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State Supreme Court hears arguments on legality of Medicaid expansion

The Arizona Supreme Court from left are Robert Brutinel, John Lopez, John Pelander, Scott Bales, Andrew Gould, Clint Bolick, Ann Scott Timmer.

The Arizona Supreme Court from left are Robert Brutinel, John Lopez, John Pelander, Scott Bales, Andrew Gould, Clint Bolick, Ann Scott Timmer.

The fate of health care for 400,000 Arizonans could depend on what seven justices of the state Supreme Court believe voters said they wanted 25 years ago.

There is no question but that Proposition 108, approved in 1992, requires a two-thirds vote of both the House and Senate for any new or increased tax. The constitutional amendment also applies to the “authorization of any new administratively set fee.’’

What is also clear is that the Legislature voted in 2013 to allow the director of the Arizona Health Care Cost Containment System, the state’s Medicaid program, to impose an assessment on hospitals to pay for the state’s share of a federal program to provide health care to more people. But that measure passed with only a simple majority.

The attorney for Republican lawmakers who opposed the assessment – and had enough votes to block it if it needed a two-thirds vote – told the justices October 26 that means the measure was illegally enacted.

Christina Sandefur of the Goldwater Institute acknowledged that if the court agrees, that eliminates the $290 million the assessment is expected to raise this year, the funds needed to get the federal dollars that pay for the care for the 400,000 Arizonans.

But she told the justices that as harsh as that result may seem, that’s precisely what voters had in mind in 1992 when they sought to put curbs on the power of lawmakers to extract more money from the public.

Christina Sandefur of the Goldwater Institute (Photo by Rachel Leingang, Arizona Capitol Times)

Christina Sandefur of the Goldwater Institute (Photo by Rachel Leingang, Arizona Capitol Times)

“The voters wanted to place constraints on the Legislature and on the legislative process,’’ Sandefur said. “The voters were very clear. They wanted to change the status quo.’’

Timothy Berg, who represents the state and AHCCCS, conceded at least part of the point of what was behind Proposition 108.

“The people were afraid of the Legislature just continuing to raise the general level of taxes,’’ he told the court. “And they recognized that sometimes the Legislature might be clever and use the word ‘fee’ instead of ‘tax,’ or ‘assessment’ instead of ‘tax.’ ‘’

But Berg pointed out that another section of the constitutional amendment specifically exempts fees and assessment that are authorized by statute which are set by a state officer or agency.

“The voters were concerned about a rising tax burden,’’ he said. “I don’t think they were concerned that the Registrar of Contractors was going to say, ‘Instead of paying $5 to file something you have to pay $15 to file.’ ‘’

And Berg argued that the assessment that pays for the health care – one that is paid solely by hospitals which are subject to AHCCCS regulation – fits the latter category.

Sandefur, however, said upholding the hospital assessment as legal would set a bad precedent. She said it would provide a road map for a bare majority of legislators to raise money by simply authorizing state agencies, headed by unelected bureaucrats, to impose fees – fees that would take a two-thirds vote if lawmakers had enacted themselves.

Prior to 2013, Arizona law required the state to provide free health care for anyone below the federal poverty level.

Gov. Jan Brewer (Photo by Evan Wyloge/Arizona Capitol Times)

Gov. Jan Brewer (Photo by Evan Wyloge/Arizona Capitol Times)

That year then-Gov. Jan Brewer sought to take advantage of a provision in the federal Affordable Care Act whereby the state could increase eligibility to 138 percent of the poverty level and the federal government would pick up virtually all of the cost.

But to get those federal dollars, the state had to agree to restore coverage for single adults below the federal poverty level. Enrollment had been halted years earlier when the Great Recession slashed state revenues.

Brewer hatched a plan to have that cost picked up by hospitals. Most did not object because the amount of the assessment would be less than the losses they were incurring because of the high number of people showing up in their emergency rooms – people who they could not legally turn away – who had no ability to pay.

Most of the Republicans who control the House and Senate were opposed.

But Brewer found a few who liked the idea. And with all the Democrats in support, she got the plan approved on a simple majority vote.

That led to the lawsuit by the other Republicans.

Sandefur told the justices that Proposition 108 clearly does away with the idea of majority rule. But she said that’s what voters wanted.

That argument has so far failed, with both a trial judge and the state Court of Appeals concluding that there was no constitutional violation and the simple majority vote was enough.

The justices could find that Sandefur is correct and the constitutional requirement does require a two-thirds vote, but conclude that its wording is not exactly clear. And given that lack of clarity, they could make their ruling prospective only, applying the supermajority requirement only to future fee authorizations but allowing the hospital assessment to remain.

No date was set for a ruling.

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