"If you want to smoke, go for it, " said Monica Coury, spokeswoman for Arizona's Medicaid program.

WSJ: Arizona Proposes Medicare Fat Fee

Ms. Coury suggested federal rules may not apply to those affected by the proposal, because Arizona extends coverage to them beyond what Washington requires.

WSJ: Arizona Proposes Medicare Fat Fee

Ms. Coury said Arizona officials hadn't yet finalized how they would determine whether a person was obese or had sufficiently followed a wellness plan, but that measures such as body-mass index could provide some guidance.

WSJ: Arizona Proposes Medicare Fat Fee