Medicaid (AHCCCS) expansion challenge argued to Court


I explained some time ago that this is no longer about Gov. Jan Brewer’s Medicaid (AHCCCS) expansion plan for the Goldwater Institute lawyers representing the Tea-Publican legislators/plaintiffs in this case. It is about preserving the GOP’s anti-democratic “weapon of mass destruction,” Prop. 108 (1992). ‘Kochtopus’ Death Star still trying to kill Medicaid (AHCCCS):

DeathStarThis case is no longer about Medicaid expansion for the “Kochtopus” Death Star. No, it is now only concerned about preserving its undemocratic Prop. 108 (1992), which requires a two-thirds supermajority vote in both legislative chambers to impose or increase any taxes, or to reduce any tax credits or exemptions.  This antidemocratic provision only enables a tyranny of a minority of anti-tax zealots (the “Kochtopus” and its minions), negating simple majority rule, the foundation of a democracy.

Here is what self-described “libertarian constitutional lawyer and freedom fighter” Christine Sandefur said in an op-ed in The Republic last month. The real ‘sore losers’ in Medicaid-tax case:

In a Feb. 11 editorial, The Arizona Republic’s editorial board dubbed these lawmakers “sore losers” for appealing that ruling.

* * *

Sadly, if this ruling stands, the real losers will not be the legislators but the voters and the state Constitution.

Preoccupied with lambasting the legislators for obstructing Medicaid expansion, the editorial board misses the forest for the trees. The desirability of the Medicaid program isn’t on trial; that’s a policy question left to the political process. The stakes of this lawsuit are much higher. At issue is the fate of a critical voter-approved constitutional protection, Proposition 108, which requires a two-thirds legislative supermajority for all new taxes and fees. The Medicaid tax became law with the approval of only a simple majority, nullifying the votes of those legislators who opposed it.

The board argues that the Legislature itself should get to decide whether Prop. 108 applies to a given tax. Never mind that more than 20 years ago, Arizona voters enacted Prop. 108 to “make it more difficult to raise taxes” and “restrain growth in state government,” even in “emergency situations” or programs “for the poor.” Those pesky details stand in the way of billions of dollars in subsidies for Arizona hospitals.

For the editorial board, simple majorities should always carry the day, even where the Arizona Constitution explicitly forbids it.

Sandefur’s editorial commentary was essentially her argument to the Court yesterday. The Arizona Capitol Times (subscription required) reports, Lawyers pitch Medicaid expansion arguments to judge who compares hearing to ‘spring training’:

Much of the hour-long hearing at Maricopa County Superior Court on Thursday focused on whether the assessment falls under an exemption in Proposition 108 for fees and assessments that are authorized by statute but set by a state officer or agency. In this case, the amount of the assessment is determined by Tom Betlach, director of the Arizona Health Care Cost Containment System.

Defense attorney Douglas Northup, who represents Betlach, told Judge Douglas Gerlach that the exception clearly applies in this case because there’s no question the amount of the assessment is set by Betlach, not by the Legislature.

“They’re asking you to totally change … the clear wording,” Northup said.
Had the drafters of Prop. 108 wanted to ensure that the exception didn’t apply in such cases, Northup said they could have clearly included such a provision in the amendment. He argued that the plaintiffs’ reasoning would require the Arizona Board of Regents to get a two-thirds vote in the Legislature any time it wanted to increase tuition or fees, which it has repeatedly done since 1992.

Furthermore, Northup noted that since the passage of Prop. 108, the Legislature has repeatedly approved similar administratively set fees with a simple majority. He said lawmakers have approved 40 such fees and assessments since 2007 alone.

“Plaintiffs’ argument ignores the reality of government,” Northup said. “Even under their slicing and dicing … there have been at least 40 of those since 2007. And I understand the point about the fact that it happens doesn’t mean it’s always right. But I would suggest that if there were constitutional infirmities and Prop. 108 applies to all those, we wouldn’t see them done regularly.”

Goldwater Institute attorney Christina Sandefur, who represents the 36 lawmakers in their challenge to the assessment, said Northup’s example only bolstered her case.

