The fate of Arizona’s Medicaid expansion is now in the hands of the Arizona Court of Appeals.

On Tuesday, the court heard the latest challenge to the long-running lawsuit brought by Republican lawmakers.

In the early 1990s, Arizona voters amended the Constitution so any new tax requires a two-thirds majority from the Legislature. But there is an exception, which allows state agency directors to impose an assessment. That’s what happened with Arizona’s Medicaid expansion. The director of AHCCCS required hospitals to pay a fee and, in turn, many of them benefited from a substantial drop in uncompensated care. Because of the Affordable Care Act, the federal government covers most of the costs for the expanded eligibility, but the state’s contribution comes from that assessment.

Opponents of the expansion, however, argue the fee was an illegal tax; representing them is Christina Sandefur with the Goldwater Institute.

“Anytime the Legislature acts, anytime it acts whether it acts on its own or whether it is acting to authorize an administrator to act, it must do so with a supermajority," she said.

A Superior Court judge did not see it that way and, in 2015, upheld the assessment was not a tax. This panel of appellate judges questioned Sandefur about the reason for the exception if it is also subject to the supermajority rule.

Tim Hogan is with the Arizona Center for Law in the Public Interest, which joined with the state to defend the challenge.

He says while the Constitution does constrain the Legislature’s ability to raise revenue, “there are exceptions to that where the government needs some flexibility to address important problems like that, and of course the one we talked about in there is university tuition, where there is an assessment to account for the cost of education.”

Former Gov. Jan Brewer showed up to watch the hearing. She said she stands by her decision — no matter how divisive — because it also restored coverage for childless adults as mandated by a voter approved measure from 2000.

“We upheld the voters’ intent when they voted on it and restored and brought money into the state and were able to cover other people, people that are desperately in need of health care.”

More than 400,000 people are now covered by Arizona’s Medicaid expansion.

Without the state contribution from the hospital assessment, the federal matching funds go away.