Jan 022014

By Nick Worth
Judge Katherine Cooper heard oral arguments in the Biggs v. Brewer case Dec.13 in Maricopa County Superior Court.
The lawsuit was filed by 36 Arizona Republican lawmakers headed by Senate President Andy Biggs and Arizona House Speaker Andy Tobin against Governor Jan Brewer in an attempt to stop the state’s Medicaid expansion plan, which was pushed through the Arizona Legislature by Brewer in June 2013.
Biggs and his fellow lawmakers are arguing that Brewer’s Medicaid expansion plan violates the voter approved Proposition 108, which requires a two-thirds majority vote in the house and senate in order to impose a tax. Brewer’s bi-partisan coalition resulted in only a simple majority to pass the measure.
In a classic case of “she says, he says,” Brewer and her legal team contend a new tax was not imposed by passing the measure.
In order to raise the mandated funding to secure the federal dollars needed for the program, Brewer’s plan gave the authority to impose the mandated funding tax to the director of the Arizona Health Care Cost Containment System (AHCCCS).
Under Brewer’s plan, the funding tax is called a “hospital assessment.”
Since the legislation was then no longer, technically, imposing a tax increase, it passed in both houses by a simple majority, bypassing the requirements of Prop. 108.
Biggs and his followers maintain the Medicaid expansion is a tax by virtue of the fact that “the provider tax is not a fee paid or assessment charged in exchange for a privilege or benefit. It is by definition a broad-based, mandatory tax levied on hospitals regardless of whether they receive Medicaid payments,” according to the case background document on the website of the Goldwater Institute, which is providing the legal representation to the Republican lawmakers suing Brewer.
The document also quotes Rep. John Kavanagh (R-Dist. 23) who warned, “calling a tax an assessment doesn’t make it any less a tax. It just makes it a hidden tax.”
Lucy Caldwell, media contact for the Goldwater Institute, cited the institute’s concern that the Medicaid measure moves power to set tax rates to an unelected government official.
Caldwell said the legislation was passed in violation of state separation-of-powers provisions by delegating taxing power to the AHCCCS director, “empowering him to set the amount and decide who will be exempt.”
The institute’s lawyers also contend the move to avoid Prop. 108’s requirements denied representation to the constituents of the 36 lawmakers “when their senators’ and representatives’ votes were not counted.”
According to Christina Sandefur, an institute lawyer on the case, the nine senators and 27 representatives have the right to sue Brewer because they voted against the measure. Sandefur also said the group makes up more than one-third of both their respective houses, meaning the bill would not have passed.
“This is exactly the sort of scenario that Prop. 108 was designed to prevent,” said Sandefur. “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.”
In another twist to the issue, even though hospitals will be paying out an estimated $75.3 million in levies under the legislation in fiscal year 2014, and an estimated payment of $255,725,300 in 2015, hospital administrators are in favor of the plan. The reason is that the hospitals will see a rise in coverage payments from previously uninsured persons who could not pay for services in the past.
The Provider Assessment Summary estimated 87 in-state hospitals around the state will be receiving about $184 million in AHCCCS payments for fiscal year 2014, a net gain of just over $108 million after their $75 million in payments.
In fiscal year 2015 those coverage payments are projected to rise to almost $699 million, leaving a net gain of about $423 million after the patient discharge fees are paid.
Brewer’s office could not be reached for comment regarding the initial hearing of the case last Friday, but an Oct. 9 article in The Tribune-News outlined some key points, that are the driving forces behind the legislation. According to Brewer’s website, some of the expansion measure’s features are:
* No state expense. The Brewer Medicaid Plan comes at no cost to the general fund.
* Upholds the will of voters. Arizonans have twice voted to restore Medicaid. By adding about 57,000 individuals to a Medicaid membership of more than one million, the state can leverage federal support and vastly diminish state expenses.
* Keeps Arizona tax dollars in Arizona. Restoration of Arizona’s Medicaid program will inject nearly $8 billion into the state’s economy over the first four years alone.
* Protects rural and safety-net hospitals. Without action, the very survival of some hospitals is threatened.
The lawsuit by the Republican legislators against Brewer came about after opponents of Medicaid expansion failed to get the required number of signatures to put the matter before the voters on the ballot.
Judge Cooper’s decision, which may take some time, will most likely not be the end of the issue, as both Biggs’ group and Brewer’s legal team are said to be gearing up for appeals.