Filed: Nov. 17, 2014
Latest Update: Mar. 02, 2020
Summary: In June 2013, Maine's legislature passed a bill that, would have expanded the state's Medicaid program in order to, receive the additional federal funding offered under the ACA.exceeded Congress's power under the Spending Clause.condition.17, Maine DHHS contends that, because the MOE provisions, .
United States Court of Appeals
For the First Circuit
No. 14-1300
MARY C. MAYHEW, in her capacity as Secretary of
the Maine Department of Health and Human Services,
Petitioner,
v.
SYLVIA M. BURWELL, in her capacity as Secretary of
the U.S. Department of Health and Human Services,
Respondent,
and
JANET T. MILLS, in her capacity as Attorney General of Maine,
Intervenor.
PETITION FOR REVIEW FROM A DECISION OF THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Before
Lynch, Chief Judge,
Selya and Barron, Circuit Judges.
Clifford H. Ruprecht, with whom Christopher T. Roach,
Geraldine G. Sanchez, and Roach, Hewitt, Ruprecht, Sanchez &
Bischoff, P.C. were on brief, for petitioner.
Alisa B. Klein, Appellate Staff Attorney, with whom Beth S.
Brinkmann, Deputy Assistant Attorney General, Mark B. Stern,
Appellate Staff Attorney, Stuart F. Delery, Assistant Attorney
General, William B. Schultz, General Counsel, Janice L. Hoffman,
Associate General Counsel, Susan Maxson Lyons, Deputy Associate
General Counsel for Litigation, and Bridgette Kaiser were on brief,
for respondent.
Christopher C. Taub, Assistant Attorney General, with whom
Janet T. Mills, Attorney General, was on brief, for intervenor.
Martha Jane Perkins, Catherine McKee, and Jack Comart on brief
for National Health Law Program, Maine Equal Justice Partners,
Maine Psychological Association, Maine Chapter of the American
Academy of Pediatrics, Maine Medical Association, Preble Street,
Maine Children's Alliance, and Young Invincibles, amici curiae.
November 17, 2014
LYNCH, Chief Judge. After providing Medicaid coverage
for over 20 years for 19- and 20-year old children whose families
met low-income requirements, in 2012, Maine DHHS1 sought to drop
that coverage by proposing an amendment to its Medicaid state plan.
The federal Department of Health and Human Services (DHHS)
Secretary disapproved the amendment, stating that it plainly
violates a federal statute, 42 U.S.C. § 1396a(gg), part of the
Patient Protection and Affordable Care Act ("ACA"), Pub. L. No.
111-148, 124 Stat. 119 (2010). Section 1396a(gg) requires states
accepting Medicaid funds to maintain their Medicaid eligibility
standards for children until October 1, 2019.
Maine DHHS now petitions for review, arguing that the
federal disapproval is unconstitutional. It says that under
portions of National Federation of Independent Businesses v.
Sebelius (NFIB), 132 S. Ct. 2566 (2012), § 1396a(gg) as applied
here is unconstitutionally coercive in violation of the Spending
Clause and, independently, that it violates Maine's right to equal
1
"Maine DHHS," as used in this opinion, refers to
petitioner Mary C. Mayhew, in her capacity as Secretary of the
Maine Department of Health and Human Services. Maine DHHS has
petitioned for judicial review of the decision of the U.S.
Department of Health and Human Services disapproving Maine's
proposed state plan amendment. Maine's Attorney General has
declined to represent Maine DHHS in this lawsuit, citing "strong[]"
disagreements with the state agency "as a matter of law and public
policy." The Maine Attorney General authorized outside counsel for
Maine DHHS and has intervened in this suit on the side of
respondent Sylvia Burwell, in her capacity as Secretary of the U.S.
DHHS.
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sovereignty as recognized in Shelby County v. Holder, 133 S. Ct.
2612 (2013), and like cases.
The United States says the statute as applied here is
constitutional, fitting easily within congressional spending power
to condition federal Medicaid grants. The Attorney General of
Maine, Janet T. Mills, as interested party-intervenor, argues that
the rejection of Maine DHHS's proposed amendment is constitutional.
And amici health professionals explain the history and importance
of the Medicaid health care provisions for this age group.2
For the reasons that follow, we hold that the statute is
constitutional as applied here.
I. Background
The Medicaid Act, 42 U.S.C. § 1396 et seq., first enacted
in 1965, provides federal funds to states to assist them in paying
for the medical care of needy individuals. NFIB, 132 S. Ct. at
2581. The Secretary of the U.S. DHHS administers the Medicaid
program through the Centers for Medicare and Medicaid Services
(CMS). Ark. Dep't of Health & Human Servs. v. Ahlborn,
547 U.S.
268, 275 (2006).
"States are not required to participate in Medicaid, but
all of them do." Id. Maine began participating in Medicaid in
1966, shortly after the program's inception. See U.S. Advisory
2
We express our appreciation to the amici for their
assistance.
-4-
Comm'n on Intergovernmental Relations, Intergovernmental Problems
in Medicaid 19 (1968), available at http://digital.library.unt.edu/
ark:/67531/metadc1397/m1/35/?q=maine. "In order to receive
[Medicaid] funding, States must comply with federal criteria
governing matters such as who receives care and what services are
provided at what cost." NFIB, 132 S. Ct. at 2581. To this end,
"States must submit to . . . CMS . . . a state Medicaid plan that
details the nature and scope of the State's Medicaid program.
[States] must also submit any amendments to the plan that [they]
may make from time to time. And [they] must receive the agency's
approval of the plan and any amendments." Douglas v. Indep. Living
Ctr. of S. Cal., Inc.,
132 S. Ct. 1204, 1208 (2012). CMS reviews
the states' plans and their proposed amendments "to determine
whether they comply with the statutory and regulatory requirements
governing the Medicaid program."
Id. (citing 42 U.S.C.
§§ 1316(a)(1), (b), 1396a(a), (b); 42 C.F.R. § 430.10 et seq.).
When Congress passed the Medicaid Act, it expressly
reserved "[t]he right to alter, amend, or repeal any provision" of
the Medicaid statute. NFIB, 132 S. Ct. at 2605 (quoting 42 U.S.C.
§ 1304). It has exercised that power. Congress has, in fact,
provided greater Medicaid eligibility on numerous occasions. From
the start, the Act has mandated coverage for certain children, and
over time it has increased the eligibility by changing age and
income requirements. See Social Security Amendments of 1965, Pub.
