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Monday, January 21, 2019

As China’s economy falters, some fund managers look to bonds


Despite mounting signs of a Chinese economic slowdown, 2019 is off to a good start for fund manager Du Zhenye.

His Shanghai-based ChangAn Xinyi Enhanced Mixed Fund has increased its assets over the past two weeks by shunning Chinese stocks for bonds. And it was the best-performing of nearly 3,000 mixed funds ranked by Haitong Securities for 2018, returning more than 14 percent.
“I don’t dare say it’s already the bottom of the stock market,” Du said.
He’s not alone in favoring Chinese bonds over equities. Slowing growth signals an earnings slump after a brutal 2018, when the Shanghai Composite index <.SSEC> tumbled 25 percent.
For some, bonds retain a shine as policymakers combat the slowdown with more stimulus. The phased inclusion of some Chinese bonds in global indexes starting this year also should draw inflows.
“We believe this year will be another bullish one for bonds,” said Du.
According to Shanghai consultancy Z-Ben Advisors, assets under management (AUM) at domestic equity mutual funds shrank 12 percent in the fourth quarter from a year earlier to 194 billion yuan ($28.62 billion) while fixed income funds expanded 20 percent to 3 trillion yuan.
That was one factor driving yields on benchmark 10-year Chinese government bonds down nearly 40 basis points in the quarter. <CN10YT=RR>
More policy easing could further cut yields, implying more gains for bondholders.
On Monday, China reported 2018 growth was the slowest in 28 years, at 6.6 percent. Beijing will reduce its 2019 full-year growth target to 6-6.5 percent, from around 6.5 percent last year, sources have told Reuters.
PUMPING CASH
While authorities rule out “flood-type stimulus” to juice growth, they have pumped cash into the banking system to boost lending. China made a cut to banks’ reserve requirement ratios this month, and more is promised.
Josh Sheng, chief investment officer at Shanghai Tongshengtonghui Asset Management, says fresh cash should fuel further gains in bonds, both sovereign and corporate. At the same time, he is watching credit data for signs of an investment pick-up that could support the stock market.
Interest in Chinese bonds isn’t limited to domestic investors.
Lenny Kwan, a portfolio manager at T Rowe Price in Hong Kong, is bullish on five- and 10-year government bonds. Edmund Goh, Asian fixed income manager at Aberdeen Standard Investments in Shanghai, is keen on corporate bonds, largely shunned by foreign investors unfamiliar with the Chinese market.
Offshore interest is likely to increase in April, when the Bloomberg-Barclays Global Aggregate Index begins to include Chinese government and policy-bank bonds.
Standard Chartered estimates the inclusion, which will be phased in over 20 months, could bring $50 billion in passive inflows into China’s fixed income market this year. It said offshore investors could own up to 2.8 trillion yuan of onshore bonds by the end of 2019, or 1 trillion yuan more than at the end of last year.
CREDIT BOMBS
Not all domestic investors are convinced. Fresh funding has been only enough “to fill the old gaps,” and the People’s Bank of China is keen to avoid excess cash putting pressure on the yuan, said Yun Xiong, partner at Leiton Capital in Shanghai.
Last year brought a record number of defaults, according to Reuters data, and “credit bombs will continue to explode” in 2019, Xiong said.
Another factor that could dent bonds is stricter insurance industry rules that took effect in 2018. Huachuang Securities said these reduced returns from insurance products and raised costs for insurers – traditionally big bond buyers. On top of this, weak income growth and rising household debt will hit growth of premiums.
Some asset managers see more value in Chinese stocks than bonds, believing that more stimulus is coming and that the U.S. and China will resolve their trade war.
Last year’s market correction led Khiem Do, Hong Kong-based head of Greater China investments at Barings, to pick up a range of stocks.
Shares on mainland exchanges are “trading at about 11 times (price to earnings). That’s very low,” said Do, who expects China’s economy to rebound in the second quarter.
Wang Qing, president of Shanghai Chongyang Investment Co, is also optimistic that China shares will rise this year.
“Market consensus at the start of a year is often wrong,” he said.
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China’s 2018 growth slows to 28-year low, more stimulus seen


China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest level in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown.

