Before TAMM, WALD and MIKVA, Circuit Judges.
UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT
Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 78-0475)
Opinion for the Court filed by Circuit Judge MIKVA.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MIKVA
Appellants, eleven states, *fn1 question the constitutionality of the "pass-through" provision of the Supplemental Security Income program of the Social Security Act (Act), §§ 1-2007, 42 U.S.C. 301-1397f (1976). The pass-through provision, added to the Act in 1976, conditions the states' receipt of federal Medicaid funds on their "passing through" to SSI recipients annual cost-of-living increases approved by Congress. See Act § 1618, 42 U.S.C. § 1382g (1976). Although similar conditions have previously been imposed by Congress, this device has never before been directly challenged by affected states. Appellants charge that the pass-through provision constitutes an abuse of the federal spending power and violates the Tenth Amendment. They also contest the interpretation given the scope of section 1618 by the Secretary of Health, Education and Welfare. *fn2
Seeking declaratory and injunctive relief, the states brought this action in the United States District Court for the District of Columbia. On cross-motions for summary judgment, the court below granted judgment in favor of the federal government. *fn3 We affirm that order. I. THE LEGISLATIVE SCHEME
The Social Security Act was enacted in 1935 as "a series of related measures designed as a unified, well-rounded program of attack upon the principal causes of insecurity in our economic life." S.Rep.No.628, 74th Cong., 1st Sess. 2 (1935). It contained a number of titles pertaining to five broad subject areas: old-age security, unemployment compensation, aid to dependent children, public health measures, and aid to the blind. Titles I and X established grant programs enabling the states to assist, respectively, the aged and the blind. Title XIV, added to the Act in 1950, provided grants to the states for the benefit of the permanently and totally disabled.
Under these titles, the federal government reimbursed the states for part of the cost of cash payments made to assist the needy in acquiring food, shelter, and medical care. The states administered the programs and determined the levels of assistance, but they had to comply with various federal requirements in order to receive federal matching funds.
The Social Security Amendments of 1960, also referred to as the Kerr-Mills Act, provided additional financial incentives to induce states to improve medical care to the elderly. The new provisions were added to Title I, the basic assistance program for the aged. The House report indicated that state plans which attempted to finance the new health care programs by diverting funds from existing public assistance programs were to be disapproved. See H.R.Rep.No.1799, 86th Cong., 2d Sess. 8 (1960).
In 1962, Title XVI was enacted, which permitted states to consolidate their assistance programs for the aged, the blind, and the disabled. To encourage the states to take advantage of this legislation, Congress provided a more favorable ratio of federal matching funds for medical assistance to the blind and the disabled under a combined plan than under the former separate plans.
The Medicaid program, Title XIX of the Act, was established by the Social Security Amendments of 1965 and is now the largest federal-state matching fund program. See Oklahoma v. Harris, 480 F. Supp. 581, 583 (D.D.C.1979). The states were authorized by these amendments to set up comprehensive plans for supplying medical services to the needy. Health care providers were reimbursed by the states for the cost of medical care furnished to Medicaid recipients, and the states in turn recouped a portion of their expenditures from the federal government. The Medicaid program was designed to replace and consolidate the previously separate health care components of the states' various cash assistance programs. Congress directed that no state Medicaid plan was to be approved if it resulted in a reduction of basic maintenance assistance to the needy. See Act § 1902(c), 42 U.S.C. § 1396a(c) (1976).
Cash assistance programs for the aged, the blind, and the disabled were federalized in 1972 with the establishment of the Supplemental Security Income program. The SSI program is described in Title XVI of the Act, which Congress revised to replace the old Titles I, X, XIV, and XVI. The federal government assumed responsibility for the administration and much of the cost of the former assistance programs; it also determined eligibility criteria for beneficiaries and set a uniform level of benefits to be given to all recipients.
This uniform national payment exceeded the assistance received by aid recipients under the superseded state-administered programs in some states, and was less than that received by recipients in other states. In order to ensure that no one suffered as a result of the new program, Congress determined that states whose grant programs had set assistance levels higher than the federal level should be required to make supplementary payments. Accordingly, Congress conditioned a state's eligibility for Medicaid funds on its willingness to make up any shortfall between the federal SSI benefit and the amount a beneficiary received from the state program as of December, 1973. See Pub.L.No.93-66, § 212, 87 Stat. 155 (1973), 42 U.S.C. § 1382 note (1976). *fn4
Moreover, Congress encouraged the states to provide optional supplementary aid both to SSI recipients and to those who, though needy, do not meet federal eligibility standards under Title XVI. See Act 1616, 42 U.S.C. § 1382e (1976); H.R.Rep.No.231, 92d Cong., 1st Sess. 199 (1971), U.S.Code Cong. & Admin.News 1972, p. 4989. Although this assistance comes entirely from state funds, *fn5 the federal government will, at the state's request, administer the payments at no cost to the state. See Act § 1616, 42 U.S.C. § 1382e (1976). Most states have chosen to provide supplementary assistance, see 122 Cong.Rec. 34,543 (1976) (remarks of Sen. Humphrey); id. at 28,280 (remarks of Rep. O'Neill), and it was the reduction of such payments that led Congress to enact the pass-through provision.
B. The Pass-Through Provision
Title XVI guarantees SSI recipients automatic, annual cost-of-living increases based on the Consumer Price Index. See Act § 1617, 42 U.S.C. 1382f (1976). These increases began in 1974 but have been offset in many states by a simultaneous reduction in the level of the state supplementary payment sometimes by an amount equal to the cost-of-living increase, at other times by a lesser amount. *fn6 Thus, SSI recipients in those states have been denied the full benefit of the cost-of-living rises approved by Congress. Instead, the increased federal expenditures have gone to provide fiscal relief to the states.
In order to prevent this result, Congress enacted the pass-through provision in 1976. See Act § 1618, 42 U.S.C. § 1382g (1976). This section conditions states' receipt of federal Medicaid funds on their agreement to pass through to SSI recipients the full amount of the annual federal cost-of-living increases. A state that supplements federal SSI assistance must maintain those supplementary payments at a level no lower than that in effect in December, 1976, or in the first subsequent month in which supplementary payments are made. See id. 1618(a), 42 U.S.C. § 1382g(a). A state is in compliance with this condition if its total expenditure on supplementary payments in any twelve-month period is no less than the amount spent in the preceding twelve months. See id. § 1618(b), 42 U.S.C. § 1382g(b). *fn7 The states are not obligated to increase the level of supplementary benefits for example, to keep pace with inflation but they must maintain the 1976 level of those payments. *fn8
Appellants contend that this provision is an unconstitutional exercise of the congressional spending power and a violation of the Tenth Amendment because the condition imposed is totally unrelated to the Medicaid program. We ...