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L. No. 89-97, sec. 121(a), § 1902(b), 79 Stat. 286, 348 (codified
at 42 U.S.C. § 1396a(b) (1969)). For example, approximately 25
years ago, "Congress required participating States to include among
their beneficiaries pregnant women with family incomes up to 133%
of the federal poverty level, children up to age 6 at the same
income levels, and children ages 6 to 18 with family incomes up to
100% of the poverty level." NFIB, 132 S. Ct. at 2631 (Ginsburg,
J., dissenting).
Before the expansion of Medicaid effected by the ACA in
2010, Medicaid did not require states to cover non-pregnant,
non-disabled children ages 18 to 20 as a condition of participation
in the program, but it permitted states to do so at the state's
option. See 42 U.S.C. § 1396d(a)(i). States which chose to do so
were required to provide the same mandatory benefits to children
aged 18 to 20 as they provided for other children.
From 1991 to the present, Maine's Medicaid program,
MaineCare, has provided Medicaid coverage to low-income individuals
aged 18 to 20. Although considered "children" for Medicaid
purposes, such individuals are otherwise considered "adults" under
Maine law. See Me. Rev. Stat. tit. 1, §§ 72(1), 73. MaineCare
makes up a major portion of Maine's annual outlays, accounting for
just over one-third of the state's total budget in 2013.3
3
Maine's total state and federal Medicaid expenditures for
fiscal year 2012 were $2.4 billion. According to Attorney General
Mills, coverage for 19- and 20-year-olds (the group for which Maine
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In 2009, as part of the American Recovery and
Reinvestment Act (ARRA), Pub. L. No. 111-5, 123 Stat. 115 (2009),
Congress offered stimulus funds to states which agreed to maintain
their Medicaid eligibility criteria at July 1, 2008 levels until
December 31, 2010. Id. § 5001(f)(1)(A), (h)(3), 123 Stat. at 500,
502. Two of the purposes of the ARRA were to "preserve and create
jobs and promote economic recovery" and to "stabilize State and
local government budgets, in order to minimize and avoid reductions
in essential services and counterproductive state and local tax
increases."
Id. § 3(a), 123 Stat. at 115–16. Maine accepted those
funds and the concordant conditions, which included continuing to
provide coverage to low-income 18- to 20-year-olds until December
31, 2010.
The ACA, enacted on March 23, 2010, contains a
"maintenance-of-effort" (MOE) provision, now codified at 42 U.S.C.
§ 1396a(gg), which provides, in relevant part, that states, in
order to continue receiving Medicaid funds,
shall not have in effect eligibility
standards, methodologies, or procedures . . .
that are more restrictive than the eligibility
standards, methodologies, or procedures,
respectively . . . that [as of March 23, 2010]
are applicable to determining the eligibility
for medical assistance of any child who is
under 19 years of age (or such higher age as
the State may have elected).
sought to repeal coverage) represented less than two percent of
that figure.
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Maine had elected to cover 18- to 20-year-olds. The requirement of
the MOE provision is in effect until October 1, 2019. 42 U.S.C.
§ 1396a(gg)(2). In other words, beginning March 23, 2010, in order
to continue receiving those Medicaid funds they had received for
this population, states were required to "freeze" their eligibility
standards for children for a period of approximately nine years.
Those "standards" included Maine's provision of coverage for 18- to
20-year-olds.
In short, in 2009, Maine agreed to continue providing
coverage, as it had since 1991, for low-income individuals aged 18
to 20 through 2010 as a condition of receiving federal stimulus
funds under the ARRA. The ACA in 2010 then required Maine to
continue doing so for another nine years as a condition of
receiving Medicaid funds. Maine DHHS complains that it did not
have an opportunity to restrict its eligibility standards for
children after it accepted funds under the ARRA but before the ACA
went into effect.
Maine is required by its state constitution to have a
balanced budget. See Me. Const. art. 5, pt. 3d, § 5; id. art. 9,
§ 14. Faced with a budget deficit in 2012, Maine's governor
proposed eliminating MaineCare eligibility for 19- and 20-year-olds
not otherwise covered by Medicaid. The legislature voted in favor
of that elimination of coverage, among other budget cuts. Maine
DHHS projected that removing 19- and 20-year-olds from the program
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would save Maine $3.7 million but cause the state to lose $6.9
million in federal funds.
In August 2012, Maine DHHS submitted a state plan
amendment to the U.S. DHHS that eliminated coverage of 19- and 20-
year-olds, among other changes. On January 7, 2013, CMS issued an
initial decision allowing most other cuts but declining to approve
Maine DHHS's amendment as to eliminating coverage for 19- and 20-
year-olds because it did not comply with § 1396a(gg). CMS rejected
Maine DHHS's arguments that the MOE provision was an
unconstitutional exercise of Congress's spending power under the
Supreme Court's decision in NFIB. CMS, on reconsideration,
affirmed the disapproval of the state plan amendment, this time
simply stating that the proposed amendment was inconsistent with
the MOE provision and that the agency did not have the authority to
adjudicate the constitutional questions raised by Maine DHHS. This
petition for judicial review followed.
Maine DHHS brings a twofold constitutional challenge to
the MOE provision before us. First, it renews its argument that
the MOE provision is unconstitutional under the Spending Clause.
Second, it contends for the first time that the MOE provision
violates the doctrine of equal sovereignty as articulated in Shelby
County v. Holder, 133 S. Ct. 2612 (2013).
We review these constitutional challenges de novo. See
5 U.S.C. § 706 (court reviewing agency action must "decide all
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relevant questions of law" and "interpret constitutional and
statutory provisions," and shall "set aside agency action . . .
found to be . . . contrary to constitutional right, power,
privilege, or immunity"); see also United States v. Rene E., 583
F.3d 8, 11 (1st Cir. 2009) (review of constitutional challenge to
a federal statute is de novo).4
4
We asked the parties to provide supplemental briefing on
the issue of whether we have jurisdiction to address Maine DHHS's
constitutional claims, even though the agency did not address those
claims because it disclaimed the "authority to render decisions
regarding the constitutionality of congressional enactments."
After reviewing the parties' arguments, we conclude that we
have jurisdiction. Under 42 U.S.C. § 1316(a), "[a]ny State which
is dissatisfied with a final determination made by the Secretary on
. . . reconsideration" regarding approval of the state's Medicaid
plan may "file with the United States court of appeals for the
circuit in which such State is located a petition for review of
such determination. . . . The court shall have jurisdiction to
affirm the action of the Secretary or to set it aside, in whole or
in part." The Supreme Court has approved of the "appellate
court[s'] reviewing the decision of an administrative agency to
consider a constitutional challenge to a federal statute that the
agency concluded it lacked authority to decide." Elgin v. Dep't of
Treasury, 132 S. Ct. 2126, 2137-38 n.8 (2012) (collecting cases).
