The day after an initiative drive failed to get enough signatures to qualify for a ballot referendum to overturn the state's Medicaid expansion, a lawsuit has been filed seeking to overturn the tax that funds the expansion.

The Goldwater Institute filed the suit on behalf of 36 Republican state lawmakers, including senators and representatives. Two citizens are also on the plaintiff list: one is a resident of Legislative District 14, the other is Tom Jenney, the director of the Arizona Chapter of Americans for Prosperity.

The lawsuit asks the court to declare the tax which funds the Medicaid expansion unconstitutional for two reasons:

  • The lawsuit argues the state cons needed a supermajority to approve the Medicaid expansion because it imposes a new tax. That means instead of a simple majority vote, the legislature needed approval from two-thirds of the members.

  • It also argues that the expansion violated the separation of powers clause in the state constitution by delegating taxing authority to the Arizona Health Care Cost Containment System, the state's Medicaid program. The ability to tax is purely a legislative power, the suit says, and AHCCCS is a department of the executive branch.

“What happened here is that the Governor signed into law without the proper number of votes the Medicaid expansion provider tax, and the legislature gave it’s taxation power away to an unaccountable bureaucrat,” said Christina Sandefur, an attorney with the Goldwater Institute.

In allowing another branch to implement and collect a tax, in this case a tax on hospitals to fund the Medicaid expansion, it's "taxation without representation," Sandefur said.

The lawsuit challenges only the tax to fund the expansion, but if it is successful, it would have a broader result.

"In effect if we were to get the tax declared unconstitutional it would probably halt expansion, at least for a while," Sandefur said.

Read the Goldwater lawsuit challenging the Medicaid expansion tax: View at Google Docs | Download File