Arizona Entitlements...To Expand or Not to Expand?

I had the wonderful pleasure of visiting the Arizona State Capital yesterday and meeting with a number of our state senators and representatives.  The big "hula-ballou" was that Governor Jan Brewer was also holding a press conference about her proposal for Medicaid, Arizona Health Care Cost Containment System (AHCCCS), expansion for our state. This has had a significant amount of media coverage, as Gov. Brewer a fiscal conservative, has decided to expand Arizona's entitlements by leveraging federal funds. Her press conference was held on the same morning the Arizona Osteopathic Medical Association (AOMA) was meeting with our state legislative representatives.  I was interviewed by News Channel 3's Dennis Welch, but only three seconds of my three minute interview was aired and it was taken completely out of context.
Here is what I tried to explain and my position on the issue. At first appearance, it seems that Gov. Brewer sprouted "progressive" tendencies and has given in to the Affordable Care Act ("ObamaCare") to which she has been historically and strongly opposed.  However, this is a very sticky problem, and it is important to understand the back ground on this issue to understand why this proposal has arisen.
It started in1982 when Arizona voted to enter the Medicaid program.  Arizona was the last state in the union to enter into Medicaid.  This brought on a number of budgetary challenges, and to solve this problem, the state "privatized" Medicaid, allowing a number of insurance companies to compete for and oversee the distribution of the care and funding in 1987 called the Arizona Health Care Cost Containment System (AHCCCS) and lovingly termed "access."  This allowed for tighter control and efficient use of the Medicaid funds.

Bigger challenges arose with the voter passage of Proposition 204 in 1995 and then re-voted upon in 2000, amending the Arizona constitution to mandate state health coverage of those residents up to 100% of the federal poverty level.  This means that no matter what, Arizona is constitutionally required to pay for and participate in Medicaid.  Part of the health care dollars have been paid for by an Arizona Sales Tax which was set to expire on December 31, 2013.  The renew of the sales tax was voted down at the end of 2012 and these funds will no longer be available.
Currently, the federal government matches Arizona's contribution to Medicaid at a 2:1 ratio. Because of budgetary AHCCCS enrollment freezes, childless adults that will not be covered, mandated changes to the plan required by the ACA, and the loss of revenue from the sales tax, AHCCCS will cost Arizona an additional $450 million dollars per year that will be required to come from the State's general fund.  This makes it impossible to balance the state's budget in 2014.
Because Medicaid coverage at a minimum of 100% of the federal poverty level is required by the state constitution, Governor Brewer is stuck with a difficult problem.  Services have already been notably reduced and reimbursement to providers has already been cut by 10% over the last few years.  Further cuts would cause providers and hospitals to drop the program like a rock.
The proposal, therefore, is to accept the Federal 9:1 match of funds by expanding Medicaid to 133% of the federal poverty level. This would actually allow coverage of an additional 60,000 Arizonians and would save the state $325 million dollars per year.
From the perspective of Health Care Policy, it is important to look at any policy in regards to cost, quality and access.  Governor Brewers proposal will allow her to balance the budget much easier, however, this proposal will not improved quality and only partially improves access.  The liberal side of the community is excited about the expansion of entitlements; however, the strong conservative side of the community is concerned that we are adding to the federal debt to balance the state's budget and strapping our children with today's burdens.  Because of increased access to services (modest as they may be), most physician and health care organizations have thrown their support behind Governor Brewer.
Will federal income tax increase in the future because of this?  Will the federal government actually have the funds to move the ACA forward? If the federal government fails with it's commitment, will that leave Arizona in a financial bind?  Does this affect our states sovereignty? These are questions that have not been answered.
I agree that something must be done, but is there another way to balance Arizona's budget without increasing  our state's dependence upon federal funds?