Growing signs of weakness in China — which has generated nearly a third of global growth in recent years — are fueling anxiety about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.
Policymakers have pledged more support this year to reduce the risk of massive job losses, but have ruled out a “flood” of stimulus like that which Beijing has relied on in the past, which quickly juiced growth rates but left a mountain of debt.
“The government has means to support the economy. They can expand infrastructure spending and they can cut banks’ reserve requirement ratio. So we don’t need to worry about capital spending,” said Naoto Saito, chief researcher at Daiwa Institute of Research in Tokyo.
“But the problem lies in consumption. As the U.S. and China clash on many fronts, consumer sentiment appears to have been hurt. Until now, solid wage growth has been supporting consumption but now there appears to be a sense of vague anxiety about the future.”
Fourth-quarter gross domestic product (GDP) grew at the slowest pace since the global financial crisis, easing to 6.4 percent year-on-year, as expected, from 6.5 percent in the third quarter, the National Bureau of Statistics said on Monday.
That pulled full-year growth down to 6.6 percent, the slowest annual pace since 1990. GDP in 2017 grew a revised 6.8 percent.
With support measures expected to take some time to kick in, most analysts believe conditions are likely to get worse before they get better, and see a further slowing to 6.3 percent this year.
U.S. President Donald Trump said on Monday that economic indicators meant it was time for China to make a trade deal with the United States.
“China posts slowest economic numbers since 1990 due to U.S. trade tensions and new policies. Makes so much sense for China to finally do a Real Deal, and stop playing around!” Trump wrote on Twitter.
Some China watchers believe actual growth is already weaker than official data suggest.
UNCERTAINTIES APLENTY
Despite a raft of policy easing steps so far, December data released along with GDP showed continued weakness across broad areas of the economy at the end of last year.
Factory output picked up unexpectedly to 5.7 percent from 5.4 percent, but it was one of the few bright spots, along with a stronger services sector.
While regulators have been fast-tracking construction projects, most of the gain appeared due to higher mining and oil production. Reuters calculations showed average daily steel output hit its lowest level since March as producers cut output amid shrinking profit margins.
Despite the slowing economy, Chinese officials also pledged to continue with a crackdown on air pollution that has weighed on the industrial sector.
Other data on Monday showed investment and retail sales continued to languish, while the jobless rate edged higher.
Fixed-asset investment rose 5.9 percent in 2018, the slowest in at least 22 years, as a regulatory crackdown on riskier financing and debt weighed on local government spending early in the year.
Property investment is also looking wobbly, with analysts waiting to see if Beijing will risk loosening restrictions on home buyers that have kept a potential housing bubble in check.
Chinese consumers are clearly feeling the pressure.
Though retail sales growth picked up marginally in December to 8.2 percent, the consumer strength gauge is around the weakest in 15 years. Auto sales in the world’s biggest car market shrank for the first time since the 1990s.
Officials recently pledged to boost consumer demand for big-ticket items from cars to appliances. But gains in disposable income are slowing, while household debt is on the rise.
Other data in recent weeks showed exports and imports unexpectedly shrank last month, while falling factory orders point to a further drop in activity in coming months and more job shedding.
Some factories in Guangdong – China’s export hub – have shut earlier than usual ahead of the long Lunar New Year holiday as new business dries up.
TRADE PRESSURES
Even if China and the United States agree on a trade deal in current talks, which would be a tall order, analysts said it would be no panacea for China or its exporters.
Demand is weakening globally, not just in the United States. Net exports actually dragged on China’s growth by 8.6 percent last year, Reuters calculations based on official data showed.
Trade negotiators are facing an early March deadline and Washington has threatened to sharply hike tariffs if there are no substantial signs of agreement.
White House officials have given markedly different views on progress so far. China’s vice premier and lead negotiator, Liu He, is due to visit Washington for the next round of talks at the end of the month.
MORE STIMULUS
To free up more funds for lending, particularly to vulnerable smaller firms, the central bank has cut the amount of reserves that banks need to set aside as reserves (RRR) five times over the past year, and guided borrowing costs lower.
Further RRR reductions are expected in coming quarters, but most analysts do not see a cut in benchmark interest rates yet, as policymakers wait to see if earlier steps begin to stabilize activity.
More forceful easing could also pressure the yuan and aggravate high debt levels, with money going into less efficient or speculative investments as it often has in the past.
The government may unveil more fiscal stimulus during the annual parliament meeting in March, including bigger tax cuts and more spending on infrastructure projects.
Some analysts believe it could deliver 2 trillion yuan ($295.13 billion) worth of cuts in taxes and fees this year, and allow local governments to issue another 2 trillion yuan in special bonds largely used to fund key projects.
China has ample room for policy adjustments, statistics bureau chief Ning Jizhe said on Monday.
Still, some analysts do not expect the economy to bottom out convincingly until summer.
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Opiant Focuses R&D Efforts on Battling Addiction and Overdoses


