Opinion ID: 2659142
Heading Depth: 2
Heading Rank: 1

Heading: Disparity in Expenditure of State Funds

Text: The majority opinion most obviously goes astray when it suggests that Plaintiffs have failed to establish a claim of disparity because they have not claimed that Hawai‘i’s per capita expenditures of state funds differ as between citizens and COFA Residents. Maj. Op. at 23 & n.8. The majority thus appears to require that, in order to establish a claim of disparate treatment, a class alleging discrimination under the Equal Protection Clause must demonstrate that the state is expending less funds, on a per capita basis, than it is spending on the rest of the population. In effect, the majority requires Plaintiffs to allege (and eventually, I presume, to prove) that they have been shortchanged on a per capita basis. Because Plaintiffs have not so alleged, the majority harbors serious doubts that Plaintiffs have made out a claim of an equal 56 KORAB V. FINK protection violation by the state. That approach is wrong in two separate ways. First, it treats Medicaid as if it consisted of two separate programs, one federal and one state, because the program is partially funded by the federal government. But that is not how Medicaid actually works. In Hawai‘i, as in most states, there is a single plan, administered by the state. The federal government reimburses the state for a significant portion of the cost, and the plan must comply with federal requirements, but it is a state plan. The majority opinion’s own description of the program, at 5, confirms as much. Beneficiaries are not covered by two separate federal and state plans, but rather by one single plan administered by the state. Second, and more importantly, the approach suggested by the majority opinion runs afoul of bedrock equal protection doctrine dating back at least to Brown v. Board of Education, 347 U.S. 483 (1954). The majority opinion would allow a state to treat a class of aliens differently as long as the state’s financial outlay for Plaintiffs and other members of the suspect class is the same, on a per capita basis, as the state’s expenditures for the rest of the population. But that does not change the fact that Hawai‘i has treated aliens differently by placing COFA Residents in a program with reduced benefits. That action constitutes disparate treatment in violation of the Equal Protection Clause. The disparate treatment is not immunized because the per capita expenditures might be the same. “Separate but equal” is not permitted. The approach of the majority opinion could justify a state reducing benefits provided to members of a particular group on the ground that providing benefits to that group is more expensive than providing the same benefits to the general KORAB V. FINK 57 population. For example, a state could reduce chemotherapy and radiation therapy benefits for African Americans and justify this discrimination by citing African Americans’ increased susceptibility to various types of cancer.2 That state could argue that, despite the reduced benefits available to any single individual, its average per capita expenditures for African Americans were not less than the expenditures for the rest of the population. Such a “separate but equal” approach runs counter to the dictates of Brown v. Board of Education. “The point of the equal protection guarantee is not to ensure that facially discriminatory laws yield roughly equivalent outcomes . . . . Rather, the right to equal protection recognizes that the act of classification is itself invidious and is thus constitutionally acceptable only where it meets an exacting test.” Finch v. Commonwealth Health Ins. Connector Auth., 946 N.E.2d 1262, 1278 (Mass. 2011). I don’t really think the majority opinion is trying to return to the era of separate but equal. Although it denies the existence of a claim of disparity vis-a-vis state action, the majority opinion nevertheless proceeds to assume arguendo the existence of such a claim and subjects Hawai‘i’s actions to review under the Equal Protection Clause, albeit based on a rational basis standard. See Maj. Op. at 23–24. If there really were no disparity attributable to the State of Hawai‘i, as the majority argues, the Equal Protection Clause would simply be inapplicable, and no further judicial review would be required. By discussing the equal protection framework 2 See, e.g., Cancer and African Americans, U.S. Dep’t of Health & Human Servs. Office of Minority Health, http://minorityhealth.hhs.gov/ templates/content.aspx?ID=2826 (last updated Sept. 11, 2013). 