Gov. Janet Napolitano is considering a push toward a universal health insurance system, but may retreat from such plans because of the state's budget crunch and opposition to the government paying for health care for the middle class.
Napolitano is considering plans that would raise income thresholds to allow more working- and middle-class uninsured to qualify for the government-run Arizona Health Care Cost Containment System and KidsCare programs.
Sources say another option under consideration would allow the uninsured middle class to buy into the government programs via income-based premiums.
AHCCCS is the state version of Medicaid and has 1.1 million enrollees.
Napolitano tried earlier this year to expand income thresholds to allow more uninsured middle-class children to qualify for the state-run KidsCare, but the effort failed.
The governor is expected to renew that push, but its success depends on how a federal battle over the State Children's Health Insurance Program is resolved and whether the Republican Legislature agrees to the changes.
The Democratic governor's office has been meeting with corporate leaders, the health care industry and others regarding possible universal health plans and changes that would allow more of the uninsured to obtain insurance. There are an estimated 1 million uninsured residents in the state.
Napolitano spokeswoman Jeanine L'Ecuyer said the governor is formulating a health plan that could be implemented without new taxes or fees. She said it would not include income-based premium or buy-in models.
Such models allow the uninsured to receive subsidies or buy into health plans based on their income.
L'Ecuyer did not specify how the health changes would be funded or what impact they might have on employers that don't offer insurance to workers.
Others familiar with the issue, however, contend the governor's office has been considering universal plans, income-based premium buy-ins and raising income thresholds.
Those sources also said there is support within the governor's office for a universal system or at least expanding government programs but that those efforts may be scaled back because of opposition at the Legislature and the state's tightening budget.
Critics question whether the government should offer health insurance to the middle class and how to pay for it, particularly considering the housing slowdown's impact on the state's fiscal condition.
The real estate downturn has created a $600 million budget shortfall.
"Low-income families already have access to government health care and expanding AHCCCS or any other program means providing coverage to the middle class and upper-middle class," said Starlee Rhoades, spokeswoman for the Goldwater Institute. "And that is not what government health care programs are for. We do not support government health care for people who can afford to pay for it on their own."
A new universal plan in Massachusetts requires employers that don't offer health insurance to pay an annual $295 per worker fee into a state fund. Several other states also are looking at universal health plans that would impose extra taxes on businesses that do not offer health benefits.
Despite the Legislature's rebuff earlier this year to expand the program, efforts are under way to attract more uninsured children to KidsCare via greater outreach. There are an estimated 251,000 uninsured children in the state, according to the U.S. Census Bureau.
KidsCare is funded by the federal State Children's Health Insurance Program. Napolitano and Democratic lawmakers still want to raise the KidsCare threshold from $40,000 in annual income for a family of four to $60,000.
"The governor will definitely push for kids coverage, but I also think she will come up with an interesting new approach to help all uninsured," said Arizona State Rep. Theresa Ulmer, D-Yuma.
Republican legislators opposed the KidsCare expansion. The Bush administration wants states to cover 95 percent of poor children before expanding programs to the middle class. President Bush vetoed a bill Oct. 3 that would have raised federal tobacco taxes and allowed states to raise qualifying income levels for SCHIP.
The governor's plans are a precursor to a possible ballot battle in November 2008 with labor unions, Democrats and some physicians wanting voters to approve a universal health insurance program.