As Purdue Pharmaceutical’s OxyContin has become the poster child for opioid addiction, so too has another drug become synonymous with efforts to save people who have overdosed on those drugs – Narcan, developed by California-based Opiant Pharmaceuticals.
Narcan is widely provided to first responders and even to families who have individuals battling opioid addiction in hopes of saving as many lives as possible. Over the past several years, BioSpace has reported on the opioid crisis running rampant across the United States. On average, 116 Americans die daily from opioid overdoses, according to the U.S. Department of Health and Human Services. A recent report that examined preventable deaths indicated that today, more people in the U.S. will die from an opioid overdose than an automobile crash. Also, a new analysis conducted by the Centers for Disease Control and Prevention indicated that drug overdose deaths among middle-aged women between the ages of 30 and 64 are soaring and have increased by 260 percent over the last 20 years. Synthetic opioids were a significant factor in that spike of death.

Many preventable deaths by opioid overdose have been prevented by Opiant’s Narcan (naloxone). In fact, last year, the U.S. Food and Drug Administration promoted the idea of prescribing Narcan to patients prescribed opioids who are deemed to be at high risk for opioid overdose.
Roger Crystal, chief executive officer of Opiant, said the issue with the opioid crisis is changing, and it might not be for the better. In an interview with BioSpace, Crystal speculated that the ongoing opioid crisis is moving into a new stage where abuse of prescription opioids and heroin is now being replaced by an increase of fentanyl. Crystal said more of the ultra-powerful painkiller is being illegally manufactured in the United States and there are rising concerns about the drug being weaponized. With that concern in mind, Opiant is working with Biomedical Advanced Research and Development Authority (BARDA), a division of HHS, to develop a potential therapy for a potential fentanyl-based attack or, for overdoses. The company is focused on developing a potent opioid antagonist that will be useful to prevent fentanyl overdoses – something that Narcan is not as able to address as well as other opioids.
Opiant is also focused on more long-term assistance for people battling opioid addiction.
“Once you’ve saved someone’s life, you have to be concerned with how you treat addiction,” Crystal said.
One program the company is pursuing is the development of an opioid antagonist implant. The implant would provide a daily treatment for opioid addicts who are struggling to quit. Crystal said patients who diligently take daily medications like suboxone or methadone do very well. However, he noted that every day and an addict has to decide to not get high and take the medication. An implantable device that would provide a daily dose of the treatment for six months “would fit the bill,” he said.
As a former London-based surgeon, Crystal could see warning signs for an impending opioid crisis. He recalled a visit to the U.S. in the early 200s to spend time with his brother and family, who live in New York. His sister-in-law was dealing with a minor pain issue but had been prescribed more than a month’s worth of an opioid pain killer, he said. Seeing the large bottle of pills for what was described as minor pain was concerning, he said. For him, that was the beginning that led to his leading the company that developed Narcan.
While he has no data for the number of lives that have been saved due to the administration of Narcan, Crystal said he was “humbled and privileged to be part of a company that developed a medication that has saved countless lives.”
Opiant isn’t just focused on opioids though. The company is taking on addiction in many forms. Most recently, the company acquired drinabant, a cannabinoid CB-1 receptor antagonist that will be used in an emergency setting for acute cannabinoid overdose (ACO). The type of overdose that drinabant is being developed for comes from the ingestion of so-called “edibles” that contain large quantities of D9-tetrahydrocannabinol (THC) and synthetic cannabinoids, such as those that are sold with the label K2 or Spice.
While not as life-threatening as opioid overdose, Crystal said cannabinoid overdoses are likely to increase, particularly as more states legalize marijuana. In Colorado, where marijuana has been legalized, Crystal said there was a 20 percent increase in ER visits due to cannabinoid overdoses. In 2016 there were about 1 million ER visits related to cannabinoids in the U.S., he said.
“It’s not quite like the opioid crisis, but there are some similarities,” he said. “Our expectation is that the need for this will only increase.”
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Targeting ‘hidden pocket’ for treatment of stroke and seizure


