Arizona Medicaid Chief’s Expired License Sparks GOP Outcry

In a revelation that’s sending shockwaves through Arizona’s political landscape, the chief medical officer for the state’s Medicaid program, AHCCCS, has been operating with an expired medical license for nearly two months. Dr. Theresa Costales, appointed by Democratic Governor Katie Hobbs in January 2025, saw her license lapse on August 9, 2025, after failing to renew it by the April 9 deadline, according to Arizona Medical Board records.

Republican leaders in the Arizona House wasted no time in calling out the oversight, describing the matter as a glaring failure in basic accountability that undermines public trust in the agency responsible for healthcare coverage for over 2 million Arizonans. 

House Speaker Steve Montenegro (R-LD29) blasted the Hobbs Administration in a statement Friday, saying, 

“A lapse like this should never happen in a healthcare agency responsible for millions of people. The public deserves accountability when even the most basic standards aren’t met.”

🚨House Republicans Expose AHCCCS Chief Medical Officer Serving with Expired Medical License

“A lapse like this should never happen in a healthcare agency responsible for millions of people. The public deserves accountability when even the most basic standards aren’t met.”… pic.twitter.com/XjxKdtjYYv

— Arizona House Republicans (@AZHouseGOP) October 3, 2025

House Majority Leader Michael Carbone (R-LD25) echoed the sentiment, pointing out the ease of verification: 

“We work every day to protect the health and well-being of Arizonans, yet AHCCCS failed to do something as basic as verify a medical license. Any citizen can look this up in minutes. That it slipped through the cracks at the highest level of medical leadership is completely unacceptable.”

Voicing a level of concern from a medical viewpoint, House Majority Whip Julie Willoughby (R-LD13), a healthcare professional herself, questioned the implications for vulnerable populations. “As a healthcare professional, I find it deeply disturbing that someone is allowed to make decisions affecting vulnerable populations without a valid medical license,” she said. Willoughby specifically highlighted potential issues with recent decisions, including the rollout of a controversial Home and Community-Based Services (HCBS) assessment tool, asking, “Were those reviews overseen by a CMO whose license had already expired? If so, how can families trust the integrity of the data or the decisions that came from it?”

Costales, a Phoenix-based psychiatrist first licensed in 2018 whose last renewal lapsed in August, continues to serve in her role, advising on clinical policies, acting as an expert witness in legal matters, and influencing medical decisions that impact patients statewide. Without the basic licensure required for medical doctors, the administration has allowed Costales to continue in this role. AHCCCS officials have responded to concerns by confirming they are in contact with the Arizona Medical Board and are pursuing an expedited renewal of the license. However, critics argue this reactive approach highlights deeper systemic issues under Hobbs’ administration, which has faced scrutiny for administrative missteps.

The incident draws parallels to ongoing debates in neighboring California, where similar concerns about bureaucratic oversight in healthcare agencies, such as Medi-Cal, have fueled calls for stricter credentialing protocols. As states throughout the country grapple with post-pandemic healthcare demands, lapses like this could erode confidence in government-run programs, potentially affecting millions of people reliant on Medicaid services.

Republican press releases and multiple media outlets, including the Arizona Republic and KJZZ, have amplified the story, with some speculating on whether the expiration was an intentional avoidance or simple negligence. As of now, Governor Hobbs’ office has not issued a direct response; however, the controversy contributes to a growing narrative of accountability challenges in Democratic-led states.

This development comes at a time when Arizona’s healthcare system is under intense scrutiny, serving as a cautionary tale for policymakers nationwide. Willoughby summed it up bluntly: “You cannot have a Chief Medical Officer without an active license—it’s that simple. Was this avoidance? Was she afraid her license wouldn’t be renewed? Those are serious questions that demand answers.”

House Speaker Pro Tempore Neal Carter (R-LD15) added, “Governor Hobbs’ administration has failed once again to ensure competence and accountability in state government. This isn’t a small oversight—it undermines public confidence in one of Arizona’s largest healthcare agencies. Arizonans deserve better.”