When State Senate President John Greene gaveled the death of a bill extending government health benefits to at least 150,000 poor Arizonans, debate did not end. If anything, it intensified.

Opponents remained convinced the bill was nothing more than an expansion of the welfare state, exactly the kind of big-government entitlement program voters of the 1990s don't want.

But Governor J. Fife Symington III, the bill's biggest booster, said expanding the Arizona Health Care Cost Containment System to cover everyone below the federal poverty line would actually save the state $500 million over five years by bringing in huge federal subsidies. He called the measure's demise his most stinging defeat of the session--and insiders say he is seriously considering a special legislative session to reopen the issue.

Symington wasn't the only one disappointed by the bill's failure.
For months, health-care providers all over the state had been salivating at the prospect of hundreds of millions of additional dollars flowing from the federal government, through AHCCCS and into their corporate pockets. One legislator said that during debate over the bill, he could have fired a pistol shot down the hall outside his office and hit ten lobbyists for AHCCCS-related medical firms.

And make no mistake: AHCCCS is big money.
Leaving AHCCCS (usually and semiphonetically pronounced "access") aside, the entire 1995 general operating budget of the State of Arizona is about $3.8 billion.

The total operating budget of AHCCCS--which includes $500 million the state kicks in--is about $1.8 billion, making it far and away the largest single program in the state government. A few years ago, one state representative quipped that at the turn of the century, there would be only two state programs left in Arizona: the Department of Corrections and AHCCCS.

AHCCCS was the first statewide managed-care system of its kind. The system is often held up as a model for the rest of the country, a textbook example of how to run a managed-care health system. When Newt Gingrich talks about freeing states from the yoke of federal bureaucracy--giving them federal money and the leeway to find their own solutions to pressing social problems--AHCCCS is exactly the kind of program he is talking about.

And to some degree, AHCCCS has been successful in containing the rise of health-care costs.

It is entirely unclear, however, that AHCCCS should be used as a model for anybody's health-care system. In fact, Arizona's indigent medical system illustrates many of the problems that the "devolution" of federal programs to the state and local level is likely to cause all over the country.

Although it is 13 years old, AHCCCS is still considered an experimental program. Based on the concept of managed care, it is truly an innovation on standard federal practices for delivering health care to the poor. What parts of that experiment have worked--or failed--should be of intense interest to state and federal policymakers, given the continuing debate about health care at the national level.

Yet there has been remarkably little oversight of key AHCCCS functions by any segment of government.

Ignored rather than scrutinized, large parts of the program's management have never solidified; they still rely to a huge extent on private consultants who soak up as much as 60 percent of the operating budgets of some departments.

Use of those consultants, and the relationships they have with past and present AHCCCS managers, has created at the least the appearance of significant conflicts of interest.

Management practices are confused enough that the system spent hundreds of thousands of dollars on computer equipment federal authorities had not approved. Then, both AHCCCS and the feds agreed the equipment was unnecessary to begin with.

Inadequate recordkeeping at AHCCCS has also led to some curious benefit procedures.

Almost since the system was created, AHCCCS has been giving health-care firms money to provide treatment for patients who don't even live in Arizona--and are, therefore, ineligible for such benefits.

And for a good part of the last decade, the Arizona Health Care Cost Containment System has been paying HMOs and other providers to give medical care to people who have been absolutely, stone-cold dead--in some cases, for years.

It was 1974 when the Arizona Legislature approved the state's participation in Medicaid, the national subsidized health-care program for the medically indigent. That approval was more of a token than anything else, though; the legislature had neglected to make any state money available for the program.

In fact, for years leading up to 1982, Arizona was the only state in the nation without a Medicaid program. Medical care for poor people was funded by county governments. As health-care costs spiraled upward and the state was flooded with new residents, counties found themselves unable to meet the budgetary demands indigent care placed upon them.