PHOENIX — In a major victory for the legislative minority, the state Court of Appeals ruled Tuesday that lawmakers on the losing end of last year’s Medicaid expansion have a constitutional right to challenge the law and the levy it imposes.
In a unanimous decision, the judges rejected arguments by Gov. Jan Brewer that only the hospitals subject to the levy have standing to argue it is a tax, which would require a two-thirds vote of both the House and Senate to approve. The assessment got only a bare majority in each chamber.
The court rejected Brewer’s contention that a simple majority of lawmakers have the constitutional power to decide when a measure needs a two-thirds vote. Appellate Judge John Gemmill said that ignores the language of the Arizona Constitution.
He pointed out that the voter-approved mandate for a two-thirds vote says it applies to a host of changes in revenues, including the imposition of any new tax as well as the imposition of any new fee or assessment. It also applies to authorizing any state agency to set fees.
Therefore, any of those actions, Gemmill said, can be enacted only by a two-thirds majority. He said allowing a simple majority to decide when to impose that two-thirds requirement would undermine the constitutional language.
Tuesday’s ruling does not end the matter — and not only because Brewer has vowed to seek Supreme Court review.
Even if the high court upholds the lawmakers’ right to sue, that only gives them the go-ahead to make their case in court that the levy, which the governor calls an assessment, not a tax, is, in fact, a tax and therefore subject to the two-thirds vote.
“If we have to return to the trial court to litigate the hospital assessment, we’re confident in its legality,” Brewer said.
That question of whether the levy is legal is crucial to whether Medicaid is expanded.
If courts ultimately rule the levy is a tax, the state cannot collect the estimated $256 million this coming budget year since it did not get the required two-thirds vote. Without those funds, Brewer’s entire Medicaid expansion plan falls apart, as Arizona no longer has the state money necessary to tap into cash from the federal Affordable Care Act.
That possibility clearly concerns the governor.
Brewer built a coalition of Democrats and some Republicans last year to expand eligibility for the Arizona Health Care Cost Containment System, the state’s Medicaid program, to everyone up to 138 percent of the poverty level, or about $27,000 for a family of three. Before this year, only those below the federal poverty level were eligible.
That move, coupled with restoring coverage for single adults that was slashed in 2011 in a budget-cutting move, potentially adds 300,000 people to the AHCCCS rolls.
But even with federal funding, there was still a cost to the state. So the plan Brewer crafted was what she called an “assessment” on hospitals to pay that share.
“Arizonans should be concerned if the courts prevent the implementation of my Medicaid restoration plan, because that would jeopardize the state’s ability to restore critical, cost-effective health care to tens of thousands through AHCCCS,” she said.
She said killing the program “would do so against the will of voters, who twice voted to provide a health-care safety net for our most vulnerable citizens.”
Although Brewer backed the earlier AHCCCS cuts, she said she did so only out of economic necessity during a dire budget crisis, and moved to restore coverage when the economy improved.
Hospitals did not object to the levy needed to cover the state match for federal Medicaid funds because AHCCCS Director Tom Betlach crafted the levy so the amount paid by any hospital chain would be less than what it would gain from more of its patients having health insurance.
But lawmakers on the losing side of the vote sued to get a ruling that the levy was, in fact, a tax.
Maricopa County Superior Court Judge Katherine Cooper, however, sided with Brewer, ruling that only the hospitals could challenge the lack of a two-thirds vote.
But Gemmill said allowing half the Legislature to decide when a two-thirds vote is needed defies logic as well as the plain language of the Arizona Constitution.
For example, he said lawmakers might want to raise income tax rates. And Gemmill said such a measure presumably would fall within the constitutional mandate for a supermajority vote.
Gemmill said lawmakers could ignore a constitutional provision that such legislation must contain language that spells out that it is effective only on a two-thirds vote. But that does not make the requirement for the supermajority go away.
“Such an omission would not defect the constitution’s requirement that any bill raising the state income tax rates be passed by a two-thirds supermajority of each legislative chamber,” he wrote.