Schweiker v. Hogan, 81-213

Decision Date21 June 1982
Docket NumberNo. 81-213,81-213
Citation102 S.Ct. 2597,73 L.Ed.2d 227,457 U.S. 569
PartiesRichard S. SCHWEIKER, Secretary of Health and Human Services, Appellant v. George HOGAN, et al
CourtU.S. Supreme Court
Syllabus

Section 1903(f) of the Social Security Act provides that federal reimbursement to States electing to provide Medicaid benefits to the "medically needy" is available only if the income of those persons, after deduction of incurred medical expenses, is less than 133 1/3% of the state Aid to Families With Dependent Children (AFDC) payment level. Section 1903(f) specifically excepts from this rule the "categorically needy"—those receiving Supplemental Security Income (SSI) because of lack of income to meet their basic needs. As applied in Massachusetts, § 1903(f) results in a distribution of Medicaid benefits to recipients of SSI that is more generous than the distribution of such benefits to persons who are self-supporting. Appellees, each of whom (or his spouse) receives Social Security benefits in an amount that renders him ineligible for either SSI benefits or state supplementary payments, filed suit in Federal District Court, alleging that § 1903(f), as applied in Massachusetts, violates the equal protection component of the Fifth Amendment. Appellees asserted that, since 133 1/3% of the Massachusetts AFDC payment level is for them lower than the SSI payment level, they are ineligible for Medicaid until their income, after deduction of incurred medical expenses, is less than that of SSI payment recipients, and that because of the Social Security benefits which they receive, appellees thus have less income available for nonmedical expenses than individuals who—possibly because they never worked and receive no Social Security benefits—are dependent upon public assistance for support. The District Court entered judgment for appellees.

Held:

1. There is no merit to appellees' contention that the Social Security Act itself compels the conclusion that, if Medicaid services are provided to the "medically needy," those persons may not be forced to incur medical expenses that would reduce their remaining income below the applicable public assistance standard. The legislative history of the Medicaid provisions of the Act does not justify a departure from the literal and clear language of § 1903(f). Nor does § 1903(f)'s literal language conflict with any other provision of the Act. Moreover, adherence to that sec- tion's language is consistent with its interpretation by the Secretary of Health and Human Services. Thus, the discrimination challenged in this case is required by the Social Security Act. Pp. 584-588.

2. As applied in Massachusetts, § 1903(f) does not violate constitutional principles of equal treatment. While powerful equities support appellees' claim of unfair treatment insofar as they receive less medical assistance and have less income remaining for their nonmedical needs than do SSI recipients, a belief that an Act of Congress may be inequitable or unwise is an insufficient basis on which to conclude that it is unconstitutional. The optional character of the congressional scheme—whereby participating States must provide Medicaid benefits to the categorically needy but may elect not to provide any benefits at all to the medically needy—does not itself violate constitutional principles of equality. Since a State may deny all benefits to the medically needy—while providing benefits to the categorically needy and rendering some persons who are on public assistance better off than others who are not—it may narrow the gap between the two classes by providing partial benefits to the medically needy, even though certain members of that class may remain in a position less fortunate than those on public assistance. The fact that Massachusetts has provided Medicaid benefits to the medically needy does not force it to make immediate medical need the sole standard in its entire Medicaid program. Pp. 588-593

501 F.Supp. 1129, reversed and remanded.

George W. Jones, Chicago, Ill., for the appellant, pro hac vice, by special leave of Court.

William H. Simon, Jamaica Plain, Mass., for appellees.

Justice STEVENS delivered the opinion of the Court.

At issue in this case are the meaning and validity of § 1903(f) of the Social Security Act, 81 Stat. 898, as amended, 42 U.S.C. § 1396b(f). As applied in Massachusetts, that provision results in a distribution of Medicaid benefits to recipients of Supplemental Security Income (SSI)—a class of aged, blind, or disabled persons who lack sufficient income to meet their basic needs—that is more generous than the distribution of such benefits to persons who are self-supporting. Appellees are members of the latter class. Because they must incur medical expenses—for which they are never reimbursed—before they become eligible for Medicaid, they have less income available for their nonmedical needs than the recipients of SSI. The District Court concluded that this discrimination was irrational and held that § 1903(f) was unconstitutional. Hogan v. Harris, 501 F.Supp. 1129 (Mass.1980). We disagree and reverse.