In Preseault v. ICC,
853 F.2d 145 (2d Cir. 1988), one of the cases
cited in the Elgin footnote, the court, in the course of reviewing
an agency's decision, held that it had jurisdiction over a
challenge to the constitutionality of the statute under which the
agency acted, even though the claim was presented for the first
time on appeal.
Preseault, 853 F.2d at 148–49. The Preseault
court rejected the agency's argument that the petitioners'
constitutional challenge should be brought in federal district
court in the first instance, concluding that "it would be
nonsensical to require a bifurcated challenge, relegating the
constitutional challenge to the statute to a district court" that
did not have jurisdiction over the review of the underlying agency
proceeding.
Id. at 149. We find Preseault's analysis persuasive.
Under § 1316(a), we have jurisdiction to review the U.S. DHHS's
disapproval of Maine DHHS's state plan amendment, and that
jurisdiction encompasses the power to adjudicate Maine DHHS's
constitutional challenges to § 1396a(gg).
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II. Spending Clause Challenge
"The Spending Clause grants Congress the power 'to pay
the Debts and provide for the . . . general Welfare of the United
States.'" NFIB, 132 S. Ct. at 2601 (quoting U.S. Const. art. I,
§ 8, cl. 1). Maine DHHS argues that application of § 1396a(gg) in
these circumstances exceeds Congress's power under the Spending
Clause for two reasons: (1) it is unconstitutionally coercive under
NFIB and (2) it violates the anti-retroactivity principle of
Pennhurst State School & Hospital v. Halderman,
451 U.S. 1, 17, 25
(1981). NFIB itself shows that both of these contentions are
without merit. The MOE provision is analogous to past
modifications of Medicaid that NFIB deemed constitutionally
permissible.
A. NFIB v. Sebelius and the Spending Clause
In NFIB, the Supreme Court considered constitutional
challenges to two provisions of the ACA: to the individual mandate,
which required most Americans to maintain a minimum level of health
insurance coverage, and to the significant expansion of the
Medicaid program, which required states to provide specified health
care to all individuals with incomes below 133 percent of the
poverty level (but at a higher federal financial participation
rate) as a condition of the state's continued participation in
Medicaid. 132 S. Ct. at 2577, 2582. In a fractured decision, the
Court upheld the individual mandate as a permissible exercise of
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Congress's taxing power, but found severable and struck down as
beyond Congress's Spending Clause authority the provision
penalizing states that did not participate in the new expansion of
the Medicaid funding with the loss of all Medicaid funding. Id. at
2608. The Court struck down only the penalty for noncompliance,
not the expansion itself.
Id. at 2607. That is, the Court held
that the U.S. DHHS could not condition the granting of all federal
Medicaid funds on a state's participation in the new expanded
program, but was permitted to condition funds for the new expanded
program on participation in the new program. The Court made this
explicit:
Nothing in our opinion precludes Congress from
offering funds under the Affordable Care Act
to expand the availability of health care, and
requiring that States accepting such funds
comply with the conditions on their use. What
Congress is not free to do is to penalize
States that choose not to participate in that
new program by taking away their existing
Medicaid funding.
Id.5
5
Maine has opted not to participate in the Medicaid
expansion. In June 2013, Maine's legislature passed a bill that
would have expanded the state's Medicaid program in order to
receive the additional federal funding offered under the ACA. LD
1066, 126th Leg., 1st Reg. Session (Me. 2013). Maine's governor
vetoed the bill, and the legislature failed to pass it over his
veto. Id.; An Act to Increase Access to Health Coverage and
Qualify Maine for Federal Funding: Roll Call Vote #339, 126th Leg.,
1st Reg. Session (Me. 2013); The Advisory Board Company, Where the
States Stand on Medicaid Expansion, Daily Briefing (Sep. 4, 2014),
http://www.advisory.com/daily-briefing/resources/primers/medicaid
map.
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Seven Justices concluded that the penalty of taking away
existing Medicaid funding from states which declined to sign up for
the new expanded Medicaid program was unconstitutional, but they
were unable to agree on a single or consistent rationale. Chief
Justice Roberts, in a plurality opinion joined by Justice Breyer
and Justice Kagan, offered one rationale for that holding. A joint
dissent authored by Justice Scalia, Justice Kennedy, Justice
Thomas, and Justice Alito offered another.
1. The plurality's approach
The plurality began its analysis by noting that the
Medicaid expansion of the ACA "dramatically increase[d] state
obligations under Medicaid." Id. at 2601. Under the pre-ACA
system, states were required "to cover only certain discrete
categories of needy individuals -- pregnant women, children, needy
families, the blind, the elderly, and the disabled."
Id. (citing
42 U.S.C. § 1396a(a)(10)). The Medicaid program expansion, "in
contrast, require[d] States to expand their Medicaid programs . . .
to cover all individuals under the age of 65 with incomes below 133
percent of the federal poverty line."
Id. (citing 42 U.S.C.
§ 1396a(a)(10)(A)(i)(VIII)).6
6
The Medicaid program expansion was projected to increase
federal Medicaid spending by $434 billion in its first six years.
Reply Br. of State Pet'rs on Medicaid at 19, Florida v. U.S. Dep't
of Health & Human Servs., 132 S. Ct. 2763 (2012) (No. 11-400),
2012
WL 864598 at *19.
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The plurality reiterated the longstanding rule that
Congress may use its power under the Spending Clause to condition
federal grants to states "upon the States' 'taking certain actions
that Congress could not require them to take.'" Id. (quoting Coll.
Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd.,
527 U.S.
666, 686 (1999)). But, in order for an exercise of the spending
power to be deemed legitimate, the state must "voluntarily and
knowingly" accept the terms of the deal.
Id. at 2602 (quoting
Pennhurst, 451 U.S. at 17). Put differently, "Congress may use its
spending power to create incentives for States to act in accordance
with federal policies," but it oversteps its authority "when
'pressure turns into compulsion.'"
Id. (quoting Charles C. Steward
Mach. Co. v. Davis,
301 U.S. 548, 590 (1937)). This limit on
Congress's spending power is necessary to "ensur[e] that Spending
Clause legislation does not undermine the status of the States as
independent sovereigns in our federal system."
Id.
The plurality opinion reasoned that, while Congress is
entitled to "condition the receipt of funds on the States'
complying with restrictions on the use of those funds" in order to
"ensure[] that the funds are spent according to [Congress's] view
of the 'general Welfare,'" when Congress places conditions on funds
that do not govern the use of those funds, "the conditions are
properly viewed as a means of pressuring the States to accept
policy changes."
Id. at 2603–04. The plurality determined that
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the latter situation obtained with respect to the Medicaid program
expansion. That expansion, Chief Justice Roberts explained,
accomplishe[d] a shift in kind, not merely
degree. The original program was designed to
cover medical services for four particular
categories of the needy: the disabled, the
blind, the elderly, and needy families with
dependent children. . . . Previous amendments
to Medicaid eligibility merely altered and
expanded the boundaries of these categories.
