Full opinion text
DUBINA, Chief Judge, and HULL, Circuit Judge: Soon after Congress passed the Patient Protection and Affordable Care Act, Pub.L. No. 111-148, 124 Stat. 119 (2010), amended by Health Care and Education Reconciliation Act of 2010 (“HCERA”), Pub.L. No. 111-152, 124 Stat. 1029 (2010) (the “Act”), the plaintiffs brought this action challenging the Act’s constitutionality. The plaintiffs are 26 states, private individuals Mary Brown and Kaj Ahlburg, and the National Federation of Independent Business (“NFIB”) (collectively the “plaintiffs”). The defendants are the federal Health and Human Services (“HHS”), Treasury, and Labor Departments and their Secretaries (collectively the “government”). The district court granted summary judgment (1) to the government on the state plaintiffs’ claim that the Act’s expansion of Medicaid is unconstitutional and (2) to the plaintiffs on their claim that the Act’s individual mandate — that individuals purchase and continuously maintain health insurance from private companies — is unconstitutional. The district court eonclud'ed that the individual mandate exceeded congressional authority under Article I of the Constitution because it was not enacted pursuant to Congress’s tax power and it exceeded Congress’s power under the Commerce Clause and the Necessary and Proper Clause. The district court also concluded that the individual mandate provision was not severable from the rest of the Act and declared the entire Act invalid. The government appeals the district court’s ruling that the individual mandate is unconstitutional and its severability holding. The state plaintiffs cross-appeal the district court’s ruling on their Medicaid expansion claim. For the reasons that follow, we affirm in part and reverse in part. INTRODUCTION Legal issues concerning the constitutionality of a legislative act present important but difficult questions for the courts. Here, that importance and difficulty are heightened because (1) the Act itself is 975 pages in the format published in the Public Laws; (2) the district court, agreeing with the plaintiffs, held all of the Act was unconstitutional; and (3) on appeal, the government argues all of the Act is constitutional. We, as all federal courts, must begin with a presumption of constitutionality, meaning that “we invalidate a congressional enactment only upon a plain showing that Congress has exceeded its constitutional bounds.” United States v. Morrison, 529 U.S. 598, 607, 120 S.Ct. 1740, 1748, 146 L.Ed.2d 658 (2000). As an initial matter, to know whether a legislative act is constitutional requires knowing what is in the Act. Accordingly, our task is to figure out what this sweeping and comprehensive Act actually says and does. To do that, we outline the congressional findings that identify the problems the Act addresses, and the Act’s legislative response and overall structure, encompassing nine Titles and hundreds of laws on a diverse array of subjects. Next, we set forth in greater depth the contents of the Act’s five components most relevant to this appeal: the insurance industry reforms, the new state-run Exchanges, the individual mandate, the employer penalties, and the Medicaid expansion. After that, we analyze the constitutionality of the Medicaid expansion and explain why we conclude that the Act’s Medicaid expansion is constitutional. We then review the Supreme Court’s decisions on Congress’s commerce power, discuss the individual mandate — which requires Americans to purchase an expensive product from a private insurance company from birth to death — and explicate how Congress exceeded its commerce power in enacting its individual mandate. We next outline why Congress’s tax power does not provide an alternative constitutional basis for upholding this unprecedented individual mandate. Lastly, because of the Supreme Court’s strong presumption of severability and as a matter of judicial restraint, we conclude that the individual mandate is severable from the remainder of the Act. Our opinion is organized as follows: I. STANDING II. THE ACT A. Congressional Findings B. Overall Structure of Nine Titles C. Terms and Definitions D. Health Insurance Reforms E. Health Benefit Exchanges F. Individual Mandate G. Employer Penalty H. Medicaid Expansion III. CONSTITUTIONALITY OF MEDICAID EXPANSION A. History of the Medicaid Program B. Congress’s Power under the Spending Clause TV. SUPREME COURT’S COMMERCE CLAUSE DECISIONS V. CONSTITUTIONALITY OF INDIVIDUAL MANDATE UNDER THE COMMERCE POWER A. First Principles B. Dichotomies and Nomenclature C. Unprecedented Nature of the Individual Mandate D. Wickard and Aggregation E. Broad Scope of Congress’s Regulation F. Government’s Proposed Limiting Principles G. Congressional Findings H. Areas of Traditional State Concern I. Essential to a Larger Regulatory Scheme J. Conclusion VI. CONSTITUTIONALITY OF INDIVIDUAL MANDATE UNDER THE TAX POWER A. Repeated Use of the Term “Penalty” in the Individual Mandate B. Designation of Numerous Other Provisions in the Act as “Taxes” C. Legislative History of the Individual Mandate VII. SEVERABILITY I.STANDING As a threshold matter, we consider the government’s challenge to the plaintiffs’ standing to bring this lawsuit. “Article III of the Constitution limits the jurisdiction of federal courts to ‘cases’ and ‘controversies.’ ” Socialist Workers Party v. Leahy, 145 F.3d 1240, 1244 (11th Cir.1998) (citations omitted). As we have explained: The case-or-controversy constraint, in turn, imposes a dual limitation on federal courts commonly referred to as “justiciability.” Basically, justiciability doctrine seeks to prevent the federal courts from encroaching on the powers of the other branches of government and to ensure that the courts consider only those matters that are presented in an adversarial context. Because the judiciary is unelected and unrepresentative, the Article III case-or-controversy limitation, as embodied in justiciability doctrine, presents an important restriction on the power of the federal courts. Id. (citations omitted). Indeed, there are “three strands of justiciability doctrine— standing, ripeness, and mootness — that go to the heart of the Article III case or controversy requirement.” Harrell v. The Fla. Bar, 608 F.3d 1241, 1247 (11th Cir. 2010) (quotation marks and alterations omitted). As for the first strand, “[i]t is by now axiomatic that a plaintiff must have standing to invoke the jurisdiction of the federal courts.” KH Outdoor, LLC v. City of Trussville, 458 F.3d 1261, 1266 (11th Cir.2006). “In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Primera Iglesia Bautista Hispana of Boca Raton, Inc. v. Broward Cnty., 450 F.3d 1295, 1304 (11th Cir.2006) (quotation marks omitted). To demonstrate standing, a plaintiff must show that “(1) he has suffered, or imminently will suffer, an injury-in-fact; (2) the injury is fairly traceable to [the statute]; and (3) a favorable judgment is likely to redress the injury.” Harrell, 608 F.3d at 1253; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992). “The plaintiff bears the burden of establishing each of these elements.” Elend v. Basham, 471 F.3d 1199, 1206 (11th Cir.2006). And standing must be established for each claim a plaintiff raises. See Harrell, 608 F.3d at 1253-54. “We review standing determinations de novo.” Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir.2005). In fact, “[sjtanding is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party’s claims.” Id. at 974 (quotation marks and alteration omitted). And “we are obliged to consider questions of standing regardless of whether the parties have raised them.” Id. at 975. Notably, the government does not contest the standing of the individual plaintiffs or of the NFIB to challenge the individual mandate. In fact, the government expressly concedes that one of the individual plaintiffs — Mary Brown — has standing to challenge the individual mandate. See Government’s Opening Br. at 6 n.l (“Defendants do not dispute that plaintiff Brown’s challenge to the minimum coverage provision is justiciable.”). Nor does the government dispute the state plaintiffs’ standing to challenge the-Medicaid provisions. The only question raised by the government is whether the state plaintiffs have standing to challenge the individual mandate. The government claims that the state plaintiffs do not have standing because they are impermissibly suing the government as parens patriae — or as representatives of their citizens — in violation of the rule articulated in Massachusetts v. Mellon, 262 U.S. 447, 485-86, 43 S.Ct. 597, 600, 67 L.Ed. 1078 (1923). The state plaintiffs respond that they are not in violation of the Mellon rule, but rather have standing to challenge the individual mandate for three independent reasons: first, because the increased enrollment in Medicaid spurred by the individual mandate will cost the states millions of dollars in additional Medicaid funding; second, because they are injured by other provisions of the Act — such as the Medicaid expansion — from which the individual mandate cannot be severed; and finally, because the individual mandate intrudes upon their sovereign interest in enacting and enforcing state statutes that shield their citizens from the requirement to purchase health insurance. States’ Opening Br. at 67-69. Although the question of the state plaintiffs’ standing to challenge the individual mandate is an interesting and difficult one, in the posture of this case, it is purely academic and one we need not confront today. The law is abundantly clear that so long as at least one plaintiff has standing to raise each claim — as is the case here— we need not address whether the remaining plaintiffs have standing. See, e.g., Watt v. Energy Action Educ. Found., 454 U.S. 151, 160, 102 S.Ct. 205, 212, 70 L.Ed.2d 309 (1981) (“Because we find California has standing, we do not consider the standing of the other plaintiffs.”); Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 264 & n. 9, 97 S.Ct. 555, 562 & n. 9, 50 L.Ed.2d 450 (1977) (“Because of the presence of this plaintiff, we need not consider whether the other individual and corporate plaintiffs have standing to maintain suit.”); ACLU of Fla., Inc. v. Miami-Dade Cnty. Sch. Bd., 557 F.3d 1177, 1195 (11th Cir.2009) (“Because Balzli has standing to raise those claims, we need not decide whether either of the organizational plaintiffs also has standing to do so.”); Jackson v. Okaloosa Cnty., 21 F.3d 1531, 1536 (11th Cir.1994) (“In order for this court to have jurisdiction over the claims before us, at least one named plaintiff must have standing for each of the claims.”); Mountain States Legal Found. v. Glickman, 92 F.3d 1228, 1232 (D.C.Cir.1996) (“For each claim, if constitutional and prudential standing can be shown for at least one plaintiff, we need not consider the standing of the other plaintiffs to raise that claim.”). Because it is beyond dispute that at least one plaintiff has standing to raise each claim here — the individual plaintiffs and the NFIB have standing to challenge the individual mandate, and the state plaintiffs undeniably have standing to challenge the Medicaid provisions' — this case is justiciable, and we are permitted, indeed we are obliged, to address the merits of each. Accordingly, we turn to the constitutionality of the Act. II. THE ACT A. Congressional Findings The congressional findings for the Act, including those relating to the individual mandate, are contained in two pages, now codified in 42 U.S.C. § 18091(a)(l)-(3). Approximately 50 million people are uninsured. The congressional findings focus on these uninsureds, health insurance, and health care. Id. 1. The Uninsured and Cost-Shifting Problems The congressional findings state that some individuals make “an economic and financial decision to forego health insurance coverage and attempt to self-insure, which increases financial risks to households and medical providers.” Id. § 18091(a)(2)(A). In its findings, Congress determined that the decision by the uninsured to forego insurance results in a cost-shifting scenario. Id. § 18091(a)(2)(F). Congress’s findings identify a multi-step process that starts with consumption of health care: (1) some uninsured persons consume health care; (2) some fail to pay the full costs; (3) in turn the unpaid costs of that health care — $43 billion in 2008— are shifted to and spread among medical providers; (4) thereafter medical providers, by imposing higher charges, spread and shift the unpaid costs to private insurance companies; (5) then private insurance companies raise premiums for health policies and shift and spread the unpaid costs to already-insured persons; and (6) consequently already-insured persons suffer higher premiums. Id. § 18091(a)(2). Also, some uninsured persons continue not to buy coverage because of higher premiums. Id. The findings state that this cost-shifting scenario increases family premiums on average by $1,000 per year. Id. § 18091(a)(2)(F). Although not in the findings, the data show the cost-shifting increases individual premiums on average by $368 to $410 per year. The cost-shifting represents roughly 8% of average premiums. In its findings, Congress also points out that national health care spending in 2009 was approximately $2.5 trillion, or 17.6% of the national economy. Id. § 18091(a)(2)(B). Thus, the $43 billion in shifted costs represents about 1.7% of total health care expenditures. Of that $2.5 trillion in national health care spending in 2009, federal, state, and local governments paid $1.1 trillion, or 44%. Private insurers still paid for 32% of health care spending in 2009, id., through: (1) primarily private employer-based insurance plans, or (2) the private individual insurance market. The private employer-based health system covers 176 million Americans. Id. § 18091(a)(2)(D). The private individual insurance market covers 24.7 million people. Undisputedly, “[h]ealth insurance and health care services are a significant part of the national economy.” Id. § 18091(a)(2)(B). 