Arizona court allows Medicaid suit to go forward

PHOENIX – The Arizona Supreme Court on Wednesday allowed a lawsuit challenging Gov. Jan Brewer’s Medicaid expansion plan to move forward, a decision that deals a major blow to the governor’s signature achievement just days before she leaves office.

The high court agreed that 36 Republican lawmakers can sue Brewer over the legality of a hospital assessment that funds the expansion plan.

The ruling means Brewer’s plan to insure about 300,000 poor Arizonans using a key part of President Barack Obama’s health care overhaul could eventually be crippled as she hands the governor’s office to fellow Republican Doug Ducey.

Brewer, who leaves office Jan. 5, said in a statement that she was “naturally disappointed” in the ruling but hopeful she will eventually prevail.

“I am abundantly confident that Arizona will ultimately prevail, and that the state will be able to focus on implementing one of the most meaningful and critical health care policies in years - the restoration of crucial, cost-effective care to thousands of Arizonans,” Brewer said.

However, Ducey must decide whether the state continues to fight the lawsuit.

Ducey, who opposed the expansion but has said he didn’t intend to push for its immediate repeal, would not say Wednesday if he would drop the battle and let the program end. He has said that he thought Brewer’s embrace of a straight expansion was a mistake.

“What was really lost here was the opportunity for some of the reforms around health care savings accounts and pricing transparency and things that will really drive the cost curve,” Ducey said after he won the Republican primary in August. “But those are things that we’ll be able to deal with in a first term.”

The case now returns to a trial court which will decide whether the hospital assessment is a tax that requires a two-thirds majority vote. Only a bare majority passed the legislation. The Goldwater Institute, which sued on behalf of lawmakers, plans to ask a judge to halt the funding for the expansion immediately.

Without the assessment, Arizona won’t have the matching funds to pay its share of the expansion that is covering about 255,000 low-income Arizonans. The state is also using excess federal cash from the assessment to plug holes in current and future budgets. A looming shortfall in the coming budget year could be made worse if Ducey allows the expansion to end.

Brewer put together a coalition of Democrats and some Republicans who supported the expansion, and after a battle with conservatives pushed it through the Legislature in a June 2013 special session. She was one of only a handful of Republican governors who embraced Medicaid expansion.

In all, 27 states and the District of Columbia are moving ahead with expansion, mostly governed by Democrats. Sixteen states have rejected expansion, and seven others are weighing options, according to the latest tracking by the Kaiser Family Foundation.

A few GOP-led states looked for compromises, embracing other options to cover low-income residents.