Under the [ACA], Medicaid . . . is no longer a
program to care for the neediest among us, but
rather an element of a comprehensive national
plan to provide universal health insurance
coverage.
Id. at 2605–06. The plurality viewed the Medicaid expansion as
creating an entirely "new health care program," participation in
which was a condition of states receiving even continued funding
for an old program (pre-ACA Medicaid). See
id. at 2606. This
meant that the Medicaid expansion was a condition upon the receipt
of funds that did not govern the use of those funds.
The plurality next considered "whether 'the financial
inducement offered by Congress' [as to the new program expansion]
was 'so coercive as to pass the point at which pressure turns into
compulsion.'" Id. at 2604 (quoting South Dakota v. Dole,
483 U.S.
203, 211 (1987)) (internal quotation marks omitted). The precedent
for this portion of the analysis was the Court's decision in Dole.
Dole had considered whether Congress's threat to withhold five
percent of a state's federal highway funds if the state did not
raise its minimum drinking age to 21 was permissible under the
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Spending Clause. Dole, 483 U.S. at 211. Dole held that it was
permissible.
Id. at 211–12. The NFIB plurality distinguished
Dole, saying while "the condition was not a restriction on how the
highway funds . . . were to be used," it was "not impermissibly
coercive, because Congress was offering only 'relatively mild
encouragement to the States.'"
NFIB, 132 S. Ct. at 2604 (quoting
Dole, 483 U.S. at 211).
By contrast, the plurality found that the financial
inducement and penalty in the new Medicaid program expansion was
"much more than 'relatively mild encouragement' -- it [was] a gun
to the head." Id. Importantly, the plurality expressly
acknowledged that Congress is permitted to modify the Medicaid
program, and to condition states' continuing participation in
Medicaid upon compliance with those modifications, as it has done
on numerous occasions in the past.
Id. at 2605.7
The plurality found that the new Medicaid program
expansion was much more than a simple modification -- it was a
"dramatic[]" "transform[ation]" of the program. NFIB, 132 S. Ct.
at 2605–06. States could not have anticipated that their
7
That was in accord with settled law, see California v.
United States, 104 F.3d 1086, 1092 (9th Cir. 1997); Stowell v.
Ives,
976 F.2d 65, 69 (1st Cir. 1992); Oklahoma v. Schweiker,
655
F.2d 401, 413–14 (D.C. Cir. 1981), and the NFIB Court did nothing
to unsettle that law. See also 42 C.F.R. § 430.12(c)(1) (state
plan "must provide that it will be amended whenever necessary to
reflect . . . [c]hanges in Federal law, regulations, policy
interpretations, or court decisions").
-16-
entitlement to Medicaid funds would become conditioned on providing
new medical care to all individuals with incomes below 133 percent
of the poverty line. Id. Thus, the new Medicaid program expansion
violated the "anti-retroactivity" rule of Pennhurst, which provides
that Congress may not "surpris[e]" states participating in a
federal-state cooperative program "with post-acceptance or
'retroactive' conditions."
Id. (quoting Pennhurst, 451 U.S. at
25).
2. The joint dissent's approach
The joint dissent's analysis of the constitutionality of
the Medicaid expansion differed significantly from that of the
plurality. The primary8 focus of the joint dissent was on the
concept of "coercion," which it defined simply: "[I]f States really
have no choice other than to accept the package, the offer is
coercive, and the conditions cannot be sustained under the spending
power." Id. at 2661 (Scalia, Kennedy, Thomas & Alito, JJ.,
dissenting). The Justices cautioned, however, that "courts should
not conclude that legislation is unconstitutional on this ground
unless the coercive nature of an offer is unmistakably clear."
Id.
8
The joint dissent also noted that conditions attached to
grants must be unambiguous, must be "related to the federal
interest in particular national projects or programs," and "may not
induce the States to engage in activities that would themselves be
unconstitutional."
NFIB, 132 S. Ct. at 2659 (Scalia, Kennedy,
Thomas & Alito, JJ., dissenting) (citations omitted) (internal
quotation marks omitted). These criteria support the
constitutionality of § 1396a(gg) here.
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at 2662. Emphasizing that Medicaid constitutes the largest line
item in states' budgets, as well as the apparent view of Congress
that no state would refuse to participate in the new Medicaid
program expansion, the joint dissent concluded that the expansion
exceeded Congress's power under the Spending Clause. Id. at
2662–66.
B. Application of NFIB to the Disapproval Here Based on
§ 1396a(gg)
When a majority of the Supreme Court agrees on a result
but "no single rationale explaining the result enjoys the assent of
five Justices, 'the holding of the Court may be viewed as that
position taken by those Members who concurred in the judgments on
the narrowest grounds . . . .'" Marks v. United States, 430 U.S.
188, 193 (1977) (quoting Gregg v. Georgia,
428 U.S. 153, 169 n.15
(1976) (plurality opinion)). In NFIB, the plurality invalidated
the Medicaid expansion on narrower grounds than did the joint
dissent. The plurality found a Spending Clause violation because
it determined that the Medicaid program expansion was an entirely
new program, participation in which was a condition on continued
receipt of pre-ACA Medicaid funds, and because the loss of pre-ACA
Medicaid funds would have been so consequential to the states that
states had no real option to refuse. In other words, the plurality
found (1) that the expansion placed a condition on the receipt of
funds that did not govern the use of those funds and (2) that the
condition was unduly coercive. The joint dissent, in contrast,
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would have invalidated the expansion based on a finding of coercion
alone. Hence, the plurality's rationale was narrower. See E.
Pasachoff, Conditional Spending After NFIB v. Sebelius: The Example
of Federal Education Law, 62 Am. U. L. Rev. 577, 593-96 (2013); cf.
S. Bagenstos, The Anti-Leveraging Principle and the Spending Clause
After NFIB, 101 Geo. L.J. 861, 873 (2013) (rejecting the
proposition that the plurality's analysis relied only upon the size
of the grant at issue). Thus, we apply the plurality's approach to
§ 1396a(gg).
Under that analysis, Maine DHHS's Spending Clause
challenge fails. Indeed, the plurality opinion precludes us from
finding that there is a Spending Clause problem with § 1396a(gg).
The MOE provision applied to the long-standing provision of care to
19- and 20-year-olds, unlike the new Medicaid program expansion
first appearing in the ACA, is not a new program. It is simply an
unexceptional "alter[ation] . . . [of] the boundaries" of the
categories of individuals covered under the old Medicaid program,
completely analogous to the many past alterations of the program
that NFIB expressly found to be constitutional. See NFIB, 132 S.
