The Arizona Court of Appeals told Gov. Jan Brewer last week that she and GOP lawmakers were obligated to provide health-care coverage to Arizonans beneath the federal poverty line.
But in a ruling released last Tuesday, Dec. 6, the justices concluded they had no power to actually force the lawmakers to provide the funding for the AHCCCS program, despite "the human suffering that has occurred and will unquestionably continue to occur as a consequence" of the health-care cuts.
Tim Hogan, the attorney who sued the state, vowed to appeal the ruling to the Arizona Supreme Court.
While Hogan wouldn't count the case as a win in his fight to reverse Gov. Jan Brewer's cuts in health-care coverage for low-income Arizonans, the appeals court agreed with half of his fundamental argument: The state is obligated to provide health insurance to any Arizonan under the federal poverty line.
That's a reversal of a Maricopa County Superior Court ruling in Brewer's favor that essentially said the Legislature did not need to fund the program, because voters couldn't force lawmakers to fund certain programs through the initiative process.
Here's the legal twist: Even though the judges believe the state should be providing health-care coverage, the appeals court concluded that it lacked the authority to order the Legislature to fund the program.
"The court says, 'There's a mandatory directive to do this; we just can't do anything about it if (legislators) don't,'" says Hogan, the executive director of the Arizona Center for Law in the Public Interest.
Hogan hopes to persuade the Arizona Supreme Court that if lawmakers are indeed obligated to provide the health-care coverage, the court should rule that they are also obligated to fund the program. He says the court did just that once when it ordered the state to spend money on school construction.
"I get that the court does not want to get involved in setting budget priorities, but there are certain things that the law requires money be spent on, and this is one of them," Hogan says.
While the justices knocked down some of her lawyers' central arguments, Brewer celebrated the court's ruling.
"I am pleased that the Arizona Court of Appeals affirmed the Superior Court's dismissal of this case and recognized that this issue involves a political decision entrusted to the legislative and executive branches of state government per the Arizona Constitution," Brewer said in a statement. "I also commend the court for taking into account that, had the freeze not been implemented, devastating cuts to other critical state services such as K-12 education and public safety would have been imminent."
The state started providing health-care coverage to any Arizonan below the federal poverty level through the Arizona Health Care Cost Containment System after voters approved Proposition 204 on the 2000 ballot. While some of the coverage was paid for by money that the state received as part of a tobacco-lawsuit settlement, most of the money came from the state's general fund.
To help balance the budget, state lawmakers cut AHCCCS funding by more than $500 million during this year's legislative session. The Brewer administration eliminated eligibility for childless adults, although she allowed anyone now on AHCCCS to remain covered unless they fail to complete renewal paperwork on time.
Since lawmakers are prohibited from changing laws passed by the voters, Hogan sued the state. The Arizona Supreme Court declined to stop the cuts and told Hogan to start the case at the Superior Court level.
The reduction in state funding for the program has resulted in lower federal funding for health care in Arizona, because the feds provide a 2-to-1 match for most of the state dollars spent on AHCCCS.
State Rep. Matt Heinz, a Democrat who represents Tucson's downtown and southside, says the cuts to AHCCCS are bad for low-income Arizonans who now must seek care in emergency rooms rather than treating chronic diseases before they are in crisis.
But the cuts are also hurting Arizona's hospitals, which are obligated to provide care even if patients are uninsured.
"The hospitals are still taking care of these folks, but they're not getting any reimbursement to help cover those costs," says Heinz, a Tucson Medical Center emergency-room physician. "That means some of these hospitals may fold. ... Rural ERs are going to start blinking out."
Jim Dickson, the CEO of Bisbee's Copper Queen Hospital, says that rural hospitals are getting hammered as a result of the cuts in AHCCCS funding, with most seeing their charity and uncompensated care costs at least double.
At the Copper Queen, uncompensated and charity care have increased from $241,000 in the first five months of last fiscal year to $610,000 in the first five months of the current fiscal year.
"The increase is growing every month," says Dixon. "The percentage is growing every month. It's accelerating every month."
Dixon is working with 16 other rural hospitals and the Brewer administration to develop a program that would allow them to voluntarily contribute dollars to the state that would be eligible for the two-to-one federal match; that money would then be returned in some form to the consortium. Federal officials are still weighing whether to approve the proposal.
"They're taking a long time to make a decision, but I'd rather them take a long time and get a 'yes' than get a quick 'no,'" Dickson says.