Medicaid Expansion Lawsuit

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The Arizona Supreme Court ruled that state legislators do have the right to sue over the expansion of Medicaid in Arizona last year. Jeremy Duda of the Arizona Capitol Times will tell us more.

Ted Simons: Governor Ducey will deliver his first state of the state address next Monday. Other elected officials sworn in today include Secretary of State Michelle Reagan, attorney general Mark Brnovich, treasurer Jeff DeWitt, superintendent of public instruction, Diane Douglas, and mine inspector Joe Hart, one wildcard facing Governor Ducey is Medicaid expansion. The state Supreme Court ruled last week that Arizona lawmakers have standing to Sue the state's Medicaid expansion program. Here to update what happened and what comes next is Jeremy Duda of the Arizona Capitol Times. Jeremy, good to see you. Thanks for joining us.

Jeremy Duda: Thanks for having me.

Ted Simons: Before we get to what the Supreme Court did here, how is the legislature challenging Medicaid expansion?

Jeremy Duda: They filed a lawsuit back in, I believe, September of 2013 alleging -- their argument was that part of Medicaid expansion assessment on hospitals that funds the state's portion of this violates a provision in the Arizona constitution in prop 108, passed by the voters in 1992. It requires a two-thirds' supermajority in the legislature to pass a tax increase which is defined as any increase in state revenue. Governor Brewer and her staff was this does -- this is -- this probably doesn't apply, falls under an exemption. It is set by an administrative head, not by the legislature, but there is other language in, you know, prop 108 that contradicts that, and they have been trying to kind of avoid getting to that point by challenging whether the lawmakers have standing.

Ted Simons: And I was going to say, initially, the idea is that the legislature is saying, this is a tax. It's a tax. You need two-thirds of us to go along with us. You had a two-thirds' simple majority. We have standing because what, our votes were not counted? We lost that particular influence in power and standing?

Jeremy Duda: Yeah, their argument was that, you know, their votes -- if this was subject to prop 108, a two-thirds' major, their votes would have been enough to kill it. This passed comfortably but not with two-thirds. The Governor couldn't round up enough votes for that. If 108 had applied, the 36 lawmakers, their votes would have been more than enough to stop this from going into effect.

Ted Simons: And I think the court called it institutional injury to the legislature, and the court, by enormous unanimous decision said they have standing.

Jeremy Duda: And including the Justices that Governor Brewer herself appointed, that probably kind of stung. The case law that they have been looking at was usually that, it usually said that the legislature, as a body, as an institution can Sue over an institutional injury. They said this is an individual injury to these folks. Their votes, if prop 108 applies, and they did not weigh in on that yet, but if it applied, these folks' votes were nullified, and they said that's an individual injury, and you have standing.

Ted Simons: And the Governor's side saying we're talking about Governor Brewer's side here, saying that they are not -- they don't have standing because they are not the ones paying the assessment, only the hospitals would have standing.

Ted Simons: The court didn't buy that, did they?

Jeremy Duda: That was part of Governor Brewer's argument, and the problem for the opposition side is that the hospitals, they pay this assessment but they get more back in Federal money for paying for all the new Medicaid patients, so, you know, why would anyone Sue if it will cost then money? There are almost -- every hospital in the state that pays an assessment gets more back than it pays out, and of the small number that don't, they are part of hospital systems that do receive more money back than they pay out.

Ted Simons: With the court making this decision, how much does this hurt the Governor's side? It seems from a distance, is that the idea of for the having standing, they put a lot of emphasis on that.

Jeremy Duda: Sure. This is potentially catastrophic to Governor Brewer's side and those who supported Medicaid expansion. It's hard not to get the feeling that they were banking a lot at non getting standing, and they have plenty of other argue for why they say prop 108 does not apply. Brewer won in the superior court at the lowest court level, and the court of appeals overturned that and said that they had standing. And I remember, you know, in the press we saw Brewer that day, and she had a Press Conference, and you could tell how visibly upset that she was. She gave her speech on whatever her Press Conference was about, and kind of looked down and let out a sigh and said ok, well, we have got to address this issue, too. She was clearly rattled by that.

Ted Simons: And rattled by that because they know that side knows that prop 108 is there, and it's tough to say the two-thirds doesn't count.