2. $90 Billion Private Underwriting Costs Problem Congress also recognized that many of the uninsured desire insurance but have been denied coverage or cannot afford it. Its findings emphasize the barriers created by private insurers’ underwriting practices and related administrative costs. Id. § 18091(a)(2)(J). Private insurers want healthy insureds and try to protect themselves against unhealthy entrants through medical underwriting, especially in the individual market. As a result of medical underwriting, many uninsured Americans — ranging from 9 million to 12.6 million — voluntarily sought health coverage in the individual market but were denied coverage, charged a higher premium, or offered only limited coverage that excludes a preexisting condition. In its findings, Congress determined that the “[a]dministrative costs for private health insurance” were $90 billion in 2006, comprising “26 to 30 percent of premiums in the current individual and small group markets.” Id. The findings state that Congress seeks to create health insurance markets “that do not require underwriting and eliminate its associated administrative costs.” Id. The Act requires private insurers to allow all applicants to enroll. 42 U.S.C. § 300gg-l(a). Congress stated that the Act, by eliminating underwriting costs, will lower health insurance premiums. Id. S. Congress’s Solutions Given the 50 million uninsured, $43 billion in uncompensated costs, and $90 billion in underwriting costs, Congress determined these problems affect the national economy and interstate commerce. Id. § 18091(a)(2). The congressional findings identify what the Act regulates: (1) the “health insurance market,” (2) “how and when health care is paid for,” and (3) “when health insurance is purchased.” Id. § 18091(a)(2)(A), (H). The findings also state that the Act’s reforms will significantly reduce the number of the uninsured and will lower health insurance premiums. Id. § 18091(a)(2)(F). To reduce the number of the uninsured, the Act employs five main tools: (1) comprehensive insurance industry reforms which alter private insurers’ underwriting practices, guarantee issuance of coverage, overhaul their health insurance products, and restrict their premium pricing structure; (2) creation of state-run “Health Benefit Exchanges” as new marketplaces through which individuals, families, and small employers, now pooled together, can competitively purchase the new insurance products and obtain federal tax credits and subsidies to do so; (3) a mandate that individuals must purchase and continuously maintain health insurance or pay annual penalties; (4) penalties on private employers who do not offer at least some type of health plan to their employees; and (5) the expansion of Medicaid eligibility and subsidies. The Act’s Medicaid expansion alone will cover 9 million of the 50 million uninsured by 2014 and 16 million by 2016. The Act’s health insurance reforms remove private insurers’ barriers to coverage and restrict their pricing to make coverage accessible to the 9 to 12 million uninsured who were denied coverage or had their preexisting conditions excluded. The Act’s new Exchanges, with significant federal tax credits and subsidies, are predicted to make insurance available to 9 million in 2014 and 22 million by 2016. Congress’s findings state that the Act’s multiple provisions, combined together: (1) “will add millions of new consumers to the health insurance market” and “will increase the number and share of Americans who are insured”; (2) will reduce the number of the uninsured, will broaden the health insurance risk pool to include additional healthy individuals, will increase economies of scale, and will significantly reduce insurance companies’ administrative costs, all of which will lower health insurance premiums; (3) will build upon and strengthen the private employer-based health insurance system, which already covers “176,000,000 Americans”; and (4) will achieve “near-universal” coverage of the uninsured. Id. § 18091(a)(2). Although the congressional' findings summarily refer to “the uninsured,” the parties’ briefs and the 52 amici briefs contain, and indeed rely on, additional data about the uninsured. Before turning to the Act, we review that data. I. Data about the Uninsured and Uncompensated Care So who are the uninsured? As to health care usage, the uninsured do not fall into a single category. Many of the uninsured do not seek health care each year. Of course, many do. In 2007, 57% of the 40 million uninsured that year used some