Arizona’s Medicaid Hospital Assessment

It’s unanimous….the levy is not a tax. That was the bottom line in a decision handed down by the Arizona Court of Appeals yesterday regarding our state’s Medicaid expansion that has extended insurance coverage to more than 400,000 low-income Arizonans.

From KTAR-News in Phoenix:

(Former Gov. Jan) Brewer battled fellow Republicans in the Legislature for months in 2013 over the expansion, finally calling the Legislature into special session to push through the measure.

Republican lawmakers who sued said the fee funding expansion was really a tax requiring a two-thirds majority vote to pass under a provision in the state Constitution. The measure didn’t meet that threshold, netting only a slim majority in the House and Senate as a handful of Republicans joined with minority Democrats to pass the law.

The court flatly rejected that argument.

According to the Arizona Daily Sun:

In a unanimous decision the judges rejected arguments by foes that the assessment on hospitals was a new tax which, according to the Arizona Constitution, needs a two-thirds vote of both the House and Senate to approve. The levy did not get that margin.

But appellate Judge Paul McMurdie, writing for the court, said he and his colleagues do not see it that way. Put quite simply, he said the levy is not a tax.

AzCentral.com added, “The three-judge appellate panel unanimously upheld the lower court’s decision, finding the hospital fee was an assessment that was correctly passed by a legislative majority in 2013. The three-judge panel issued its written decision Thursday, a month after sharply questioning the dissenting lawmakers’ attorneys during oral arguments. “It wasn’t unexpected, given the way the argument went, but of course we are disappointed,” said Christina Sandefur, a Goldwater Institute attorney who represented the lawmakers.”

KJZZ pointed out, “there are certain exceptions in Arizona law that allow for special fees, and the judges agreed the hospital assessment qualified as that.”

Arizona Hospital and Healthcare Association (AzHHA) Vice President of Strategy and General Counsel Ann-Marie Alameddin, wrote an amicus brief to support the state’s legal defense. This piece appears integral to the Court’s reasoning that the hospital funding in the Act is a fee – not a tax. Click here to read the brief.

The fight, however, may not be over. Lawmakers challenging the decision are expected to petition the Arizona Supreme Court to review of the case. We will continue to follow this closely and bring you the latest developments. And we’d love to have you share your thoughts on the decision. Listening to what our partners are thinking is a critical piece of our long-term goal to one day make Arizona the Healthiest State in the Nation!

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