The U.S. House and Senate are expected to soon begin work on trying to find common ground on a framework for a new budget; the House approved its version last week, which calls for its Energy and Commerce Committee to find ways to cut roughly $880 billion.
That committee has jurisdiction over Medicare and Medicaid, among other programs, and while Republican leaders have said Medicaid will not see cuts, many experts say it’s not possible to cut that amount without including the health care program for low-income Americans.
Medicaid has been around since 1965, although Arizona was the last state in the country to start its program; it launched the Arizona Health Care Cost Containment System, or AHCCCS, in 1982.
Last month on The Show, we heard from the head of the Arizona Hospital and Healthcare Association, who estimated three-quarters of a million Arizonans could lose their health-care coverage if the feds implement cuts to Medicaid.
Today, we hear a historical perspective on the program from Len Kirschner. He served as the second director of AHCCCS starting in the mid 1980s and is a past president of AARP Arizona. And, he says, over the years, there’ve been a number of political battles over Medicaid.
Full conversation
LEN KIRSCHNER: What's interesting about Medicaid is, it's never got any positive response from policymakers. It's always been the other child. And so, every time there's been a problem in our health care system that nobody could figure out what to do about it, it was always Medicaid that came to the rescue. When it was clear that Medicaid did not provide long-term care, it became Medicaid's problem.
During the AIDS epidemic in the '80s, nobody decided what to do about that population. Medicaid came to the and when we had a large number of people uninsured in the Obama plan, Medicaid expansion came to the aid. What was interesting was that Jan Brewer was the governor at the time and she signed a law that made the expansion here. A lot of her Republican friends were not happy with that. COVID, massive expansion of Medicaid, and now we're sitting here in 2025, the population of over 2 million covered in the state and almost 80 million covered nationally.
BRODIE: When Arizona decided to start AHCCCS, did it learn lessons or had it taken things from other states to incorporate here or did Arizona sort of say, we're gonna, this is what we wanna do, forget about what anyone else is doing, this is what we think is best here.
KIRSCHNER: Arizona said, we're not gonna call it Medicaid, we're gonna call it something else. We don't use the word Medicaid, and we're gonna do something very different. Medicaid was a fiscal agent. They paid claims after the service was provided, and the Arizona model was a prepaid capitated system with the state contracting with health plans. That was a totally new model.
And the first national Medicaid program I went to was in Washington in 1987, and the other Medicaid program, state directors, all were looking at me and say, what in the world are you doing? That's not what Medicaid is. Since then, almost every state in the country has adopted the Arizona model. We became the model for America.
BRODIE: When AHCCCS first started in the early ‘80s, like what kind of impact did you see off the bat? Like was it, was it apparent that this is something that the state had needed right away?
KIRSCHNER: No. In fact, the first couple of years was a disaster. first of all, it started out it was a part, a division of the Department of Health Services. It wasn't a separate state agency. They contracted out in the system, which was a subsidiary of an aerospace company. The first two years did not work well. The governor decided it need to be a separate state agency, and in 1984, became a separate state agency and Don Schaller came in as the first director.
When Babbitt left to run for president, we got a new governor, Evan Mecham, I became the next director. And the program has evolved over time. It moved from a totally new system that was hard to start to now we're the national model.
BRODIE: So I guess what changed? I mean, I would imagine that just moving it to its own state agency, it's sort of separate entity wasn't all that happened to turn that around, right?
KIRSCHNER: No, it required building a new information system because what McAuto had brought in a retrospective payment system from New York state didn't work because those were paying claims after the fact, a month or two after it was provided. The Arizona model was to pay capitation upfront at the start of the month to provide care.
It took us about four years to build a new system, the prepaid Medical Management Information System, and we spent about close to $50 million on building that information technology.
BRODIE: When you look at AHCCCS today, you referenced how it's sort of always been, you know, sort of coming to the rescue when you have a population of people that need health care and you don't know where else for them to get it. AHCCCS has sort of been there. When you look at AHCCCS today in 2025, like what is its impact, what is its importance to Arizona?
KIRSCHNER: Well, over 2 million of the 7 million people in Arizona are covered by AHCCCS. Half the women who give birth in the state are on AHCCCS at time of delivery. About 65% to 70% of the children in the state are on AHCCCS. Over 50% of the seniors who are in long-term care are on AHCCCS. You cut that funding for this program has a major impact on health care in the state, particularly in the rural areas, but certainly throughout Arizona.
And of course, that's what the federal government is talking about doing. They're talking about cutting spending by $880 billion over the next 10 years. Most of that will come from Medicaid. And if that happens, we could see 600,000 people with health care coverage on the AHCCCS program lose coverage right out of the gate.
BRODIE: So what happens then if there are cuts? I mean, is this the kind of thing where the state in your mind has to backfill that and pick up the cost for those patients, or do those patients just maybe lose health care and become uncompensated care for hospitals?
KIRSCHNER: I think that you're gonna find many of them become uncompensated care. They don't have access to other health care programs. If the first thing that happens is they cut back on the funding for the expansion population that Jan Brewer signed into law, 600,000 people on the program. There's a trigger that says, if the funding goes below 80% of the cost for the state picking up more, then the funding system that we have in Arizona goes away and that population will probably lose coverage. That will increase the number of people who are uninsured in the state.
BRODIE: And I mean it sounds as though, as you said, the way that this is being proposed anyway, the talk right now would not, in your mind, have a good, good outcome for the state and perhaps more importantly for the people who are on AHCCCS who rely on it to get health care.
KIRSCHNER: It's gonna have a terrible outcome if they go forward with the things that are being rumored coming out of Washington, D.C., right now.