medical services; in 2008, 56% of the 41 million uninsured that year used some medical services. As to medical services, 50% of uninsured people had routine checkups in the past two years; 68% of uninsured people had routine checkups in the past five years. In 2008, the uninsured made more than 20 million visits to emergency rooms, and 2.1 million were hospitalized. The medical care used by each uninsured person cost about $2,000 on average in 2007, and $1,870 on average in 2008. When the uninsured do seek health care, what happens? Some pay in full. Some partially pay. Some pay nothing. Data show the uninsured paid on average 37% of their health care costs out of pocket in 2007, and 46.01% in 2008, while third parties pay another 26% on their behalf. Not surprisingly, the poorer uninsured, on average, consume more health care for which they do not pay. Even in households at or above the median income level ($41,214) in 2000, the uninsured paid, on average, less than half their medical care costs. It is also undisputed that people are uninsured for a wide variety of reasons. The uninsured are spread across different income brackets: (1) less than $25,000: 15.5 million uninsured, or about 31%; (2) $25,000 to $49,999: 15.3 million uninsured, or about 30%; (3) $50,000 to $74,999: 9.4 million uninsured, or about 18%; (4) $75,000 or more: 10.6 million uninsured, or about 21%. As the data show, many of the uninsured have low to moderate incomes and simply cannot afford insurance. Some of the uninsured can afford insurance and tried to obtain it, but were denied coverage based on health status. Some are voluntarily uninsured and self-finance because they can pay for their medical care or have modest medical care needs. Some may not have considered the issue. There is no one reason why people are uninsured. It is also not surprising, therefore, that Congress has attacked the uninsured problem through multiple reforms and numerous avenues in the Act that we outline later. Given these identified problems, congressional findings, and data as background, we now turn to Congress’s legislative response in the Act. B. Overall Structure of Nine Titles The sweeping and comprehensive nature of the Act is evident from its nine Titles: I. Quality, Affordable Health Care for All Americans II. Role of Public Programs III. Improving the Quality and Efficiency of Health Care IV. Prevention of Chronic Disease and Improving Public Health V. Health Care Workforce VI. Transparency and Program Integrity VII. Improving Access to Innovative Medical Therapies VIII. Community Living Assistance Services and Supports IX. Revenue Provisions The Act’s provisions are spread throughout many statutes and different titles in the United States Code. As our Appendix A demonstrates, the Act’s nine Titles contain hundreds of new laws about hundreds of different areas of health insurance and health care. Appendix A details most parts of the Act with section numbers. Here, we merely list the broad subject matter in each Title. Title I contains these four components mentioned earlier: (1) the insurance industry reforms; (2) the new state-run Exchanges; (3) the individual mandate; and (4) the employer penalty. Act §§ 1001— 1568. Title II shifts the Act’s focus to publicly-funded programs designed to provide health care for the uninsured, such as Medicaid, CHIP, and initiatives under the Indian Health Care Improvement Act. Id. §§ 2001-2955. Title II contains the Medicaid expansion at issue here. Title II’s provisions also create, or expand, other publicly-funded programs. Id. Title III primarily addresses Medicare. Id. §§ 3001-3602. Title IV concentrates on prevention of illness. Id. §§ 4001-4402. Title V seeks to increase the supply of health care workers through education loans, training grants, and other programs. Id. §§ 5001-5701. Title VI creates new transparency and anti-fraud requirements for physician-owned hospitals participating in Medicare and for nursing facilities participating in Medicare or Medicaid. Id. §§ 6001-6801. Title VI includes the Elder Justice Act, designed to ehminate elder abuse, neglect, and exploitation. Id. Title VII extends and expands certain drug discounts in health care facilities serving low-income patients. Id. §§ 7001-7103. Title VIII establishes a national, voluntary long-term care insurance program for purchasing community living assistance services and support by persons with functional limitations. Id. §§ 8001-8002. Title IX contains revenue provisions. Id. §§ 9001-9023. We include Appendix A because it docu-' ments (1) the breadth and scope of the Act; (2) the multitudinous reforms enacted to reduce