Ct. at 2606.
Section 1396a(gg) differs from the new program expansion
considered in NFIB in several critical ways. As an initial matter,
§ 1396a(gg) does not "expand" Medicaid eligibility at all. It
simply requires a state, as a condition of continued participation
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in Medicaid, to maintain its Medicaid eligibility standards for
"children" for nine years. See 42 U.S.C. § 1396a(gg)(2) (MOE
provision applies to "the eligibility standards, methodologies, and
procedures . . . that are applicable to determining the eligibility
for medical assistance of any child who is under 19 years of age
(or such higher age as the State may have elected)"). As NFIB
noted, the Medicaid expansion "require[d] States to expand their
Medicaid programs by 2014 to cover all individuals under the age of
65 with incomes below 133 percent of the federal poverty line" and
"establishe[d] a new '[e]ssential health benefits' package." 132
S. Ct. at 2601 (citing 42 U.S.C. §§ 1396a(a)(10)(A)(i)(VIII),
1396a(k)(1), 1396u–7(b)(5), 18022(b)).
What is more, § 1396a(gg) requires states to maintain
eligibility standards for a population -- low-income children of
certain ages -- that has historically been covered by Medicaid.
Maine DHHS admits in its argument that the classic form of Medicaid
provided coverage for the blind, the disabled, the elderly, and
needy families with dependent children. In fact, the Medicaid
program has an extensive history of covering 18- to 20-year-olds.
At the time of Medicaid's enactment in 1965, the program included
some 19- and 20- year-olds within the population of children that
states had to cover. It did so first by requiring states to match
the coverage of social assistance programs like Aid for Families
with Dependent Children ("AFDC"), which defined eligible children
-20-
to include 19- and 20-year-olds in particular educational programs.
See 42 U.S.C. § 606(a) (1964) (providing that AFDC was available to
any "dependent child," defined as "a needy child (1) who has been
deprived of parental support or care . . . and who is living with
[one of several enumerated relatives] . . ., and (2) who is (A)
under the age of eighteen, or (B) under the age of twenty-one and
. . . a student regularly attending [certain educational
programs]"); Social Security Amendments of 1965, Pub. L. No. 89-97,
sec. 121(a), § 1902(a)(10), 79 Stat. 286, 344-45 (codified at 42
U.S.C. § 1396a(a)(10) (1969)) ("A state plan for medical assistance
must . . . provide for making medical assistance available to all
individuals receiving aid or assistance under State plans approved
under [AFDC] . . . .").
The Medicaid program also mandated that states provide
medical assistance to all under-21 individuals who would have
qualified as "children" for AFDC but for their age, thus removing
the educational condition that limited the class of 19- and
20-year-olds covered under AFDC. See id. §§ 1902(b), 79 Stat. at
348 (codified at 42 U.S.C. § 1396a(b) (1969)); see also
id. § 1904,
79 Stat. at 351 (codified at 42 U.S.C. § 1396d(a)(i) (1969)).
Thus, from its early days, Medicaid contemplated mandatory coverage
of some 19- and 20-year-olds, due to their status in federal law as
"children" in need. Such a mandatory coverage requirement was in
place when Maine joined Medicaid in 1966. The mandate to cover
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children under 21 who would qualify for AFDC but for their age did
not become optional until more than a decade later. See Omnibus
Budget Reconciliation Act of 1981, Pub. L. No. 97-35, § 2172(b)(1),
95 Stat. 357, 808 (1981) (codified at 42 U.S.C. § 1396d(a)(i)); id.
§ 2172(a), 95 Stat. at 808 (codified at 42 U.S.C. § 1396a(b)
(1983)).
There is an additional relevant point. The category of
children for which a state must provide coverage has remained
subject to expansion throughout the history of Medicaid.
Alterations to the category of needy children occurred repeatedly
in the 1980s, with states being required to cover an expanding
group of children based on changing age and income requirements.
Importantly, in 1990, Congress required states to cover all
18-year-olds who met certain income eligibility requirements,
irrespective of their "dependent" status. Omnibus Budget
Reconciliation Act of 1990, Pub. L. No. 101–508, § 4601(a)(2), 104
Stat. 1388, 1388-166 (1990) (codified at 42 U.S.C. § 1396d(n)(2));
id. § 4601(a)(1)(A), 104 Stat. at 1388-166 (codified at 42 U.S.C.
§ 1396a(a)(10)(A)(i)(VII)). In this way, children aged 18 --
historically treated by AFDC and Medicaid in the same manner as
children under 21 -- thus became included in the mandatorily
covered category without any condition other than their income
level. That is so even though 18-year-olds are for many other
purposes, including voting, treated as adults rather than children.
-22-
The history of Medicaid's treatment of 18-, 19-, and
20-year-olds further demonstrates that application of § 1396a(gg)
here as to the treatment of 19- and 20-year-olds "accomplishes a
shift in . . . degree," rather than in kind. NFIB, 132 S. Ct. at
2605; see also
id. at 2606 (noting that a Medicaid "amendment
requiring States to cover pregnant women and increasing the number
of eligible children . . . . can hardly be described as a major
change in a program that -- from its inception -- provided
healthcare for 'families with dependent children'" (emphasis
added)).9
Two further differences between the MOE provision and the
new Medicaid program expansion considered in NFIB support the
conclusion that the MOE provision did not accomplish a shift "in
kind." First, the MOE provision uses the same pre-existing funding
mechanism as pre-ACA Medicaid, whereas the expansion uses a new,
more generous federal funding mechanism. Second, under
§ 1396a(gg), Maine is required only to maintain its current
benefits for 19- and 20-year olds, whereas the Medicaid expansion
required states to provide a "new '[e]ssential health benefits'
package . . . to all new Medicaid recipients." NFIB, 132 S. Ct. at
2601 (first alteration in original). The NFIB Court explicitly
mentioned both of these features of the expansion in its analysis.
9
The pregnancy program was not directly at issue in NFIB,
but this language strongly suggests that the plurality viewed it as
a permissible alteration of the old program.
-23-
It noted that "the manner in which the expansion [was] structured
indicate[d] that . . . Congress . . . recognized it was enlisting
the States in a new health care program" because "Congress created
a separate funding provision to cover the costs of providing
services to any person made newly eligible by the expansion" and
because "Congress mandated that newly eligible persons receive a
level of coverage that is less comprehensive than the traditional
Medicaid benefit package." Id. at 2606.