She described the Board of Regents as a perfect example of how the exception is supposed to be used. Because the Legislature has already approved the board’s authority to set tuition – that decision was made long before Prop. 108, Sandefur noted – the exception simply means that it does not have to again seek legislative approval every time it wants to exercise that authority.

“They still have to be initially authorized,” she said. “That was the whole point of passing Prop. 108.”

Sandefur pointed to another provision of Prop. 108 which states that a two-thirds supermajority is required for the Legislature to approve, “any new state fee or assessment or the authorization of any new administratively set fee.” If Northup’s argument is correct, she said, it would render that provision meaningless.

“It creates a loophole that removes checks and balances,” Sandefur said. “What they want is to allow a bare majority be able to vote to get around Prop. 108.”

But Sandefur said the exemption on administratively set fees only becomes relevant if the hospital assessment is not considered a tax. And she argued that the assessment should in fact be considered a tax.

Sandefur argued that assessment is a tax because it is not voluntary and the money is redistributed by the state. Furthermore, she said an assessment or fee must be tied to some benefit received by those who pay it. In this case, not every hospital that pays the assessment receives a benefit because not every hospital accepts Medicaid patients or payments from the federal government.

“Here we have a general tax, a general levy that’s being collected on hospitals, regardless of whether they participate in Medicaid,” she said. “We’re missing that nexus there.”

Gerlach countered, asking, “Isn’t at least one of the benefits of this act is it increases the pool of persons with insurance coverage, and as a result, the hospitals experience fewer occasions when they provide unreimbursed purposes?”

“There could be hospitals that do not benefit from this tax,” Sandefur replied. “I think that is the very characteristic of a tax. It’s redistributed.”

Northup said the assessment shouldn’t be considered a tax because the hospitals that pay it do receive a benefit. Of the 97 hospitals that pay the assessment, he said 89 receive more money back from the federal government in Medicaid reimbursements than they pay to the state. Only three hospitals lose money, he said, while five others break even.

But the hospitals that don’t benefit are still part of hospital systems that receive more money overall than they pay out, he said.

“By system, everyone is a net benefit,” Northup said.

Attorney Tim Hogan, who represents Medicaid patients who benefited from the expansion, pointed to what he said were three factors that should be used to determine that the assessment is a fee and not a tax: only a very small number of people pay it, it’s set by a state agency head and it provides a benefit to hospitals that pay it, which he noted was part of the
legislative intent of the Medicaid expansion bill in the first place.

“You don’t have to divine it here,” Hogan said of the Legislature’s intent. “It’s expressly stated what the intent is, and that is to provide a benefit to the hospitals.”

Gerlach asked attorneys for both sides how thorough a ruling they wanted, saying it might be better to move quickly because whichever side loses will simply move on to the Court of Appeals and then to the Arizona Supreme Court. Both sides said they needed only to know the basis and rationale for his ruling.

“There is no way to get your case to the Supreme Court right away, so we had to go through this exercise. I enjoyed it, but the fact of the matter is I appreciated the fact that my decision probably has as much meaning as the outcome of a spring training game,” Gerlach said.

A quick decision is expected, to be followed by an appeal to the Court of Appeals.

I have advocated for years that the GOP’s anti-democratic “weapon of mass destruction,” Prop. 108 (1992), needs to be repealed. It enables a tyranny of a minority of anti-tax zealots — effectively giving a small minority veto power over necessary and responsible fiscal policy — negating simple majority rule, the foundation of a democracy.

This is why the “Kochtopus” Death Star, the Goldwater Institute, is fighting to preserve Prop. 108 — to hell with the hundreds of thousands of Arizonans losing their health care — they are merely collateral damage in the Death Star’s ideological war.

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AZ BlueMeanie
The Blue Meanie is an Arizona citizen who wishes, for professional reasons, to remain anonymous when blogging about politics. Armed with a deep knowledge of the law, politics and public policy, as well as pen filled with all the colors stolen from Pepperland, the Blue Meanie’s mission is to pursue and prosecute the hypocrites, liars, and fools of politics and the media – which, in practical terms, is nearly all of them. Don’t even try to unmask him or he’ll seal you in a music-proof bubble and rendition you to Pepperland for a good face-stomping. Read blog posts by the infamous and prolific AZ Blue Meanie here.