Roadblocks remain for Medicaid expansion

The protracted fight for Medicaid expansion likely won’t end with Gov. Jan Brewer’s signing of the historic legislation.

At least one group is already pushing to refer the expansion plan to the November 2014 ballot, and others may join the fray. And if that effort fails, foes are readying a lawsuit alleging that Brewer and her legislative allies violated a provision of the Arizona Constitution requiring a two-thirds vote for a tax increase.

Now that that the legislative battle is over and Brewer has signed the bill, two of the governor’s old nemeses from the Legislature are leading the charge for a citizen referendum. The United Republican Alliance of Principled Conservatives, led by former Sens. Frank Antenori and Ron Gould, took out petitions for a referendum on June 19.

The group has until Sept. 11 to collect 86,405 valid signatures to refer Brewer’s expansion plan to the November 2014 ballot. URAPC Chairwoman Christine Bauserman, a Tucson Tea Party activist, said the group’s goal is to collect about 120,000 signatures.

The measure would refer two key portions of the Medicaid plan to the ballot — the section expanding Arizona Health Care Cost Containment System eligibility to 133 percent of the federal poverty level, and the provision implementing a hospital tax that will fund the state’s portion of the program and qualify the state for federal matching funds.

URAPC planned a June 22 rally at the state Capitol as the official kickoff of the referendum drive.

Despite a lack of funding, referendum organizers say they can collect enough signatures with an all-volunteer effort. Bauserman said URAPC has at least 1,200 volunteers who are fired up to stop Medicaid expansion.

“People are coming in from all over Arizona asking for stacks of 100 petitions,” Bauserman said. “They’re ready to go.”

Antenori, a Tucson Republican who clashed frequently with Brewer during his time at the Legislature, said collecting the signatures will be tough, but he is confident.

“It’s not going to be a slam dunk, but it’s doable. We have so many energized people,” Antenori said. “We’ve got a wide swath of the most activist members of the Republican Party fired up and ready to go.”

Doomed to fail

Brewer and her allies not only question the group’s ability to collect enough signatures, but say a referendum on Medicaid expansion is not permitted under the Arizona Constitution. Brewer spokesman Matthew Benson said the expansion is not referable due to a constitutional provision exempting budget appropriations from the referendum process.

The Governor’s Office said a 1991 Arizona Court of Appeals ruling against an attempted referendum challenging a tax in Greenlee County backs up its claim that expansion can’t be referred to the ballot.

“The Court of Appeals chose to err on the side of having a wide exemption,” Benson said. “But beyond that, this is a fringe effort by a fringe group that is doomed to fail, either in the signature gathering or in court.”

After the Legislature passed her Medicaid plan, Brewer said she doesn’t think the referendum drive will be able to gather enough signatures.

“And I think that if it does even reach to the ballot, I bet the people overwhelming will concur with what the Legislature did,” Brewer told reporters on June 13.

But Brewer said it would be a shame if referendum organizers collected enough signatures to put Medicaid expansion on the ballot because it would put the program on hold until after the November 2014 election.

Possible legal challenge

Restoring Arizona, an Arizona Chamber of Commerce and Industry-backed organization that campaigned for Medicaid expansion throughout the legislative session, is trying to ensure that the referendum doesn’t get that far.

Spokesman Jaime Molera said Restoring Arizona will continue educating the public about Medicaid expansion, including by going to areas where URAPC is collecting signatures, and will keep an eye out to make sure “legally all their activities are done above board and are being done the right way.” He said Restoring Arizona may also bring a legal challenge to the referendum.

“We’re … not going to sit on our hands. This is something where we’re going to be very engaged and very much actively participating by going to areas where they might be collecting signatures or trying to collect, and educating the public as to what this means,” Molera said. “We’re going to be very aggressive.”

Honing legal theories

If URAPC or other anti-expansion groups fail to get enough signatures or get knocked off the ballot in a legal challenge, the next phase of the battle will be over Proposition 108. Conservative opponents have long argued that the hospital tax, which the legislation refers to as an assessment, required a two-thirds vote under the constitutional amendment, which was approved by voters in 1992.

The conservative Goldwater Institute is planning a Prop. 108-based lawsuit if the referendum drive fails, according to Clint Bolick, the organization’s litigation chief. The institute has also pledged to defend URAPC in court if it faces a legal challenge over the constitutionality of the referendum.

“We’re planning to spend the next 90 days honing our legal theories, talking to possible plaintiffs and determining if we can put together a strong lawsuit. And at this point, everything indicates that we should be able to put together a very strong legal challenge,” Bolick said.

The Ninth Floor argues that the assessment isn’t subject to Prop. 108 because it falls under a loophole for fees and assessments that don’t have a set amount or formula established by the Legislature and are set by a state agency head. Brewer’s plan gives the director of the Arizona Health Care Cost Containment System, the state’s Medicaid program, the authority to establish the assessment and set the amount.

The Legislature, including many of the Republican lawmakers who argued in favor of a Prop. 108 clause for Medicaid expansion, used that loophole frequently in recent years, authorizing agency directors to raise fees and assessments to make up for budget shortfalls during the fiscal crisis.

“Whether you call it a tax or not isn’t the issue. It’s the mechanics of what that assessment is doing. That’s the key,” Benson said. “This is larger than the other (assessments), but mechanically it’s no different.”

Paul Bender, a law professor at Arizona State University, agreed.

“If it’s constitutional to do it for a small tax, I would think it was equally constitutional to do it for a large tax. There’s nothing in the constitutional provision that makes that exception turn on the size of the tax,” Bender said.

But Bender said the Goldwater Institute may have an argument if it can show legislative history indicating that

Prop. 108 was meant only for small fees and assessments, not a massive assessment such as the hospital tax. He said the institute could argue that the tax is not a fee or assessment.

“That’s a completely plausible argument,” he said.

Bender also questioned whether the Goldwater Institute would have standing to bring suit. He said the institute may need to find a hospital that opposes paying the tax to bring the challenge.

Bolick would not comment on why the Goldwater Institute believes the tax doesn’t fall under the Prop. 108 exemption for fees and assessments.

“We don’t plan to air our legal arguments before filing a lawsuit. But I think it suffices to say that we strongly disagree with the governor’s assessment,” he said.