PHOENIX — The Ducey administration goes to court Thursday to defend a program the new governor never wanted in the first place.
Attorneys for the state hope to convince Maricopa County Superior Court Judge Douglas Gerlach that a levy on hospitals that has been paying for expansion of the state’s Medicaid program is an “assessment” and not a “tax.” A ruling against the state could knock nearly 350,000 residents off the state’s Medicaid plan.
That distinction is critical, as the state constitution requires a two-thirds vote of both the House and Senate for any increase in taxes. But the expansion, pushed through the Legislature by Jan Brewer in 2013 when she was governor, did not get that margin.
The Arizona Supreme Court ruled last year that lawmakers who oppose the measure, who make up more than a third of both chambers, have the right to challenge the decision of colleagues to call the levy that raised $270 million last fiscal year an assessment. Today’s hearing gives those legislators, represented by the Goldwater Institute, a chance to make their case.
It also means that Tom Betlach, director of the Arizona Health Care Cost Containment System, has to defend the expansion.
During the 2014 campaign Doug Ducey voiced his opposition to the federal Affordable Care Act. It is that program, sometimes referred to as “Obamacare,” that provided almost all the money for the expansion to the working poor.
But to take advantage of those dollars, the state had to restore funding it had cut for single adults.
Brewer came up with a plan to get the hospitals to pick up the cost. The hospitals went along after AHCCCS officials showed them they would make far more — perhaps a 150 percent return — than the levy would cost by providing care to patients who would have insurance.
It is the nature of that levy that is before the court. But there’s also a political side to the issue.
Gubernatorial press aide Daniel Scarpinato sidestepped questions about his boss being in the position of having his administration defend a law he never supported.
“This is an issue that originated under a previous Legislature and a previous administration,” Scarpinato said. And he said that, as governor, Ducey will “comply with the requirements of the law based on the ruling handed down.”
But a ruling in favor of the dissidents would create problems for the governor.
There are not sufficient votes to re-enact the levy with a two-thirds vote. That would force Ducey to either find the hundreds of millions of dollars elsewhere in the budget or be forced to knock nearly 350,000 people off the AHCCCS rolls.
So with the federal dollars already flowing, Betlach has to convince Gerlach that the levy is not a tax.
Not everyone believes that Betlach, doing Ducey’s bidding, intends to vigorously defend the expansion.
Tim Hogan of the Arizona Center for Law in the Public Interest got court permission to intercede on behalf of those who stand to lose care if the court voids the levy as an illegal tax. He said it’s not just that Ducey, running for office, actively opposed expansion.
“Since he’s been governor, he appointed somebody from the Goldwater Institute … to a position on his staff,” Hogan explained. That refers to Christina Corieri, named by Ducey to be a health-care adviser.
Hogan said Corieri, while at the institute, actively opposed Medicaid expansion and wrote a critique of the program. And although she is now working for Ducey, it is the Goldwater Institute that is representing the Republican lawmakers trying to kill expansion.
Betlach, in his own court filings, acknowledged he serves at the pleasure of the governor.
But he argued there is no basis to believe his interests are not the same as those of the Medicaid recipients: defending the constitutionality of the levy on hospitals. He called contentions to the contrary “sweeping and unsupported.”
But Judge Katherine Cooper, who agreed to let Hogan and his clients intercede, noted that Betlach is in the position “of defending an action taken by his former employer” — meaning Brewer — that may not be equally shared by his current boss.
The question of the nature of the levy is only part of the issue facing Gerlach.
In enacting the law in 2013, Brewer and supporters did more than simply call the levy an assessment.
They structured the law so that it was Betlach, and not the Legislature, deciding how much to raise. The statute even gives the AHCCCS director the power to exempt certain hospitals, a move designed to mute protests from facilities that would benefit little by an expanded Medicaid program.
But Goldwater Institute attorney Christina Sandefur is arguing that is a sham.
“Evading constitutional protections and stripping the legislature of its taxing authority yields the exact outcome that Arizona’s constitutional checks and balances were designed to prevent: consolidating power in an unaccountable administrator who is free to play favorites,” she said in her legal briefs.
