmakers to pass a funding package before the Division of Development Disabilities runs out of money in May.
“These programs are not just numbers on a budget, they are the foundation of health, dignity and independence for individuals with disabilities,” Dr. Kathleen Muldoon, whose son relies on the program, said during a march last month.
The Hobbs administration argued Republicans are politicizing the issue, saying supplemental funding packages like the one they are requesting are typically routine budgeting mechanisms to address shortfalls caused by higher-than-anticipated costs.
“Passing supplementals is just a very routine part of budgeting,” Slater said. “It's something that has been done every single year since 2016.”
He pointed to a $279 million supplemental package for the state’s school voucher program that was included in the budget in 2024. The governor has said the voucher program, which is supported by Republican lawmakers, will need another $48 million supplemental this year.
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