Arizona’s Governor Jan Brewer, is challenging the people of Arizona and their representatives’’ standing in a legal challenge to her Medicaid expansion program. The Goldwater Institute is representing 36 Arizona representatives, and three Arizona residents, against the largest expansion of a federal program in Arizona’s history.
Brewer, who turned on the majority of her party members and joined Democrats, called the people’s representatives “disgruntled legislators.”
The legislators and residents are asking a judge to block implementation of the new law.
In the lawsuit filed by the Goldwater Institute in Maricopa County Superior Court, plaintiffs argue that the recent expansion of the Obamacare Medicaid program violated Proposition 108, a constitutional protection passed by Arizona voters in 1992 to require a two-thirds majority of legislators whenever levying a tax increase. The lawsuit also asserts that the legislation expanding the Obamacare Medicaid mandate violates state separation-of-powers doctrine.
In June, Brewer called legislators into a surprise special session to approve an expansion of Arizona’s Medicaid program (AHCCCS) under Obamacare. Thanks to the 2012 U.S. Supreme Court decision on the federal health care law, states are no longer required to expand Medicaid programs under the law. Still, Governor Brewer and key allies urged lawmakers to pass expansion despite previous experience with Medicaid legislation in which cost estimates to expand the program exceeded projections by nearly 400% each year.
To fund Arizona’s obligations, supporters of expansion opted to charge hospitals a mandatory provider tax. In order to qualify for funding, federal law requires Arizona to collect the tax from hospitals regardless of whether they accept Medicaid payments. When Governor Brewer and key allies realized they were unable to muster the two-thirds majority required by the Arizona state constitution to pass expansion, they attempted to dodge Prop 108’s requirements by surrendering the legislature’s taxing power to the director of AHCCCS, an unelected bureaucrat.
The Obamacare Medicaid expansion — and the provider tax that will fund it — passed both state legislative bodies with little more than a simple majority vote, falling short of the constitutionally required minimum necessary to approve a new tax. Structurally, the expansion also violated critical separation-of-powers provisions by relinquishing the taxing power to the AHCCS chief, who is now empowered to set tax rates and give exemptions to select hospitals.
“This is exactly the sort of scenario that Prop 108 was designed to prevent,” said Christina Sandefur, one of the Goldwater Institute attorneys leading the case. “By enacting a tax without the two-thirds majority required by our Constitution, the state has disenfranchised citizens whose representatives opposed the tax. Legislators are beholden to their constituents, but bureaucrats have no such accountability.”
The Obamacare Medicaid expansion marks the first time that the legislature has directly raised taxes since Prop 108’s passage in 1992, an indication of the constitutional protection’s strength when followed.
“If this bill is not stopped, a dangerous precedent will have been set that extends far beyond Medicaid expansion,” said Sandefur. “Blocking implementation of this law is critical to preserving the democratic protections Arizonans have enshrined in their constitution.”
According to an AP report, in her legal pleadings, the Governor sidesteps the question of whether the assessment on the hospitals included in her plan is a tax and subject to the two-thirds vote requirement. Instead, Brewer contends the only entities that have a right to sue are the hospitals being assessed.
However, the initial draft of the AHCCCS’s hospital assessment that will fund Governor Brewer’s Medicaid expansion plan has been completed, and it shows that hospitals make money.
According to the draft, nearly every hospital system in the state is expected to gain money overall during the first six months of the expansion. Additional information on AHCCCS’s website indicates three hospitals from Banner Health’s system, along with Scottsdale Healthcare’s Shea Medical Center and Oro Valley Hospital, will lose money from the assessment during the first year. However, Banner will still gain over $14 million in Medicaid payments from all of its other hospitals.
The total collected from all hospitals will be $75 million under the assessment, and they will receive a return of nearly $184 million in the first year.