March 24, 2010: Last week, Arizona became the first state to drop its CHIP program. The move will leave almost 38,000 low-income children in the state without health insurance coverage as of June 15, 2010. Lawmakers also passed a 25 percent reduction in Medicaid coverage--a reduction which will drop about 310,000 people from the program in January 2011 if federal ARRA funding for Medicaid programs is not extended.
Lawmakers who supported the cuts say they made the reductions to CHIP and Medicaid because Arizona is facing its largest budget deficit in history, with a $2.6 billion projected shortfall next year. However, opponents point out that the cuts violate the Medicaid maintenance-of-effort clause in the newly-passed federal health reform legislation, thereby jeopardizing the state's eligibility for federal Medicaid funding.
While other states (California and Tennessee) have placed enrollment caps on their CHIP programs, none besides Arizona has eliminated the program altogether, and California and Tennessee have both rescinded their caps.