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AZ Republicans Fight Obamacare Hospital Tax

PHOENIX (CN) - Arizona's efforts to comply with Obamacare led to a tax increase that did not get the required two-thirds approval by the Legislature, 36 Republicans claim in court.

The Patient Protection and Affordable Care Act increased federal eligibility for Medicaid to include people with an income below 133 percent of the federal poverty level, but "states that choose to expand are responsible for administrative costs and medical costs for the previously eligible populations," according to the complaint in Maricopa County Superior Court.

Gov. Jan Brewer's office estimates expansion will cost $154 million for the first year, and the nonprofit Kaiser Family Foundation predicts Arizona will spend $3.1 billion from 2014-22 on the expansion, the complaint continues.

Arizona allegedly needs to charge hospitals a mandatory provider tax to qualify for federal funding, but the Medicaid expansion plan failed to pass either house of the state Legislature by the two-thirds supermajority, according to the complaint.

All 36 plaintiff lawmakers, led by Arizona state Senate president Andy Biggs, say they voted against House Bill 2010. They are joined as plaintiffs by three constituents.

"Instead of complying with the Constitution, expansion advocates passed the new program by ceding the power to levy taxes to the director of Arizona's Medicaid agency," known as the Arizona Health Care Cost Containment System, according to the complaint.

They added: "Despite its constitutional infirmities, Governor Brewer signed H.B. 2010 into law on June 17, 2013."

"H.B. 2010 delegates the authority to levy the provider tax to the unelected AHCCCS director, requiring the director to 'establish, administer and collect an assessment on hospital revenues, discharges or bed days for the purpose of funding the nonfederal share of the costs,'" the complaint continues.

It allegedly empowers the director to determine the method, amount or rate of the assessment, as well as modifications and exemptions.

The legislators say Brewer's approval of the law violates a 1992 constitutional amendment to "make it more difficult to raise taxes."

The amendment, approved by 71 percent of Arizona voters, requires a two-thirds vote to pass a new tax. House Bill 2010 passed the House with a 33-27 vote, and the Senate 18-11.

The lawmakers seek to find the law unconstitutional, and to enjoin collection of the tax.

They are represented by Christina Sandefur with the Goldwater Institute's Scharf-Norton Center for Constitutional Litigation.


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