The ideal drug is one that only affects the exact cells and neurons it is designed to treat, without unwanted side effects. This concept is especially important when treating the delicate and complex human brain. Now, scientists at Cold Spring Harbor Laboratory have revealed a mechanism that could lead to this kind of long-sought specificity for treatments of strokes and seizures.
According to Professor Hiro Furukawa, the senior scientist who oversaw this work, “it really comes down to chemistry.”
When the human brain is injured, such as during a stroke, parts of the brain begin to acidify. This acidification leads to the rampant release of glutamate.
“We suddenly get more glutamate all over the place that hits the NMDA receptor and that causes the NMDA receptor to start firing quite a lot,” explains Furukawa.
In a healthy brain, the NMDA (N-methyl, D-aspartate) receptor is responsible for controlling the flow of electrically charged atoms, or ions, in and out of a neuron. The “firing” of these signals is crucial for learning and memory formation. However, overactive neurons can lead to disastrous consequences. Abnormal NMDA receptor activities have been observed in various neurological diseases and disorders, such as stroke, seizure, depression, and Alzheimer’s disease, and in individuals born with genetic mutations.
Furukawa’s team, in collaboration with scientists at Emory University, looked for a way to prevent over-firing NMDA receptors without affecting normal regions of the brain.
Previous work had identified promising compounds, called the 93-series, suited to this purpose. Eager to join with the NMDA receptor in an acidic environment, these compounds downregulate the receptor activity, even in the presence of glutamate, thereby preventing excessive neuronal firing.
However, the 93-series compounds sometimes cause the unwanted consequence of inhibiting the NMDA receptors in healthy parts of the brain. That’s why Furukawa and his colleagues set out to determine how they could improve upon the unique features of the 93-series.
Their latest results are detailed in Nature Communications.
Using a method known as X-ray crystallography, the researchers were able to see that a motif on the 93-series compound slots into a tiny, never-before-noticed pocket within the NMDA receptor. Experimentation showed that this pocket is particularly sensitive to the pH around it.
“Now that we see the pH-sensitive pocket within NMDA receptors, we can suggest a different scaffold,” Furukawa explained. “We can redesign the 93-series chemical compound — let’s call it 94-series — in such a way that it can more effectively fit to that pocket and a higher pH sensitivity can be obtained. So, we’re basically just starting our effort to do that.”
Story Source:
Materials provided by Cold Spring Harbor Laboratory. Original written by Brian Stallard. Note: Content may be edited for style and length.
Journal Reference:
  1. Michael C. Regan, Zongjian Zhu, Hongjie Yuan, Scott J. Myers, Dave S. Menaldino, Yesim A. Tahirovic, Dennis C. Liotta, Stephen F. Traynelis, Hiro Furukawa. Structural elements of a pH-sensitive inhibitor binding site in NMDA receptors. Nature Communications, 2019; 10 (1) DOI: 10.1038/s41467-019-08291-1
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New routes to treating osteoarthritis


In the largest genetic study of osteoarthritis to date, scientists have uncovered 52 new genetic changes linked to the disease, which doubles the number of genetic regions associated with the disabling condition.
Scientists at the Wellcome Sanger Institute, GSK and their collaborators analysed the genomes of over 77,000 people with osteoarthritis. Their findings, published today (21 January) in Nature Genetics, revealed new genes and biological pathways linked to osteoarthritis, which could help identify starting points for new medicines. Researchers also highlighted opportunities for existing medicines to be evaluated in osteoarthritis.
Almost ten million people in the UK suffer from osteoarthritis, a degenerative joint disease in which a person’s joints become damaged, stop moving freely and become painful. There is no disease-modifying treatment for osteoarthritis. The disease is managed with pain relief medications and often culminates in joint replacement surgery, which has variable outcomes.
Osteoarthritis is the most prevalent musculoskeletal disease and a leading cause of disability worldwide. In the UK, the disease indirectly costs the economy £14.8 billion each year.
To uncover the genetics underpinning osteoarthritis, scientists from the Sanger Institute, GSK and their collaborators analysed the whole genomes of over 77,000 people with osteoarthritis and over 370,000 healthy people using patient data from the UK Biobank resource and the arcOGEN study. The team studied many different types of osteoarthritis, including in knee and hip joints.
Professor Eleftheria Zeggini, previously from the Wellcome Sanger Institute and now based at Helmholtz Zentrum München in Germany, said: “Osteoarthritis is a very common, disabling disease with no cure. We have conducted the largest study of osteoarthritis to date, and found over 50 new genetic changes that increase the risk of developing osteoarthritis. This is a major step forward in developing treatments to help the millions of people suffering from the disease.”
In order to discover which genes cause osteoarthritis, the team incorporated additional functional genomic data and analysed gene activity by measuring gene expression down to the protein level. The team integrated genetic and proteomic data on tissue taken from patients undergoing joint replacement surgery. By incorporating many different data sets, scientists were able to identify which genes were likely to be causal for osteoarthritis.
Ten of the genes were highlighted as targets of existing drugs, which are either in clinical development or approved for use against osteoarthritis and other diseases. These include the drugs INVOSSA, which is registered for knee osteoarthritis, and LCL-161, a drug in clinical development for the treatment of breast cancer, leukemia and myeloma. The team suggest that the ten drugs highlighted would be good candidates for testing in osteoarthritis.
Dr Stephen Simpson, Director of Research at Versus Arthritis, who supported the arcOGEN study, said: “Osteoarthritis affects over 8.5 million people across the UK. We know that the condition impacts people in different ways, meaning the treatment that works for one person doesn’t always work for someone else.
“This study represents a hugely important milestone towards understanding the complexity of osteoarthritis and finding new treatments and we are delighted that our support for the arcOGEN study has helped deliver this. In the long term, the research progresses us significantly on the journey to ending the pain, isolation and fatigue of those living with arthritis.”
Story Source:
Materials provided by Wellcome Trust Sanger Institute. Note: Content may be edited for style and length.
Journal Reference:
  1. Ioanna Tachmazidou et al. Identification of new therapeutic targets for osteoarthritis through genome-wide analyses of UK Biobank data. Nature Genetics, 2019 DOI: 10.1101/453530
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Movie Violence Doesn’t Make Kids Violent


