Mon, June 24

Governor's Medicaid battle with legislators goes before judge

PHOENIX -- The lawyer for Gov. Jan Brewer asked a judge late Friday to block dissident lawmakers from challenging the vote of the majority of their colleagues to expand Medicaid in Arizona.

Douglas Northup told Maricopa County Superior Court Judge Katherine Cooper the 36 legislators lack legal authority to advance their claim that key provisions of the expansion plan are unconstitutional. That includes whether what Brewer calls an "assessment' on hospitals to pay for expansion is really a tax.

That distinction is crucial because a 1992 amendment to the Arizona Constitution requires a two thirds vote of both the 60-member House and 30-member Senate. The legislation gained barely a majority in each chamber.

Instead, Northup told Cooper she lacks the power to intercede.

He conceded that Proposition 108 does require a two-thirds vote for a tax hike. But Northup insisted that a simple majority of the Legislature can decide whether that two-thirds requirement is necessary. And that, he said, makes it an internal matter, out of the reach of the courts.

That contention drew derision from attorney Christina Sandefur of the Goldwater Institute who represents the legislators challenging the levy.

"If a bare majority can decide whether to apply a super-majority requirement (for legislation) then Prop 108 is meaningless,' she said.

Brewer is also arguing, through Northup, that the dissident legislators have no legal right to sue in the first place.

In essence, Northup wants Cooper to rule that only those who have a "particularized injury' have legal standing. That would be only the hospitals subject to the tax.

But the governor effectively ensured the hospitals would not do that: She structured the levy in a way so every hospital chain would actually financially benefit from the deal.

At issue is whether the Arizona Health Care Cost Containment System, the state's Medicaid program, adds about 350,000 people on top of the 1.3 million who now get free care.

Under current law, the state provides coverage to everyone up to the federal poverty level, a figure about $19,530 a year for a family of three. The federal Medicaid program picks up about two-thirds of the cost.

Brewer is taking advantage of the federal Affordable Care Act. It has Washington pick up the cost of expanding coverage to an adjusted figure of 138 percent of the poverty level, at least for the first several years.

But the deal requires Arizona to to restore coverage for about 240,000 childless adults, cut several years ago in a budget maneuver, and pay its one-third share.

That money is coming from the assessment on hospitals. AHCCCS figures that will raise about $75 million in the first six months.

But AHCCCS produced studies for the hospitals showing expanded coverage will bring them $108 million more than that in insurance coverage, cost they would otherwise have to write off as uncollectable. So the hospitals are supporting expansion -- and are not challenging the levy.

With the hospitals on the sidelines, Sandefur told Cooper she needs to let the legislators step in.

She said Proposition 108 was designed to overturn the practice of lawmakers approving higher taxes by a simple majority vote. It effectively says one-third of either chamber, plus one, can veto any tax hike.

Sandefur said allowing the hospital levy to take effect with a simple majority effectively nullifies the constitutionally granted veto power of this minority.

"If the plaintiffs don't have their day in court, then the very integrity of the legislative process is at issue here,' Sandefur told Cooper.

Northup, however, told the judge that if the legislative opponents of Medicaid expansion are unhappy their fight is neither with Brewer nor AHCCCS Director Tom Betlach.

"If there was harm caused to the plaintiffs by anyone, it was by other members of the body that the legislators are part of,' Northup said. He said that makes it an "internal dispute' of the Legislature and out of bounds of the court.

He also disputed Sandefur's contention that the dissident lawmakers have some right to enforce the two-thirds vote provision of the Arizona Constitution.

"Proposition 108 was enacted to protect the taxpayers from the Legislature,' Northup said. "It was not to protect the Legislature from themselves.'

Cooper gave no indication when she will rule. But there is a deadline of sorts: The challenged expansion plan is set to take effect on Jan. 1.

If Cooper sides with expansion foes, that paves the way for them to argue that underlying legal question of whether a two-thirds vote is needed. But a ruling for Brewer would not end the dispute, as the opponents are virtually certain to appeal.

That two-thirds vote requirement is not the only legal issue.

Sandefur pointed out that the legislation does not spell out how the tax or assessment is to be imposed. Instead, it gave Betlach total power, without legislative oversight, to determine who should be charged and how much.

Betlach clearly used that discretion, even crafting a plan to ensure that the Mayo Clinic in Scottsdale will pay nothing at all.

During the legislative session, Mayo lobbyists had threatened to oppose the plan, noting that their client, with few uninsured patients, stood to gain very little through an expanded Medicaid program.

And Phoenix Children's Hospital also got an exemption, as existing Medicaid laws already provide coverage for youngsters above the poverty level.

Monica Coury, the AHCCCS deputy director, said there were no promises made during the session to either hospital to get them not to oppose the expansion.

Senate President Andy Biggs, one of the foes of expansion, conceded that winning this second legal argument about the authority to delegate the power to impose assessments could come back to bite the Legislature.

Lawmakers have routinely granted state agencies such power in the past. For example, they have given broad discretion to the Environmental Quality to set fees to cover costs.

Biggs said a ruling by Cooper that this delegation is illegal would void such arrangements. But he said that is not necessarily a bad thing, saying lawmakers should probably have better control over revenues raised by state agencies.