the number of the uninsured; (3) the large number and diverse array of new, or expanded, federally-funded programs, grants, studies, commissions, and councils in the Act; (4) the extensive new federal requirements and regulations on myriad subjects; and (5) how many of the Act’s provisions on their face operate separately and independently. We now examine in depth the five parts of the Act largely designed to reduce the number of the uninsured. Because of the Act’s comprehensive and complex regulatory scheme, it is critical to examine what the Act actually does and does not do. We start with some terms and definitions. C. Terms and Definitions The Act regulates three aspects of health insurance: (1) “markets,” the outlets where consumers may purchase insurance products; (2) “plans,” the insurance products themselves; and (3) “benefits,” the health care services or items covered under an insurance plan. 1. Markets Given its focus on making health insurance available to the uninsured, the Act recognizes and regulates four markets for health insurance products: (1) the “individual market”; (2) the “small group market”; (3) the “large group market”; and (4) the new Exchanges, to be created and run by each state. The term “individual market” means “the market for health insurance coverage offered to individuals other than in connection with a group health plan.” 42 U.S.C. §§ 300gg-91(e)(l)(A), 18024(a)(2). The term “group market” means “the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by an employer.” Id. § 18024(a)(1). Within the “group market,” the Act distinguishes between the “large group market” and the “small group market.” The term “large group market” refers to the market under which individuals purchase coverage through a group plan of a “large employer.” Id. §§ 300gg-91(e)(3), 18024(a)(3). A “large employer” is an employer with over 100 employees. Id. §§ 300gg-91(e)(2), 18024(b)(1). The term “small group market” refers to the market under which individuals purchase coverage through a group plan of a “small employer,” or an employer with no more than 100 employees. Id. §§ 300gg-91(e)(4), (5), 18024(a)(3), (b)(2). The term “Exchanges” refers to the health benefit exchanges that each state must create and operate. Id. § 18031(b). Companies (profit and nonprofit) participating in the Exchanges will offer insurance for purchase by individuals and employees of small employers. See id.; id. § 18042. The uninsured can obtain significant federal tax credits and subsidies through the Exchanges. See 26 U.S.C. § 36B; 42 U.S.C. § 18071. In 2017, the states will have the option to open the Exchanges to large employers. 42 U.S.C. § 18032(f)(2)(B). 2. “Essential Health Benefits Package” Term Two key terms in the Act are: (1) “essential health benefits package” and (2) “minimum essential coverage.” Although they sound similar, each has a different meaning. The term “essential health benefits package” refers to the comprehensive benefits package that must be provided by plans in the individual and small group markets by 2014. Id. § 300gg-6(a) (effective Jan. 1, 2014); id. § 18022(a). The Act does not impose the essential health benefits package on plans offered by large group employers to their employees. An “essential health benefits package” must: (1) provide coverage for the “essential health benefits” described in § 18022(b); (2) limit the insured’s cost-sharing, as provided in § 18022(c); and (3) provide “either the bronze, silver, gold, or platinum level of coverage” described in § 18022(d). Id. § 18022(a). The Act leaves it to HHS to define the term “essential health benefits.” Id. § 18022(b). However, that definition of “essential health benefits” must include at least these ten services: (A) Ambulatory patient services. (B) Emergency services. (C) Hospitalization. (D) Maternity and newborn care. (E) Mental health and substance use disorder services, including behavioral health treatment. (F) Prescription drugs. (G) Rehabilitative and habilitative services and devices. (H) Laboratory services. (I) Preventive and wellness services and chronic disease management. (J) Pediatric services, including oral and vision care. Id. § 18022(b)(1). The bronze, silver, gold, and platinum levels of coverage reflect the levels of cost-sharing (or actuarial value of benefits) in a plan and do not represent the level or type of services. Id. § 18022(d)(l)-(2). For example, a bronze plan covers 60% of the benefits’ costs, and the insured pays 40% out of pocket; a platinum plan covers 90%, with the insured paying 10%. Id. § 18022(d)(1)(A), (D). S. Individual Mandate’s “Minimum Essential Coverage” Term The Act uses a wholly different term— “minimum essential coverage” — in connection with the individual mandate. “Minimum essential coverage” is the type of plan needed to satisfy the individual mandate. A wide variety of health plans are considered “minimum essential coverage”: (1) government-sponsored programs, (2) eligible employer-sponsored health plans, (3) individual market health plans, (4) grandfathered health plans, and (5) health plans that qualify for, and are offered in, a state-run Exchange. 