State Supremes to Hear Challenge to Medicaid Expansion October 26

When Arizona expanded our Medicaid program (AHCCCS) to cover people up to 138% of poverty we used a provision in the ACA that allows states to expand coverage with the federal government absorbing all the cost at first.

But that meant we had to first cover all “childless adults” below the federal poverty level- a group that lost AHCCCS coverage during the recession.  We paid for covering the childless adults with an assessment (fee) on hospitals (right now it’s about $264M).

AHCCCS set the assessments using a formula that made sure each hospital chain would be OK with the assessment because their fee would be lower than what they stood to gain by the reduction in uncompensated care.

The bill that authorized the assessment and Medicaid expansion barely passed with just over 50% of the House and Senate.  Many of the lawmakers that voted “no” believe that the bill should have required a supermajority because of a voter approved initiative that requires tax increases to pass by 2/3 of each chamber.

The Executive Branch believes that the assessment is not a tax, but a fee set by an agency director.  That’s the crux of the Biggs v. Betlach suit that challenges our Medicaid expansion.

The Goldwater Institute filed new documents this week with the Arizona Supreme Court, who will ultimately decide if the assessment is a fee or a tax. 

If the Court ultimately agrees with the Plaintiffs, AHCCCS wouldn’t be able to collect $264M hospitals pay and there won’t be enough money to fund the childless adults or the expanded coverage.  Unless the legislature were to vote by a 2/3 majority to fund the program, the only path to keeping the coverage would be via a voter initiative- which just got a lot harder to do with the passage of HB 2404 (preventing signature gatherers from getting paid by the signature) and HB2244 (changing the citizen's initiative compliance standard from "substantial compliance" to "strict compliance").

There will be Oral Arguments on the Biggs v. Betlach case on Thursday, October 26 starting at 9 am at the Arizona Supreme Court (Case CV-17-0130-PR).