DALLAS -- Arizona Gov. Jan Brewer is expected to sign the $8.8 billion budget approved in a contentious special session that ended Thursday with expansion of the state's Medicaid system under President Obama's Affordable Care Act.

Amid bitter rhetoric, Republican legislators set aside their ideological objections to the so-called “Obamacare” and agreed to accept $1.6 billion in federal funds for providing federal medical insurance for the working poor.

“This Medicaid Restoration Plan does not solve all of Arizona’s health care challenges,” said Brewer, a Republican, in a statement at the end of the special session. “But it will extend cost-effective care to Arizona’s working poor, using the very tax dollars our citizens already pay to the federal government. It will help prevent our rural and safety-net hospitals from closing their doors. And it will boost our economy by creating more than 20,000 jobs at a time when Arizona needs them most.”

Brewer broke with other Republican governors and conservative state legislators in demanding passage of the Medicaid expansion to those above the poverty line of $23,550 for a family of four. Under the 2010 ACA, states can extend Medicaid coverage to those earning up to 133% of the federal poverty limit, with the federal government covering the entire expense for three years.

“By joining me in extending health coverage to hundreds of thousands of Arizonans, legislators of my own party have come under sharp criticism in some quarters,” Brewer said. “Some have had threats made not just against their political future, but also their personal livelihood.

“But I also know this in my heart: The great majority of Arizonans stand with us. Our citizens have – time and again – voted to extend cost-effective care to the working poor. Over the last five months, more than 400 community groups have rallied behind our effort.”

Brewer said the extended federal coverage will cover what she called “the hidden health-care tax” when counties and the state are forced to swallow the cost of emergency room treatment for conditions that could have been circumvented earlier by a routine doctor’s visit.

Business leaders and private industry will also benefit from having a workforce that is healthy, despite low pay, she said.

Brewer cited the example of one Arizonan, Justin Smith, who lost his health insurance along with his job in the recession, then got sick and now has $200,000 in medical bills.

“Hundreds of thousands of uninsured Arizonans walk the same tightrope every day, knowing they are a single car wreck, illness or accident from financial ruin,” Brewer said.

Leaders of the legislature’s Republican majorities, citing concern about states’ rights, fought Brewer throughout the regular session on the Medicaid issue, forcing her to call a special session.

“We waited for months for the budget and Medicaid expansion because the Republican legislative leadership held the will of the majority hostage with political games,” said House Minority Leader Chad Campbell, D-Phoenix, at the close of the session. “The game playing stopped when the governor called a special session.”

Over the last four years, the state has faced budget gaps exceeding $1 billion. In fiscal years 2010 and 2011, the state closed the gaps in large part with deep cuts to education, healthcare and other state expenses.  The situation became so bad that the state had to mortgage state buildings, including the capitol, through bond issues to cover its obligations.

After closing an anticipated budget gap of $1.1 billion for fiscal year 2012, Arizona received a federal Medicaid waiver that allowed the state to contain Medicaid program costs.

With the rebound, state officials are now forecasting baseline budget-basis operating surpluses of $611.9 million in fiscal 2012 and $867.8 million in fiscal 2013.

With the turnaround, Moody’s Investors Service shifted the outlook on Arizona’s Aa3 credit rating to stable from negative in November.  Standard & Poor’s rates the state AA-minus with a stable outlook.

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