In short, the MOE provision as applied here does not
create a new program and falls comfortably within Congress's
express reservation of power to "alter" or "amend" the terms of the
Medicaid statute in its coverage of previously covered groups. See
Cong. Research Serv., Selected Issues Related to the Effect of NFIB
v. Sebelius on the Medicaid Expansion Requirements in Section 2001
of the Affordable Care Act 5-6 (July 16, 2012), available at
http://www.ncsl.org/documents/health/aca_medicaid_expansion_memo_
1.pdf (concluding that the MOE provision of the ACA remains valid
after NFIB because it is not "part of the 'new Medicaid expansion
program' for which the states must have a 'genuine choice'").
Further, the states had notice at the inception of the Medicaid
program that continued participation by a state in Medicaid might
be conditioned on a requirement such as the MOE provision here.
As a result, there is no Spending Clause violation under
NFIB. See also California v. United States, 104 F.3d 1086, 1092
-24-
(9th Cir. 1997) (rejecting California's argument that Congress
cannot introduce new conditions on participation in Medicaid
because California "now has no choice but to remain in the program
in order to prevent a collapse of its medical system"); Stowell v.
Ives, 976 F.2d 65, 69 (1st Cir. 1992) (finding that statute
providing that U.S. DHHS would not approve a state plan for medical
assistance if the state reduced payment levels for the AFDC program
provided "incentives -- not commands -- to the States," since
states could choose to maintain AFDC benefits or to reduce them and
risk losing federal funding). Rather, this is one of the "typical
case[s]" in which "we look to the States to defend their
prerogatives by adopting 'the simple expedient of not yielding' to
federal blandishments when they do not want to embrace the federal
policies as their own."
NFIB, 132 S. Ct. at 2603 (quoting
Massachusetts v. Mellon,
262 U.S. 447, 482 (1923)).
Maine DHHS's arguments to the contrary are unconvincing.
First, Maine DHHS argues that the MOE provisions are an "integral
part" of the Medicaid expansion that was considered in NFIB, and so
they must be struck down "as a direct implementation of the ruling
in NFIB." Not so. The plurality focused exclusively on the
amendments to Medicaid that required states "to meet the health
care needs of the entire nonelderly population with income below
133 percent of the poverty level." NFIB, 132 S. Ct. at 2606. The
Court did not hold, or even intimate, that other changes to
-25-
Medicaid wrought by the ACA, such as the MOE provision at issue
here, were constitutionally infirm. To the contrary, the plurality
expressly stated that it was holding unconstitutional only the
sanction of withholding all Medicaid funding from states that
refused to accept this "basic change in the nature of Medicaid."
Id. at 2608. "That remedy d[id] not require striking down other
portions of the Affordable Care Act."
Id.
Second, Maine DHHS contends that, regardless of its
earlier choice to provide coverage for low-income 19- and 20-year-
olds, Congress had not previously mandated this coverage, so the
now-mandated MOE coverage is "new." It argues that "Congress
cannot threaten to withdraw all Medicaid funds from a State for
failing or refusing to cover categories of adults for whom Medicaid
has never previously mandated coverage," regardless of the fact the
state had chosen to provide such coverage. In fact, Congress can
do so and it has done so, on numerous occasions. Moreover, the
NFIB plurality expressly said Congress is allowed to do so, so long
as the change effected by the expansion is a shift in degree rather
than a shift in kind. See
id. at 2605. NFIB approved of a past
amendment that newly required states to cover pregnant women; that
was a shift in degree and not in kind, as is this.
Id. at 2605–06.
Further, application here of § 1396a(gg) concerns children, a
classic Medicaid program objective, not adults.
-26-
Third, Maine DHHS argues that § 1396a(gg) is "coercive"
because "when a federal program is as large as Medicaid is . . .,
the State has no option but to participate." That is not the test
NFIB has adopted. Even were the question of tests open, Maine
DHHS's Spending Clause claim based upon "coercion" alone does not
work. As the Supreme Court noted long ago, an attempt to determine
when "inducement" to comply with a condition on the use of federal
funds crosses the line into "compulsion" would "plunge the law into
endless difficulties." Davis, 301 U.S. at 590 (Cardozo, J.); see
also Oklahoma v. Schweiker,
655 F.2d 401, 413-14 (D.C. Cir. 1981)
("The courts are not suited to evaluating whether the states are
faced . . . with an offer they cannot refuse or merely a hard
choice.").
Maine DHHS's argument that the MOE provision is
indistinguishable from the Medicaid expansion considered in NFIB
is, as explained, unpersuasive. As it affects Maine, the MOE
provision requires Maine to do no more than continue to cover
low-income individuals aged 18 to 20 for a period of nine years,
and in exchange Maine will receive the classic funding. By
contrast, the new Medicaid program expansion would have required
Maine to cover all low-income individuals indefinitely. NFIB, 132
-27-
S. Ct. at 2606. Those changes are not the same nor even
analogous.10
C. Claimed Pennhurst Anti-Retroactivity Violation
Maine DHHS also argues that the application to it of the
MOE provision violates the Pennhurst anti-retroactivity principle
because Congress "changed the deal" it offered to Maine in 2009.
Maine DHHS points out that, in 2009, Maine was required to maintain
eligibility standards only through 2010 in order to get the
stimulus funds it had chosen to seek. Then, in 2010, with the
passage of the ACA, Maine was required to maintain those standards
through 2019 in order to avoid losing all Medicaid funds.
This retroactivity argument fails. In Pennhurst, the
Supreme Court explained that "legislation enacted pursuant to the
spending power is much in the nature of a contract: in return for
federal funds, the States agree to comply with federally imposed
conditions." 451 U.S. at 17. But a state cannot "voluntarily and
knowingly accept[] the terms of the 'contract'" if it "is unaware
of the conditions or is unable to ascertain what is expected of
it."
Id. Thus, "if Congress intends to impose a condition on the
10
In briefing and at oral argument, counsel for Maine DHHS
argued that, because "the NFIB Court did not sever the application
of the Medicaid expansion only to those 21 and above," the decision
means that Congress may not make coverage of 19- and 20-year-olds
mandatory. We see no basis to so conclude. The question of
whether to sever application of the expansion to 18- to 20-year-
olds from application of the expansion to 21- to 64-year-olds was
not before the Court in NFIB.
-28-
grant of federal moneys, it must do so unambiguously"; it may not
"surpris[e] participating States with post acceptance or
'retroactive' conditions." Id. at 17, 25.
The ACA did not "surprise" Maine with a retroactive
condition. Because Congress has reserved in the Medicaid Act the
power to "alter" or "amend" the Medicaid program, states have had
fair notice that Congress may make incremental changes such as
"increasing the number of eligible children." NFIB, 132 S. Ct. at
2606.11 Here, Congress did not even go that far; instead, it merely
required that states continue providing coverage to children on the
same terms as were in effect on the date of the ACA's passage.