Jeremy Duda: Well, I am sure that's what the other side would say, and if you look at the language, it is kind of difficult to imagine how the pro expansion side is going to prevail. You look at the language of prop 108, and it has a list of the things that this applies to. Number one, an increase in a statutorily prescribed fee or assessment or an increase in a statutorily maximum limit for administratively set fee. Or the imposition of any state fee or assessment or administratively set fee, you know, language goes on, you know, bureaucratic language, but it seems like it's clear that this would apply to something like this. They gave the director of access, the Medicaid program, authorization to determine the amount of this assessment that would be imposed on hospitals, and to determine which hospitals would pay this. And it seems like this covers that.

Ted Simons: So, it goes back to superior court, correct?

Jeremy Duda: Yes, back to the lower court now, and they will relook at the case on the prop 108 argument, which they completely sidestepped before.

Ted Simons: Will Governor Ducey continue to defend?

Jeremy Duda: He hasn't really said, you know. Governor Ducey is inheriting a lot of litigation from his predecessor, and on all of them, his staff has the same answer. We're reviewing it, consulting with council. We'll determine once he's sworn in, now he is and he has to make decisions. This is -- this is a big one, you know. This is an issue where if he stopped defending this, which we have seen, I don't know in Arizona but in other states in the Federal level, that would be the end of it, and Medicaid expansion would go away completely. Now, I don't know if he will do that. This would cause -- this would be dropping a bombshell on an already frazzled budget situation so I don't know if he would do that, plus, I think some of the opponents of Medicaid expansion, I think that they would like to see this litigated. Prop 108 has never been litigated in the courts. There is a lot of fuzziness over what it applies to in terms of the fees, assessments, and there is things that the legislature has done in the last few years during the last crisis that probably would fall under the same argument here that nobody ever challenged.

Ted Simons: What point do the courts -- can the legislature say that we have decided this is an assessment? Not a tax? You can do that up and down the line, can't you?

Jeremy Duda: Oh, sure. Back in 2009, 2010, 2011, they did this -- nowhere near at this level. But, there were a lot of situations where they authorized agency heads to impose fees, and never set an amount. And you can do a maximum limit and gave them kind of a blueprint for here's how much money we think you can get out of this, but nobody ever challenged these things. Those were slightly different situations. Some will argue these were user fees. People were paying for services they were getting from the agencies, and of course, nowhere near the millions and millions of dollars in hospital assessment brings in.

Ted Simons: We're looking at the bureaucratic aspect here, logistics and looking at the legal aspect, but let's talk about the human aspect. We're talking 200, 300,000 folks, could be affected by this?

Jeremy Duda: There are almost 250,000 people, childless adults who have enrolled with access since the beginning of 2014 when the program went into effect. The Medicaid expansion, ended coverage from 100% of the Federal poverty level to 133%, but remember from a few years earlier we had frozen enrollment for people up to 100%, and that had downsized the budget saving measure. Now, the folks were coming back, and the overwhelming majority, the people have enrolled since, are the people who were technically covered by state law. We're looking at almost 210,000 people, built up to 100%, 32, 33,000, maybe probably a little more by now on the 100, 133%. That's a quarter of a million people right there.

Ted Simons: You are talking about Federal funding that goes away. You are talking about these folks in the hospitals, the costs that we were talking about that got this through in the first place, those return. This is a big deal.

Jeremy Duda: Yeah, and you have, you know, is a few options for what you do. You dropped 250,000 people right off the bat or more than that because you still had some preexisting childless adults who had not dropped their enrollment yet by the time this went into effect. Do you envy, you know, 100 to 133% expansion, which, you know, state law did not cover before that and pay for the rest out of state funds? Which would cost a heck of a lot, especially with a billion dollars deficit coming up.

Ted Simons: Well, we shall see what happens next. Good stuff, Jeremy. Good to have you here. Thanks for joining us.

Video: Climb east along U.S. 60, approximately 55 miles from Phoenix, and you will come to a marker for picket post mountain. Early Mexico residents called it a name after birds in the area. In 1870, the soldiers of indian fighter general George stoneman renamed it picket post mountain for the second, they posted here, high above infantry camp established at its base. Within eight years, a town of 2,000, called picket post, later pinal city, sprang up to work the silver King mine, Arizona's richest silver strike before it Petered out. Today, thousands flock to the foothills of picket post mountain to stroll through boys Thompson Arboretum. Home to 6,000 plant species and 270 kinds of birds.

Jeremy Duda:Journalist, Arizona Capitol Times;

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