BOISE — Idaho Supreme Court justices on Tuesday appeared skeptical of arguments both from the Idaho Freedom Foundation that Proposition 2, expanding Medicaid, is unconstitutional, and from the Idaho Attorney General’s Office that the case should be dismissed on procedural grounds before even getting to its merits.

The initiative, which passed in November with 60.6 percent of voters supporting it, expands Medicaid in Idaho largely at federal expense to cover those who currently fall into a coverage gap, because they make too much to qualify for traditional Medicaid, but not enough to qualify for subsidized health insurance through the state insurance exchange. Idaho was one of three states whose voters opted to expand Medicaid on Nov. 6; 33 states had previously taken that step.

The lawsuit charges that the voter initiative unconstitutionally delegates lawmaking authority to the state Department of Health and Welfare and the federal government, a contention the attorney general’s office dismisses as simply not true.

“Based on the plain reading … there is simply no delegation to the federal government,” Deputy Attorney General Brian Kane told the justices. “No cogent legal theory has been advanced procedurally or substantively in the course of these proceedings.” He asked that the case be dismissed and the state be awarded attorney fees.

Bryan Smith, attorney for Freedom Foundation board Chairman Brent Regan, told the justices that the initiative opts Idaho into expanding Medicaid without accounting for any possible federal changes that could occur in the program without Idaho’s consent, thus delegating Idaho’s lawmakers power to the feds.

“You’re saying you can’t back out of Medicaid plans?” Chief Justice Roger Burdick asked him. “If the government changes something, can’t the state say, ‘No, we opt out’?”

Smith responded that the state shouldn’t have to take that step. “Are we going to act, or are we going to be acted upon?” he asked. “This is the problem. We are now left with unknowable and uncertain changes the federal government would make, and that requires us to play defense instead of offense.”

Though both sides in the case submitted substantial arguments on procedural issues, including standing and jurisdiction, the court appeared disinclined to toss the case out on those grounds without considering the merits. When Kane presented procedural arguments, Burdick said there are “unique and compelling circumstances,” saying, “We have a Legislature that is waiting to see what happens with this decision up or down. Is that not unique and compelling, whether or not this is constitutional?”

Kane said, “This case does not rise to that level.”

Burdick countered, “If we follow your argument and dismiss this on procedural grounds, then the Legislature is left with, is this good law or is this bad law — so they’re paralyzed. And then the people’s will is also paralyzed. Is that not … unique and compelling circumstances?”

Kane said the chief justice raised a unique argument “for why the merits should be reached in this case.”

Justice John Stegner noted the “tens of thousands of people impacted” by the outcome. An estimated 60,000 Idahoans now fall into the coverage gap because the state hasn’t expanded Medicaid. Though former Gov. Butch Otter convened several task forces that recommended the move, lawmakers refused to act for six straight years, before voters took on the matter themselves through the initiative.

The justices had pointed questions for Smith about his delegation argument, which is at the heart of his contention that the citizen initiative is unconstitutional.

Stegner asked Smith, “One of the things I’m trying to understand is, if the Legislature had done this, would you have a quarrel with it? And because the people did it, why do you have a quarrel with it? It seems to me that the people of the state have simply said, ‘We’re going to raise the level (for Medicaid eligibility) from 21 percent of federal poverty level to 133 percent.’ … That strikes me as a fairly innocuous legislative action, whether it’s done by the people or by the Legislature.”

Smith said the federal poverty level itself is something the federal government “can change with very little input from Idaho.” Stegner then asked, in that case, if Smith wasn’t arguing that Idaho’s entire Medicaid program is unconstitutional, because it, too, uses federal poverty level in eligibility standards.

And Justice Greg Moeller said by Smith’s logic, other Idaho statutes, like the one tying Idaho’s minimum wage to the federal minimum wage, also would be unconstitutional.

Burdick asked if state laws tying policies to federal price indexes also would be unconstitutional.

Moeller asked Smith, “Isn’t it possible to work with the federal government without being considered a secession of power or a surrender of our sovereignty?”

Smith said yes, if Idaho can decide which federal rules it wants to accept, and not be forced to live with the rules by default. Moeller asked, “Isn’t that, though, what the people of this state did by passing Proposition 2?”

After the arguments, Regan, who sat in the front row of the audience, praised Smith’s performance, saying he did “a very good job of lawyering.”

Idaho Secretary of State Lawerence Denney, who had a conference call and missed the arguments, said, “It will be what it will be. We decided just to let the attorneys take care of it.” He added, “It was interesting to me that the Supreme Court even heard it, but I think they do want to answer a couple of questions there.”

Smith said, “I think that the court will get to the merits of the case.” But after that point, he said, “I have no idea. We could have a divided court. … I think we raised some pretty good issues.”

In Smith’s reply brief filed with the court, he warned that the voter-passed initiative could turn Idaho lawmakers into “zombie legislators” with no say over policy.

Ken McClure, who argued to the justices on behalf of a group of intervenors including two potential Medicaid recipients, a doctor, and the Idaho Medical Association, splitting time with the attorney general’s office, said, “I think that the court received a clear presentation of each side, and I will look forward to its ruling.”

The justices took the case under advisement, and will issue a written ruling.

McKay Cunningham, a law professor at Concordia University in Boise, said he was surprised the justices didn’t focus more on the procedural issues. “You don’t ever get to the merits until you are firmly grounded in jurisdiction,” he said. “I think that the court was doing its best to make sure that it had a full understanding of all of the arguments and a fair opportunity for everyone to articulate them fully.”

Betsy Z. Russell is the Boise bureau chief and state capitol reporter for the Idaho Press and Adams Publishing Group. Follow her on Twitter at @BetsyZRussell.

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