Maine DHHS appears to argue that it could not have foreseen that in
exchange for stimulus funds it would be locked into those coverage
levels at a later time. But this modest change falls within the
Medicaid Act's broad reservation clause. Maine was on notice, both
before and after accepting stimulus funds, that an incremental
alteration of Medicaid might change the conditions on participation
in the Medicaid program in the way that § 1396a(gg) has. Put
differently, Maine was not "unaware of the conditions [on its
participation in Medicaid] or . . . unable to ascertain what [was]
expected of it,"
Pennhurst, 451 U.S. at 17, when it chose to
11
As explained in greater detail above, at the inception of
the Medicaid program, states were required to cover individuals
aged 18 to 20 if they would have qualified for the AFDC program but
for their age, and Congress at one point expanded Medicaid to cover
18-year-olds regardless of their status as "dependents."
-29-
receive funds under Medicaid or under the ARRA. There is no
constitutional infirmity here.
III. Equal Sovereignty Claim
Maine DHHS also argues that the MOE provision deprives
Maine of its right to equal sovereignty under Shelby County v.
Holder, 133 S. Ct. 2612 (2013), because it "prohibit[s] Maine from
exercising the prerogative to design its Medicaid laws in ways that
many of its sister States remain free to do." This argument fails
at every step of the analysis. First, Maine DHHS's premise that
§ 1396a(gg) singles out certain states for disparate treatment is
wrong. Shelby County is also not relevant here because § 1396a(gg)
does not similarly effect a federal intrusion into a sensitive area
of state or local policymaking. Finally, there is no
constitutional problem because any disparate treatment caused by
§ 1396a(gg) is sufficiently related to the problem that the statute
was designed to address.
A. Shelby County
Shelby County considered the continuing constitutionality
of §§ 4 and 5 of the Voting Rights Act (VRA) of 1965. Section 4
set forth a "coverage formula" that identified jurisdictions with
a history of voter discrimination, and § 5 required those
jurisdictions to obtain "preclearance" for any change in voting
procedures by "proving that the change had neither 'the purpose
[nor] the effect of denying or abridging the right to vote on
-30-
account of race or color.'" Id. at 2618–20 (alteration in
original). In the years after the VRA's passage, Congress
repeatedly re-authorized the Act (most recently in 2006), but it
made no changes to § 4's coverage formula after 1975.
Id. at
2620–21.
The Shelby County Court held that § 4's coverage formula
unconstitutionally infringed the equal sovereignty of the states.
Id. at 2623–31. The majority explained that, when a statute
"authorizes federal intrusion into sensitive areas of state and
local policymaking, . . . and represents an extraordinary departure
from the traditional course of relations between the States and the
Federal Government,"
id. at 2624 (citations omitted) (internal
quotation marks omitted), "any 'disparate geographic coverage' must
be 'sufficiently related to the problem that it targets.'"
Id. at
2627 (quoting Nw. Austin Mun. Util. Dist. No. One v. Holder,
557
U.S. 193, 203 (2009)).12 The Court found that § 4's coverage
12
Shelby County relied primarily on two cases for its
discussion of the equal sovereignty doctrine: Coyle v. Smith, 221
U.S. 559 (1911), and Northwest Austin. Coyle held that
when a new state is admitted into the Union,
it is so admitted with all of the powers of
sovereignty and jurisdiction which pertain to
the original states, and that such powers may
not be constitutionally diminished, impaired,
or shorn away by any conditions, compacts, or
stipulations embraced in the act under which
the new state came into the Union, which would
not be valid and effectual if the subject of
congressional legislation after admission.
-31-
formula as used in Shelby County did not satisfy this test because
it was "based on decades-old data and eradicated practices." Id.
at 2627.
B. Disparate Treatment
Maine DHHS's premise that § 1396a(gg) results in
"disparate treatment" of states, as that phrase was used in Shelby
County, is mistaken. On its face, the MOE provision applies the
same rule to each state: freeze eligibility standards in existence
as of March 23, 2010 until October 1, 2019, or risk losing Medicaid
funding. In Shelby County, the government admitted that the
coverage formula was "'reverse-engineered': Congress identified the
jurisdictions to be covered and then came up with criteria to
describe them." Id. at 2628. In contrast, Maine has not been
"singled out" at all. The rule is uniform and performs an
important function of not providing incentives to states to act in
ways Congress wishes to avoid. See, e.g., Bennett v. Ky. Dep't of
Educ.,
470 U.S. 656, 671–72 (1985). Every state has simply
been
221 U.S. at 573. In other words, Congress can enact laws affecting
a state differently from other states at the time of its admission
only if Congress could constitutionally do so after the state's
admission. Northwest Austin expressed concerns in dicta that the
VRA might conflict with "our historic tradition that all the States
enjoy 'equal
sovereignty.'" 557 U.S. at 203 (quoting United States
v. Louisiana,
363 U.S. 1, 16 (1960)).
-32-
required to continue for a limited period of time13 to fund Medicaid
services for those children it was funding before the ACA.
Maine DHHS resists this distinction, pointing out that
even the preclearance requirement in Shelby County, in a sense,
applied to all states. This contention is unpersuasive. In Shelby
County, the government expressly admitted that it had singled out
certain states for disfavored treatment and then reverse-engineered
a coverage formula that would target only those states. 133 S. Ct.
at 2628. Here, in contrast, there is no suggestion that the MOE
provision was "reverse-engineered"; from all indications, Congress
came up with the criteria without regard to which states would be
covered by their application.
C. Intrusion Into a Sensitive Area of State or Local
Policymaking
We reject Maine DHHS's equal sovereignty claim for
another reason as well. Shelby County involved a situation of
federal "intrusion[s] into sensitive areas of state and local
policymaking," id. at 2624, and required in that context that
disparate treatment must be "sufficiently related to the problem
that it targets,"
id. at 2627. The Court repeatedly emphasized
that the VRA marked an "extraordinary" departure from basic
principles of federalism because it intruded into a realm
(regulation of state and local elections) that has traditionally
13
Section 1396a(gg) will remain in effect only until 2019.
See 42 U.S.C. § 1396a(gg)(2).
