Arizona Gov. Jan Brewer dealt legal blow over Medicaid expansion plan

Arizona Gov. Jan Brewer was dealt a significant legal defeat Wednesday when the Arizona Supreme Court ruled that a lawsuit challenging her controversial Medicaid expansion plan could move forward.

The Republican governor, who leaves office in January, wants to insure about 300,000 poor Arizonans through a key part of President Obama’s Affordable Care Act. But 36 lawmakers from Brewer’s own party sued the governor, questioning the legality of a hospital assessment that would fund the plan.

The court’s ruling now allows that lawsuit to go forward by returning it to a trial court, which will decide whether the hospital assessment is a tax requiring a two-thirds majority approval by the Legislature. Brewer was only narrowly able to get a majority of lawmakers to support her plan when it passed the Legislature during a June 2013 special session.

The assessment -- expected to raise $256 million in 2015 -- is a key part of Brewer’s plan because without it the state won’t receive the federal matching funds it needs to pay its share of the Medicaid expansion. The Medicaid expansion would include people earning between 100% and 138% of the federal poverty level as well as childless adults.

Hospitals were strongly in favor of the assessment because the expansion would reduce the cost of treating uninsured patients.

This is the second legal challenge Brewer’s plan has faced. A Maricopa County Superior Court judge dismissed the lawmakers’ first attempt. But an appeals court ruled that the lawsuit should go forward and the state Supreme Court agreed. The case will now proceed to trial.

The Supreme Court heard the case in November. At the time Brewer, who attended the hearing, said defeat of her plan “could be fatal. It could be a catastrophe.”

“Let’s be perfectly clear: Preventing Medicaid restoration would threaten our safety-net hospitals and decimate our state budget, including funding for our [Department of Child Safety] and education and public safety,” Brewer told the Associated Press. “There’s a lot at stake here.”

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