By: Program and Policy Committee 

AzRHA recognizes the threats to Medicaid coverage across Arizona

Cuts to Medicaid would mean fewer Arizonans with health care coverage, resulting in more individuals delaying care until they are sicker and requiring more costly interventions.  It would also increase uncompensated care burdents for hospitals and clinics, many of which already operate with limited resources.  Nationwide, adults under 65 and children in small towns and rural areas are more likely to be enrolled in Medicaid than their urban counterparts.

Medicaid in Arizona: Essential Coverage, Powerful Federal Support

Arizona’s Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), plays a vital role in covering low-income residents—supported heavily by federal funding through the Federal Medical Assistance Percentage (FMAP). FMAP is calculated using a state’s per capita income over three years; the lower a state's income compared to the national average, the higher the FMAP. By law, the federal government pays at least 50% of Medicaid costs.

For Fiscal Year 2025, Arizona’s FMAP is 64.34%, meaning for every $1 the state spends, the federal government contributes $1.80. Some Medicaid enrollees, specifically those eligible through Arizona’s 2014 Medicaid expansion to 138% of the federal poverty level (FPL), are covered at an even higher federal match rate of 90%.

Arizona’s Medicaid Expansion Supports 500,000—but Faces a Funding Trigger Risk

Arizona’s Medicaid expansion, launched by voters through Proposition 204 in 2000 and extended by the legislature in 2014, currently covers over 500,000 low-income adults and children. Funded through provider taxes returned to health care facilities, the program expanded eligibility up to 138% of the federal poverty level—$35,632 for a family of three in 2024. However, this coverage is at risk: a state law trigger would end the expansion if the federal funding match (FMAP) falls below 80%, also eliminating the hospital assessment that funds the program.

AzRHA’s Commitment to Rural Health Access

AzRHA remains committed to advocating for policies that protect and strengthen Medicaid coverage across Arizona. In partnership with other healthcare stakeholders, we continue to support efforts that preserve this critical funding stream and ensure equitable access to care for rural residents.

Medicaid Cuts Could Leave Half a Million Arizonans Without Coverage

If proposed Medicaid cuts move forward this fall, more than 500,000 Arizonans could lose their AHCCCS coverage—jeopardizing access to care for some of the state’s most vulnerable residents. The effects would be far-reaching: health insurers could lose hundreds of thousands of enrollees, while hospitals and physicians would face a steep rise in uncompensated care. Rural and critical access hospitals could be forced to shut their doors, and emergency rooms would likely become overwhelmed as uninsured patients turn to them for care they can no longer afford elsewhere. These cuts don’t just threaten coverage—they risk destabilizing Arizona’s entire rural health care infrastructure.

Lawmakers are currently considering proposals which would reduce the amount contributed by the Federal government. Arizona residents covered under Prop 204 and the ACA Expansion are at the greatest risk.