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Arizona Supreme Court rejects Medicaid expansion challenge

(AP Photo)

PHOENIX — The Arizona Supreme Court rejected a challenge Friday to a Medicaid expansion that helps pay insurance for hundreds of thousands of people in the state.

The high court ruled unanimously on a challenge brought by Republican lawmakers who opposed the Medicaid expansion plan championed by former Gov. Jan Brewer in 2013.

Republican lawmakers challenged the fee and the case was argued in October. The challenge had wound its way through state courts ever since, being upheld all along the way.

Former Gov. Jan Brewer got a slim majority of lawmakers to back the plan in 2013.

Lawyers representing opposition to the plan argued that the hospital fee was a tax that required a two-thirds vote under a voter-approved 1992 Constitutional amendment.

They argued that the hospital assessment was actually a tax that required a two-thirds vote under a voter-approved 1992 Constitutional amendment covering tax increases. Brewer only got a majority of lawmakers to back the plan.

The Goldwater Institute called the court decision a “blow to taxpayer rights.”

“The voters who limited the Legislature’s ability to raise taxes certainly didn’t intend to give even greater power to unelected officials to impose `assessments,”’ Christina Sandefur, a Goldwater attorney, said in a statement. “This is a classic case of taxation without authorization.”

The state’s Medicaid agency and an advocacy group representing Medicaid recipients argued an exemption for fees set by state agencies means the hospital assessment is legal. Lower courts agreed with that argument.

Groups such as the Arizona Hospital and Healthcare Association praised the court’s decision.

“This is a great day for Arizona, and one we have awaited through a four-year legal fight,” the group said. “Had the high court instead opted to strike down the law that re-opened Arizona’s Medicaid rolls, the consequences would have been dramatic.”

Legislators led by then-Senate President Andy Biggs filed suit. They said the bill was unconstitutional because it hadn’t complied with the required supermajority.

The state’s Medicaid agency argued an exemption for fees set by state agencies meant the hospital assessment didn’t need a supermajority and was legal. Lower courts agreed with that argument.

Losing the assessment would have forced major enrollment cuts. The vast majority of funding for the expansion population comes from the federal government, but the state has to cover some costs.

Brewer’s law restored coverage for childless adults earning less than 100 percent of the federal poverty level who had been covered in Arizona before the Great Recession sapped state revenues.

It also extended coverage to all Arizonans legally in the country who earn up to 138 percent of the poverty level.

Brewer, a Republican, surprised many when she embraced the expansion. She angered many fellow Republicans with her efforts, which included calling a special legislative session after Republican House and Senate leaders stalled a vote for weeks.

She said in an interview Friday that she was “very gratified” that the court sided with her, saying a ruling the other way would have cost lives, decimated rural hospitals and hurt the state’s economy.

“Over 400,000 Arizonans now will continue to receive health care and mental health care and life-saving treatment, and that’s really important,” Brewer said. “Doing the right thing almost always means doing the hard thing, and I have absolutely, absolutely no regrets.”

With the expansion, about 1.9 million Arizona residents are now covered by Medicaid.

The Associated Press contributed to this report.

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