The statutory provisions governing the Medicaid program are complex. See 42 U.S.C. § 1396 et seq. (1976 ed. and Supp. IV). We first consider the history of the specific provisions at issue in this case, then relate the circumstances that gave rise to the present controversy, and finally address the two legal issues that are presented.

I

Section 1903(f) of the Social Security Act (Act) was enacted in 1968. To understand the present controversy, however, it is necessary to consider amendments to the Act made in 1965, 1967, and 1972.

A.

The Medicaid program was established in 1965 in Title XIX of the Act "for the purpose of providing federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons." Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784. Section 1902(a)(10) of the Act, 42 U.S.C. § 1396a(a)(10), sets forth the basic scope of the program, which has not changed significantly from its enactment in 1965. See 79 Stat. 345. Participating States are required to provide Medicaid coverage to certain individuals—now described as the "categorically needy"; at their option States also may provide coverage (and receive partial federal reimbursement) to other individuals—described as the "medically needy." See Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S.Ct. 2633, 2636, 69 L.Ed.2d 460.1 These classes are defined by reference to other federal assistance programs.

In 1965, federal assistance programs existed for the aged, the blind, the disabled, and families with dependent children.2 At that time, each of these programs was administered by the States, which established both the "standard of need" and the "level of benefits." See Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 32 L.Ed.2d 285; Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442.3 In establishing the Medicaid program, Congress required participating States to provide medical assistance to individuals who received cash payments under one of these assistance programs. 79 Stat. 345, as amended, 42 U.S.C. § 1396a(a)(10)(A). The House Report explained: "These people are the most needy in the country and it is appropriate for medical care costs to be met, first, for these people." 4 They are the "categorically needy."

Congress also provided that a participating State could offer Medicaid benefits to individuals who fell within one of the categories for which federal assistance was available but whose income made them ineligible for aid under those programs. These individuals were deemed "less needy" 5 and could receive assistance only if their income and resources were insufficient "to meet the costs of necessary medical or remedial care and services." 79 Stat. 345, as amended, 42 U.S.C. § 1396a(a)(10)(C). In 1965, no limit was placed on the extent to which federal reimbursement was available for optional coverage that States elected to provide to these persons who might become "medically needy." 6

Since States established the income limits for the categorical assistance programs, they also established the income limits for the "categorically needy" under the Medicaid program. In addition, participating States established the eligibility standards for the optional coverage provided to the "medically needy." In § 1902(a)(17) of the Act, 42 U.S.C. § 1396a(a)(17), however, Congress set forth certain requirements governing state standards for determining eligibility. In particular, Congress required States to "provide for flexibility in the application of such standards with respect to income by taking into account, except to the extent prescribed by the Secretary, the costs (whether in the form of insurance premiums or otherwise) incurred for medical care or any other type of remedial care recognized under State law." 79 Stat. 346; see 42 U.S.C. § 1396a(a)(17).7

Most States promptly elected to participate in the Medicaid program.8 Many of these States also chose to provide Medicaid coverage to the "medically needy." Within a year, Congress recognized that it was fiscally improvident to rely exclusively on the States to set income limits for both aspects of the Medicaid program. See H.R.Rep. No. 2224, 89th Cong., 2d Sess., 1-3 (1966). It cautioned States "to avoid unrealistic levels of income and resources for title XIX eligibility purposes." Id., at 3.

B

In 1967, Congress placed a limit on federal participation in the Medicaid program. Representative Mills introduced a bill, sponsored by the Johnson administration, that would have made significant changes in both the Medicaid program and the categorical assistance programs. H.R. 5710, 90th Cong., 1st Sess. (1967). Under § 220 of H.R. 5710, a State participating in the Medicaid program would have been entitled to receive federal financial assistance for providing...

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