-33-
been the exclusive province of the states.14 Id. at 2618
(characterizing § 5 as a "drastic departure from basic principles
of federalism");
id. at 2623 (noting that the Framers "intended the
States to keep for themselves . . . the power to regulate
elections");
id. at 2624 (stating that the VRA "'authorizes federal
intrusion into sensitive areas of state and local policymaking,'
. . . and represents an 'extraordinary departure from the
traditional course of relations between the States and the Federal
Government'");
id. at 2630 (explaining, "[a]t the risk of
repetition," that the VRA is "far from ordinary");
id. at 2631
(stating that any preclearance formula must reflect conditions that
"justify[] such an 'extraordinary departure from the traditional
course of relations between the States and the Federal
Government'"). The equal sovereignty doctrine has been applied
only in such extraordinary situations. See NCAA v. Governor of
N.J.,
730 F.3d 208, 239 (3d Cir. 2013) ("[T]here is nothing in
Shelby County to indicate that the equal sovereignty principle is
meant to apply with the same force outside the context of
'sensitive areas of state and local policymaking.'" (quoting Shelby
14
Similarly, in Coyle v. Smith, the challenged federal
statute mandated that Oklahoma, as a condition of admittance to the
Union, establish its state capital in a particular city. See 221
U.S. 559, 564 (1911). The Court found that this statute violated
the equal sovereignty doctrine, noting that "[t]he power to locate
its own seat of government, and to determine when and how it shall
be changed from one place to another, and to appropriate its own
public funds for that purpose, are essentially and peculiarly state
powers."
Id. at 565.
-34-
County, 133 S. Ct. at 2624)).15 This is not such an extraordinary
situation. Federal laws that have differing impacts on different
states are an unremarkable feature of, rather than an affront to,
our federal system. Indeed, MOE provisions like the one at issue
here have long been a common feature of federal spending programs,
including Medicaid. See, e.g., Social Security Amendments of 1965,
Pub. L. No. 89-97, sec. 121(a), § 1902(c), 79 Stat. 286, 348
(codified at 42 U.S.C. § 1396a(c) (1969)) (MOE provision in the
original Medicaid statute);
Bennett, 470 U.S. at 671 (describing
MOE provision in the Elementary and Secondary Education Act of
1965).
The MOE provision at issue here does not intrude on an
area of traditional state concern; to the contrary, it simply
requires an extension of states' prior choices to participate in a
limited federal-state cooperative program. Maine DHHS's assertion
that the MOE provision affects its "ability to pass and implement
laws, in the exercise of the fundamental police power over health
and welfare" is stated at much too high a level of generality to be
15
In NCAA, the Third Circuit rejected an equal sovereignty
challenge to a statute that, in effect, prohibits casino-operated
sports books outside of Nevada. The Third Circuit held that the
Commerce Clause, under which the challenged statute had been
enacted, "'does not require geographic uniformity.'" Id. at 238
(quoting Morgan v. Virginia,
328 U.S. 373, 388 (1946) (Frankfurter,
J., concurring)).
We need not and do not hold that the equal sovereignty
doctrine is categorically inapplicable to congressional action
under the Spending Clause. We simply find the doctrine
inapplicable on the facts of this case.
-35-
true. A state's ability to set the conditions of eligibility for
participation in a federal health insurance program that is funded
primarily by the federal government is not a core sovereign state
function in the same way as is a state's ability to regulate the
conduct of its elections. Cf. NCAA, 730 F.3d at 237–39 (reasoning
that the equal sovereignty doctrine did not apply to a statute
affecting a state's ability to pass laws legalizing sports
gambling).
Put simply, the MOE provision is not at all an
"intrusion," much less an intrusion into state sovereignty as was
true of § 4 of the VRA. The equal sovereignty doctrine of Shelby
County is not applicable to this case.
D. Sufficient Justification
Maine DHHS makes, and we reject, an argument that under
Shelby County the MOE provision is not sufficiently related to the
problem it targets. Shelby County permits legislation that
"single[s] out" states if the singling out "makes sense in light of
current conditions." 133 S. Ct. at 2629. The coverage formula of
§ 4 of the VRA failed that test because it was "based on decades-
old data and eradicated practices."
Id. at 2627. Section
1396a(gg), in contrast, does "make[] sense in light of current
conditions," and so, to the extent that it results in disparate
treatment of states at all, the disparity is permissible.
-36-
Congress has long used temporary MOE provisions in
Medicaid and other benefits programs for a specific, legitimate
purpose: to protect low-income individuals from losing public
assistance in times of transition between different statutory
schemes for delivering that assistance.16 The MOE provision at
issue here is no different. As counsel for the United States
explained at oral argument, when Congress passed the ACA, it did
not want to create incentives for states to drop children
previously covered "on the often mistaken premise that they will be
easily transitioned to new coverage," when "in fact, there are gaps
in enrollment, people lose better benefits packages, or Congress
may just not want to shift from an existing program to one that is
now funded through [new] federal dollars." And as amici point out,
Congress was entitled to consider that widespread withdrawal of
coverage for children could have a serious impact on the public
fisc, since children who have health insurance are more likely to
avoid serious (and expensive) long-term health problems that often
beset children who lack insurance. The MOE provision avoided these
potential negative consequences of the shift from the pre-ACA
16
For example, when Congress passed the Medicaid statute in
1965, it included a provision prohibiting the U.S. DHHS from
approving a state plan that would result in a reduction in aid or
assistance provided under any of the five assistance programs
related to Medicaid eligibility, such as AFDC. See Social Security
Amendments of 1965, Pub. L. No. 89-97, sec. 121(a), § 1902(c), 79
Stat. 286, 348 (codified at 42 U.S.C. § 1396a(c) (1969)).
-37-
regime. The coverage conditions here are based on "current
conditions" and address real problems.
Thus, we reject Maine DHHS's argument that "the MOE
provisions . . . [are] not sufficiently tailored to any
constitutional purpose."17 To the contrary, § 1396a(gg) directly
serves the legitimate purpose of ensuring that children do not lose
health insurance as the country transitions from the pre-ACA
Medicaid regime to the post-ACA Medicaid regime. This is a far cry
from the situation the Court confronted in Shelby County, where
Congress "reenacted a formula based on 40-year-old facts having no
logical relation to the present day." 133 S. Ct. at 2629. Any
disparity in treatment caused by the MOE provision is justified.
IV. Conclusion
We deny the petition for review and find no
constitutional violation. Costs are awarded against Maine DHHS.
17
Maine DHHS contends that, because "the MOE provisions
. . . form an integral part . . . of the Medicaid Expansion," "[i]t
is clear that the purpose of the MOE provisions is promotion of a
constitutional wrong: the mandatory Medicaid Expansion under ACA
§ 2001." But Maine DHHS's premise that the MOE provisions were an
"integral" part of the new Medicaid program expansion considered in
NFIB is pure speculation; as Maine DHHS admits, Congress did not,
and was not required to, make explicit findings as to the rationale
behind the MOE provision. Moreover, even if Maine DHHS's
speculation were correct, it remains true that the independent
justification for the MOE provision offered by the United States --
preserving public assistance benefits for children in a time of
transition between different public assistance programs -- is
entirely valid.
-38-
