Medicaid expansion challenge is rejected

State’s high court rules assessment is not a tax

The Arizona Supreme Court, in a unanimous decision Friday, rejected a bid from a group of 36 current and former Republican lawmakers to overturn the state’s Medicaid expansion.

The lawmakers argued that a hospital assessment used to pay the state’s portion of the Medicaid expansion is a tax that requires a two-thirds legislative majority to enact. The 2013 Legislature narrowly approved the assessment.

But the court rejected that claim, upholding a lower court’s ruling.

The GOP lawmakers’ challenge could have jeopardized health care for about 400,000 low-income Arizonans who gained insurance coverage under the Medicaid expansion.

“It is a huge victory for Arizona’s budget and stability,” said former Gov. Jan Brewer in a phone interview. “I feel good that Arizonans will continue to receive health care because of the decision . ... It met the test of doing the right thing, which almost always means doing the hard thing.”

It’s yet another defeat for the lawmakers and the Goldwater Institute, which have waged repeated court challenges of the expansion since Brewer, a Republican, signed legisla-

tion in 2013 that enacted the expansion.

The lawsuit was rejected by a Maricopa County Superior Court judge in 2015, and the Arizona Court of Appeals upheld that decision in March.

The high court’s decision Friday has implications beyond the state’s Medicaid expansion because it addressed whether fees or assessments imposed as a matter of routine state government can be considered a tax.

A Goldwater Institute attorney representing the lawmakers argued before the seven-member Arizona Supreme Court on Oct. 26. The argument was the assessment was a tax that required the vote of a two-thirds majority of the Legislature under Proposition 108, which was passed by voters in 1992.

But attorneys representing the state argued that the voter-approved initiative included an exception that allowed fees and assessments to be imposed by state agencies.

In a unanimous opinion written by Chief Justice Scott Bales, the state’s high court ruled that the hospital assessment used to pay for the expansion is not a tax that requires a two-thirds legislative majority to impose.

The court ruled that the Medicaid assessment, imposed by Arizona Health Care Cost Containment System Director Tom Betlach, is not a tax.

“The assessment is imposed by the director in hospitals, a narrow class, and directly benefits hospitals by expanding AHCCCS coverage for uninsured patients, thereby increasing payments to hospitals,” Bales wrote.

The court also ruled the hospital assessment is an exception to the requirement of two-thirds legislative approval because it is “not prescribed by formula, amount or limit.”

Christina Sandefur, a Goldwater Institute attorney who argued for the lawmakers, blasted the decision. “This is a classic case of taxation without authorization,” Sandefur said in a statement. “This decision allows the legislature to call taxes assessments and escape the two-thirds requirement.”