58 KORAB V. FINK established by Graham v. Richardson, 403 U.S. 365 (1971), and Mathews v. Diaz, 426 U.S. 67 (1976), and applying rational basis review to uphold Hawai‘i’s discriminatory health welfare programs, the majority tacitly acknowledges that a claim for discrimination based on disparate treatment does not require proof of disparate per capita expenditure of funds. But it shouldn’t even start down that road. II. Hawai‘i’s Decision to Reduce Benefits for COFA Residents The main thrust of the majority opinion, as I understand it, is that Hawai‘i’s actions are subject only to rational basis review under the Equal Protection Clause, rather than strict scrutiny, because those actions were authorized by Congress. Here again, the majority fails to heed well established Supreme Court precedent. We must decide this case under the equal protection framework established by the Supreme Court in Graham and Mathews. The equal protection holdings in those cases are clear, and the majority opinion ably summarizes them, at 13–17. In brief, Graham requires that we review state discrimination against aliens under strict scrutiny, while Mathews requires that we review federal discrimination against aliens under rational basis review, because of the federal government’s broad powers in the area of immigration and foreign relations. The question this case thus turns on is whether the denial of equal benefits to COFA Residents is ultimately the responsibility of the state or of Congress. I conclude that it is the State of Hawai‘i that is ultimately responsible. The majority reaches a different conclusion, permitting it to uphold Hawai‘i’s program under rational KORAB V. FINK 59 basis review, by obscuring the role states play within the statutory framework established by Congress. The majority repeatedly emphasizes that Hawai‘i is following the federal direction and that states are given only limited discretion to decide which aliens to provide benefits to under the Welfare Reform Act. But there is no federal direction regarding how to treat COFA Residents and others within what the majority describes as the Welfare Reform Act’s third category of aliens. The statute gives states discretion to decide whether or not to provide health benefits to persons within that category.3 See 8 U.S.C. §§ 1621–1622; Maj. Op. at 7–9. In making the decision not to provide equal benefits to COFA Residents, Hawai‘i has necessarily made a distinction on the basis of alienage: a similarly situated citizen is eligible to receive more benefits. Because Hawai‘i has classified COFA Residents on the basis of alienage, the Equal Protection Clause requires that we strictly scrutinize Hawai‘i’s actions to ensure that they are “narrowly tailored measures that further compelling governmental interests.” Johnson v. California, 543 U.S. 499, 505 (2005) (quoting Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227 (1995)). 3 In fact, the statute gives discretion regarding how to treat aliens within the second category as well, notwithstanding the majority’s description of that category as that of “aliens for whom states must not provide any state benefits,” Maj. Op. at 18 (emphases added). The Welfare Reform Act allows states to provide benefits to this category of aliens “through the enactment of a State law after August 22, 1996, which affirmatively provides for [those aliens’] eligibility.” 8 U.S.C. § 1621(d). 60 KORAB V. FINK That federal discrimination against aliens would be subject only to rational basis review is irrelevant. We are presented with a case not of federal discrimination, but one of state discrimination. It is undisputed that COFA Residents are not eligible for federal benefits and that Hawai‘i thus cannot obtain federal reimbursements for expenses incurred to cover COFA Residents under Hawai‘i’s Medicaid programs.4 See 8 U.S.C. §§ 1611, 1641. But it is also undisputed that Hawai‘i remains free to cover COFA Residents under its Medicaid programs, so long as it uses only state funds—something Hawai‘i did for fourteen years, from the time of the enactment of the Welfare Reform Act in 1996 until 2010. See id. §§ 1621–22. In 2010, based on COFA Residents’ status as aliens, Hawai‘i cut them off from its Medicaid programs and placed them in the reducedbenefits BHH program.5 See Haw. Admin. Rules (HAR) §§ 17-1714-28, 17-1722.3-7. Hawai‘i’s actions thus classify on the basis of alienage and are subject to strict scrutiny. In effect, through the Welfare Reform Act, I think Congress has given states a lit firecracker, at risk of exploding when a state exercised its discretion to discriminate on the basis of alienage. It was Hawai‘i’s decision not to 4 “Medicaid programs” refers to the managed care programs Hawai‘i has operated since 1993, pursuant to a waiver approved by the federal government under section 1115 of the Social Security Act. These programs include QUEST, QUEST-Net, QUEST Adult Coverage Expansion, and QUEST Expanded Access. 5 Because the BHH program has a capped enrollment, HAR § 171722.3-10, and more COFA Residents were moved from the Medicaid programs to BHH than would normally be allowed under the cap, new COFA Residents moving to Hawai‘i after 2010 may not be covered under any state medical welfare program. KORAB V. FINK 61 cover COFA Residents under its Medicaid programs that effected the discrimination in this case. “Insofar as state welfare policy is concerned, there is little, if any, basis for treating persons who are citizens of another State differently from persons who are citizens of another country.” Mathews, 426 U.S. at 85 (footnote omitted). “The States enjoy no power with respect to the classification of aliens. This power is ‘committed to the political branches of the Federal Government.’” Plyler, 457 U.S. at 225 (citation omitted) (quoting Mathews, 426 U.S. at 81). And, as I will discuss below, this is not a power the federal government can delegate to the states.