Parents often worry that violent movies can trigger violence in their kids, but a new study suggests PG-13-rated movies won’t turn your kids into criminals.
Researchers found that as PG-13 movies became more violent between 1985 and 2015, overall rates of murder and violence actually fell.
“It doesn’t appear that PG-13-rated movies are having any impact on viewers,” said lead researcher Christopher Ferguson. He’s a professor of psychology at Stetson University in DeLand, Fla.
Kids may re-enact things they see in films during play, Ferguson said, but their playful re-enactments don’t turn into real-life violence, like bullying or assaults.
But the report came under fire from Dan Romer, director of the University of Pennsylvania’s Adolescent Communication Institute. He said the data studied can’t be used to draw conclusions about movies’ effects on violence.
“The authors have a very simplistic model of how the mass media work, and they have an agenda that attempts to show that violent media are salutary rather than harmful,” Romer said. “What is needed is dispassionate analysis rather than cherry-picking of convenient data.”
Previous studies have suggested parents may become desensitized to violence in PG-13 movies, making it more likely they will let children see them — especially when gun violence is portrayed as justified.
But researcher Ferguson said media are simply an easy target for people who want to claim the moral high ground. Blaming media gives people a false sense of control.
“It’s nice to say, ‘Let’s get rid of this thing and then that would make all these problems go away,'” he said. “It’s kind of a simplistic answer.”
Dr. Michael Rich, director of the Center on Media and Child Health at Boston Children’s Hospital, reviewed the findings. He said the new study attempts to simplify a complex issue.
“While violence has declined, it doesn’t warrant the conclusion that we are not affected by violence in our media,” Rich said. “As a pediatrician, I am more concerned about the violence that children experience every day, which is not reflected in crime stats.”
What people experience most is micro-aggressions, like bullying, Rich said. While he considers movies a reflection of society, he added that the causes of violence and aggression are numerous. “It’s a complex issue,” he said.
But it’s clear that violence in media has a numbing effect, making viewers less bothered by it, he said. “That is, in part, why violent media always needs to up the ante,” Rich explained.
Media violence teaches kids that the world is more violent than it really is, and most react by becoming more fearful, not more violent or aggressive, he said.
“Violence is much rarer than fear and anxiety,” Rich said. “We find that most kids who carry a weapon into school do it for protection.”
For the study, Ferguson and Villanova University psychology professor Patrick Markey reviewed other researchers’ data on PG-13 movies, along with U.S. Federal Bureau of Investigation data on violent crime and the National Crime Victimization Survey.
But Romer said that data can’t be used to draw conclusions about movies’ effects on violence.
Despite a sharp drop in youth violence since the mid-1990s, the homicide rate has been far more stable, Romer said.
“And the homicide data do not even focus on youth gun homicides, which is what one would want to look at if one were really interested in the effects of gun violence in popular movies,” he added.
Gun violence in young people rose dramatically as it became more common in PG-13 movies in the late 1980s and early 1990s, Romer noted.
Rich said parents can use media to teach their children. He suggested parents watch these movies with their kids and help them respond to their feelings and fears about what they see.
“Parents can help guide their children to what is acceptable and what is not,” Rich said. “Kids are always learning, but that learning can be shaped and modified.”
The report was published Jan. 17 in the journal Psychiatric Quarterly.
More information
For more about violence in media, visit the Center for Media Literacy.
SOURCES: Christopher Ferguson, Ph.D., professor of psychology, Stetson University, DeLand, Fla.; Michael Rich, M.D., M.P.H., director, Center on Media and Child Health and associate professor of pediatrics, Boston Children’s Hospital; Dan Romer, Ph.D., director, Adolescent Communication Institute, and research director, Annenberg School for Communication, University of Pennsylvania, Philadelphia; Jan. 17, 2019, Psychiatric Quarterly
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CMS approves Arizona’s tough Medicaid work requirement


