Medicaid Makes Poor Healthier and States Poorer

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Arizona hopes to save $500 million, or half of its 2012 budget shortfall, by putting a freeze on accepting new Medicaid patients who do not have children. The freeze goes into effect today and could prevent up to 150,000 Arizonans from receiving insurance.

Cuts may be in store at the national level, as well.

The House Republican budget proposed by Rep. Paul Ryan, R-Wis., would completely overhaul the way Medicaid is paid for, turning it into a block-grant program where the federal government allocates a fixed payment to each state, capping how much states can receive instead of matching their spending dollar for dollar.

Proponents say the block-grant program will give states greater flexibility to tailor coverage, but opponents claim the program would just transfer costs to the states.

Conversely, Obama's health reform law expands health coverage to 32 million Americans by 2014, half of which will gain coverage through Medicaid. The Kaiser Foundation estimated the 16 million new enrollees will cost the federal government $443 billion over five years.

The Associated Press contributed to this report.

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