PHOENIX — The Arizona Supreme Court on Wednesday allowed a lawsuit challenging Gov. Jan Brewer’s Medicaid expansion plan to move forward, a decision that deals a major blow to the governor’s signature achievement just days before she leaves office.
The high court agreed that 36 Republican lawmakers can sue Brewer over the legality of a hospital assessment that funds the expansion plan.
The ruling means the outgoing governor’s plan to insure about 300,000 poor Arizonans using a key part of President Barack Obama’s health care overhaul could eventually be crippled as she hands over the governor’s office to fellow Republican Doug Ducey.
Brewer, who leaves office on Jan. 5, said in a statement that she was “naturally disappointed” in the ruling but hopeful she will eventually prevail.
“I am abundantly confident that Arizona will ultimately prevail, and that the state will be able to focus on implementing one of the most meaningful and critical health care policies in years - the restoration of crucial, cost-effective care to thousands of Arizonans,” Brewer said.
However, it will be Ducey who must decide whether the state continues to fight the lawsuit challenging the assessment. His spokesman didn’t immediately return calls seeking comment.
The case now returns to a trial court which will be charged with deciding whether the hospital assessment is a tax that requires a two-thirds majority vote. Only a bare majority passed the legislation. The Goldwater Institute, which sued on behalf of lawmakers, plans to ask a judge to halt the funding for the expansion immediately, and Brewer hopes Ducey continues to defend her plan.
Without the assessment, Arizona won’t have the matching funds needed to pay its share of the expansion that is now covering about 255,000 low-income Arizonans.
Brewer put together a coalition of Democrats and some Republicans who supported the expansion, and after a monthslong battle with conservatives of her own party pushed it through the Legislature in a June 2013 special session. She was one of only a handful of Republican governors who embraced Medicaid expansion. In all, 27 states and the District of Columbia are moving ahead with the expansion. Sixteen states have turned down the expansion, and seven others are weighing options, according to the latest tracking by the Kaiser Family Foundation.
Republicans who opposed the expansion joined forces with the Goldwater Institute to sue Brewer. The key question of the legal fight is whether the hospital money - assessed on impatient discharges - is a tax.
The GOP lawmakers say it is a tax, meaning the Medicaid expansion violated the state Constitution because any tax increase in Arizona requires a two-thirds vote in the Legislature. The expansion passed with a simple majority. Brewer’s lawyers argued that the assessment wasn’t a tax and that the Legislature itself voted not to require the supermajority vote.
A Maricopa County Superior Court judge first threw out the lawmakers’ lawsuit, but the state appeals court reversed that decision and allowed the lawsuit challenging the hospital assessment.
The Supreme Court on Wednesday agreed with the appeals court, while noting it was not deciding whether the assessment was indeed a tax.
“Regardless of how the case ultimately comes out, today’s decision means that lawmakers can’t vote to ignore the Constitution,” said Christina Sandefur, the Goldwater Institute attorney who argued the case. “More than 20 years ago, Arizona voters enacted Proposition 108 to curb taxes and government growth. Thanks to today’s decision, the dozens of lawmakers who voted against dramatically transforming Arizona’s Medicaid program, putting the state on the hook for billions of dollars, and ceding the legislature’s taxing power to an unaccountable administrator, will get to defend this important legacy.”
The hospital assessment is expected to collect $256 million in the state’s 2015 budget year to pay the state’s share of expanding Medicaid. The beneficiaries of the expansion include people earning between 100 percent and 138 percent of the federal poverty level and childless adults making less than that who lost optional coverage provided by Arizona during a state budget crisis - people Brewer herself once fought to push off the program.
The federal government pays for most of the expansion costs, but restoring optional coverage that Arizona voters have twice approved required the assessment. Hospitals strongly backed the assessment because they expect to see a much bigger reduction in the cost of treating uninsured patients.
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