Judge: Arizona Medicaid expansion was constitutional

• Judge Douglas Gerlach, in his ruling, said the fee “does not qualify as a tax,” as the 36 Republican legislators who opposed it have argued
• As a result, there was no need for a two-thirds supermajority to enact the legislation

The Arizona Legislature’s simple-majority vote to expand Medicaid was constitutional, a judge ruled Wednesday, setting the stage for a legal fight that will ultimately reach the state Supreme Court.

The case hinges on whether a hospital assessment lawmakers approved in 2013 to fund the expansion, which extended health-care coverage to more than 250,000 low-income Arizonans, is a fee, as its proponents argued, or a tax.

Maricopa County Superior Court Judge Douglas Gerlach rejected arguments from three dozen former and current Republican lawmakers that the hotly disputed hospital assessment was a tax. Tax increases require a two-thirds vote of the Legislature.

The Goldwater Institute, which represents the lawmakers, immediately said it will appeal the ruling.

“This has been about more than the Medicaid tax,” attorney Christina Sandefur said. The broader issue is the reach of the supermajority requirement, which voters approved in 1992. Left unchallenged, future legislatures could raise taxes in the guise of fees or assessments, she said.

But Gerlach ruled the lawmakers’ case didn’t meet any of the three criteria outlined in prior court cases that would distinguish an assessment from a tax. Nor did they prove that any of the exceptions that would make an “assessment” a tax apply.

Gov. Jan Brewer, who rallied a bipartisan coalition of lawmakers to pass the assessment, praised Gerlach’s ruling. In a statement, she called it “a huge win for businesses, our health care system and for hard working families in Arizona.”

The Arizona Hospital and Healthcare Association also cheered the ruling. In a statement, executive director Greg Vigdor said in the hospital assessment has cut the number of unpaid stays at Arizona hospitals, especially smaller ones, while expanding health coverage to hundreds of thousands of people.

However, Vigdor, like the GOP lawmakers, acknowledged the fight it not over.

Gerlach acknowledged as much at the court hearing last month, noting appeals will be filed regardless of his decision and that the state Supreme Court will ultimately decide the matter.

“My decision probably has no more impact than the outcome of a spring-training game,” said Gerlach, who has worked as a baseball umpire.

Reach the reporter at maryjo.pitzl@arizonarepublic.com or at 602-444-8963.