The fate of a hospital assessment that helps pay for a Medicaid expansion plan that now covers 400,000 additional Arizona residents is in the hands of the Arizona Supreme Court.
The high court heard a challenge Thursday to the assessment that was brought by Republican lawmakers but didn't indicate when it would issue a ruling.
An attorney for the Goldwater Institute, representing the GOP lawmakers, argued that the hospital fee required a two-thirds vote under a 1992 Constitutional amendment known as Proposition 108 that was approved by state voters.
Goldwater attorney Christina Sandefur said any increase in revenues, whether a tax, fee or assessment, triggered the supermajority requirement.
"They wanted to change the status quo -- they wanted to place these limitations on the Legislature requiring anytime the Legislature acts to raise revenue," she told the justices.
The state's Medicaid agency, represented by private attorney Timothy Berg, argued that an exemption for fees set by state agencies means the hospital assessment is legal.
The case is important not only for the 400,000 people now covered under the expansion but also because the Legislature needs clarity to avoid similar challenges in the future, Berg said.
He said Sandefur's argument is inconsistent with the plain language in the law, which exempts fees or assessment set by state agencies under a law passed by the Legislature.
"It's clear on its face," Berg said. "There is no two-third requirement to apply to it."
The justices asked pointed questions of both attorneys, and Chief Justice Scott Bales repeated a phrase that was an important clue in the Court of Appeals' March decision upholding the assessment. During arguments before that case was decided, Judge Paul J. McMurdie got nods from the other two judges when he said Sandefur's arguments were illogical and "circular." Bales twice used the "circular" phrase on Thursday.
The state's hospitals paid $265 million in assessments last fiscal year based on the number of people they treated. In return, they got patients that were covered by Medicaid, and their statewide association backs the assessment. The assessment pays the state's cost of coverage, but the vast majority of spending comes from the federal government.
Former Republican Gov. Jan Brewer pushed the Medicaid expansion through the Legislature four years ago.
Brewer's law restored coverage for childless adults earning less than 100 percent of the federal poverty level who had been covered in Arizona before the Great Recession sapped state revenues. It also extended coverage to all Arizonans legally in the country who earn up to 138 percent of the poverty level.
Brewer surprised many when she embraced the expansion, and angered many other Republicans with her efforts, which included calling a special legislative session after Republican House and Senate leaders stalled a vote for weeks.
With the expansion, about 1.9 million Arizona residents are now covered by Medicaid.