Arizona Lawsuit Could Take Health Care Away From 300,000 People

CREDIT: AP Photo/Ross D. Franklin

Arizona Gov. Jan Brewer (R), who supports expanding Medicaid in her state.

The Arizona Supreme Court reinstated a lawsuit on Wednesday that could strip health care away from 300,000 low-income Arizonians should it ultimately prevail. Though it should be noted that Wednesday’s decision dealt entirely with a procedural issue, that the court explicitly stated that its decision was not a “determination on the merits,” and that Arizona has a strong legal argument it can raise against this attempt to take health care away from many of the state’s most vulnerable residents.

Arizona Gov. Jan Brewer is one of a handful of Republican governors who supported expanding Medicaid under the Affordable Care Act. For the first three years of this expansion, the federal government will pay for the entire cost of the expansion. Beginning in 2017, however, states that accept the expansion must cover 10 percent of this cost. The bill Brewer signed expanding Medicaid in her state assesses fees on hospitals “for the purpose of funding the nonfederal share of the costs.” Nevertheless, the state’s hospitals support the Medicaid expansion, citing the fact that it rescues them from having to provide uncompensated care to low-income patients.

Although a majority of both houses of Arizona’s legislature also supported the Medicaid expansion, significant minorities did not. This could matter because a provision of the state constitution states that most laws that provide “for a net increase in state revenues” require a two-thirds supermajority in both houses in order to become law. Wednesday’s decision by the state supreme court held that a bloc of lawmakers, that would have been large enough to kill the Medicaid expansion bill if this constitutional provision applied to it, has the legal right to bring a lawsuit challenging the hospital assessments that fund Arizona’s share of the expansion.

That, however, is all that Wednesday’s order held. It did not consider whether the two-thirds supermajority requirement actually applies to the Medicaid expansion law.

When the courts do consider the merits of this issue, Arizona has a strong legal argument supporting the Medicaid expansion. The state constitution also contains an exception to the supermajority requirement that applies to “[f]ees and assessments that are authorized by statute, but are not prescribed by formula, amount or limit, and are set by a state officer or agency.” The Medicaid expansion law appears carefully designed to fit within this exception, as it delegates the power to “establish, administer and collect” the assessment to the director of the state’s Medicaid agency, and it also gives this director the power to “adopt rules regarding the method for determining the assessment, the amount or rate of the assessment, and modifications or exemptions from the assessment.”

In their original complaint challenging the Medicaid expansion, the plaintiffs claim that this level of delegation to an executive branch official is itself unconstitutional, arguing that the Medicaid expansion law “impermissibily delegates the taxing power” to a state official “empowering him to set the amount of the tax and to determine who will be exempt.” Yet, whatever the merits of this argument might have been in the absence of the constitutional provisions defining the scope of the two-thirds supermajority requirement, the argument is much harder to sustain in the face of these provisions. The Arizona constitution explicitly contemplates that “[f]ees and assessments that are authorized by statute, but are not prescribed by formula, amount or limit, and are set by a state officer or agency” shall exist. And the Medicaid expansion law authorizes just such an assessment.

Nevertheless, should this lawsuit ultimately prevail, the likely result will be that hundreds of thousands of Arizonians will lose their health care, in order to spite a hospital assessment that the hospitals themselves support.