Arizona on Friday became the eighth state to receive CMS approval for a waiver to establish a Medicaid work requirement.
The Section 1115 waiver also shrinks retrospective eligibility for some Medicaid applicants from 90 days prior to application to the beginning of the month in which the application is filed. Similar provisions, which are opposed by hospitals, have been included in other state “community engagement” waivers.
Starting as soon as Jan. 1, 2020, an estimated 120,000 low-income non-disabled adults ages 18-49 will be required to report at least 80 hours per month of employment, educational activity, job search or training or volunteer community service to keep their Medicaid coverage through the Arizona Health Care Cost Containment System.
If they fail to report compliance by the 10th day of the following month and don’t submit a good-cause reason, they will be suspended from coverage for two months, after which they will be automatically reinstated.
That’s a far-quicker penalty than in Arkansas—the first state to implement a work requirement last year—where more than 18,000 people were disenrolled from Medicaid last year due to failure to report or meet the work requirement for three months.
“Employment and community engagement are proven to have a positive effect on overall health and well-being,” Arizona Republican Gov. Doug Ducey said in a written statement. Arizona’s GOP-controlled legislature had required the state to apply for a work requirement waiver, which was turned down in 2015 by the Obama administration.
The waiver, called AHCCCS Works, includes exemptions for nearly two dozen groups, including members of Native American tribes, people diagnosed with serious mental illness, and people with an acute medical condition.
The state will allow Medicaid expansion enrollees to report their community engagement activities online, in person and by phone. As much as possible, it will try to pull data from other public programs to automatically record compliance activities, said Heidi Capriotti, a spokeswoman for AHCCCS.
Arizona has not projected how many people will be disenrolled due to the work requirement, and has not estimated how much the program will cost to administer, she added. The state’s expansion currently covers an estimated 400,000 adults with incomes up to 138% of the federal poverty level.
“The vast majority of those folks are likely to become uninsured for at least some period of time—exposing them to financial peril and worsening health,” Joan Alker, a Medicaid researcher at Georgetown University, wrote in a new blog post.
The Arizona Hospital and Healthcare Association, which previously indicated it would prefer no work requirement, was guarded in its reaction to the waiver.
“We appreciate that the final plan includes exemptions for some of the most vulnerable clients and populations where a work requirement might be greatly limited by their healthcare needs,” said CEO Greg Vigdor. “AzHHA and its members will monitor the impact of this approved plan on patients across Arizona as it goes into effect, and will continue to work with the Ducey administration and AHCCCS to make sure that our program serves Arizonans well into the future.”
The CMS has charged ahead with green lighting state Medicaid work requirement waivers despite a federal court ruling last June blocking the agency’s approval of Kentucky’s waiver on the grounds that the CMS had not adequately considered the impact on coverage. A similar federal lawsuit challenging Arkansas’ waiver is pending.
In December, Michigan and Maine won CMS approval for waivers, though it’s uncertain whether the new Democratic governors of those states, who oppose Medicaid work requirements, will implement them. A number of other states either have waiver requests pending or are considering submitting such proposals.
Hospitals and patient advocacy groups warn that work requirements will lead to large coverage losses, causing disruptions in care for people with chronic conditions and driving up uncompensated care costs. They argue that taking coverage and healthcare away from low-income adults will make it harder for them to find and keep employment, and that there’s no evidence such requirements result in higher employment rates for this population.
Those arguments haven’t swayed CMS Administrator Seema Verma. “The Trump administration remains committed to supporting state innovation to ensure states have the flexibility needed to provide better health outcomes for their citizens,” she said in a written statement announcing the Arizona approval.
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