26 U.S.C. § 5000A(a), (f)(1). Many of these plan types will satisfy the mandate even if they do not have the “essential health benefits package” and regardless of the level of benefits or coverage. The requirement of the “essential health benefits package” is directly tied to some of the insurance product reforms, but not the individual mandate. We turn to the Act’s first component: the insurance reforms. D. Health Insurance Reforms To reduce the number of the uninsured, the Act heavily regulates private insurers and reforms their health insurance products. We list examples of the major reforms. 1. Guaranteed issue. Insurers must permit every employer or individual who applies in the individual or group markets to enroll. 42 U.S.C. § 300gg-l(a) (effective Jan. 1, 2014). However, insurers “may restrict enrollment in coverage described [in subsection (a) ] to open or special enrollment periods.” Id. § 300gg-1(b)(1) (effective Jan. 1, 2014). 2. Guaranteed renewability. Insurers in the individual and group markets must renew or continue coverage at the individual or plan sponsor’s option in the absence of certain exceptions, such as premium nonpayment, fraud, or the insurer’s discontinuation of coverage in the relevant market. Id. § 300gg-2(b). 3. Waiting periods. Under group health plans, insurers may impose waiting periods of up to 90 days before a potential enrollee is eligible to be covered under the plan. Id. §§ 300gg-7 (effective Jan. 1, 2014), 300gg-3(b)(4). The Act places no limits on insurers’ waiting periods for applications in the individual market. 4. Elimination of preexisting conditions limitations. Insurers may no longer deny or limit coverage due to an individual’s preexisting medical conditions. The Act prohibits preexisting condition exclusions for children under 19 within six months of the Act’s enactment, and eliminates preexisting condition exclusions for adults beginning in 2014. Id. § 300gg-3. 5. Prohibition on health status eligibility rules. Insurers may not establish eligibility rules based on any of the health status-related factors listed in the Act. Id. § 300gg-4 (effective Jan. 1, 2014). 6. Community rating. In the individual and small group markets and the Exchanges, insurers may vary premium rates only based on (1) whether the plan covers an individual or a family; (2) “rating area”; (3) age (limited to a 3-to-l ratio); and (4) tobacco use (limited to a 1.5-to-l ratio). Id. § 300gg(a)(l). Each state must establish one or more rating areas subject to HHS review. Id. § 300gg(a)(2)(B). This rule prevents insurers from varying premiums within a geographic area based on gender, health status, or other factors. 7. Essential health benefits package. The individual and small group market plans must contain comprehensive coverage known as the “essential health benefits package,” defined above. Id. §§ 300gg-6(a) (effective Jan. 1, 2014), 18022(a). The Act does not impose this requirement on large group market plans. 8. Preventive service coverage. Insurers must provide coverage for certain enumerated preventive health services without any deductibles, copays, or other cost-sharing requirements. Id. § 300gg-13(a). 9. Dependent coverage. Insurers must allow dependent children to remain on their parents’ policies until age 26. Id. § 300gg-14(a). 10. Elimination of annual and lifetime limits. Insurers may no longer establish lifetime dollar limits on essential health benefits. Id. § 300gg-ll(a)(l)(A), (b). Insurers may retain annual dollar limits on essential health benefits until 2014. Id. § 300gg-ll(a). 11. Limits on cost-sharing by insureds. “Cost-sharing” includes out-of-pocket “deductibles, coinsurance, copayments, or similar charges” and “qualified medical expenses.” Id. § 18022(c)(3)(A). Annual cost-sharing limits apply to group health plans, health plans sold in the individual market, and qualified health plans offered through an Exchange. Id. §§ 300gg-6(b) (effective Jan. 1, 2014), 18022(a), (c). 12. Deductibles. Deductibles for any plans offered in the small group market are capped at $2,000 for plans covering single individuals and $4,000 for any other plan, adjusted after 2014. Id. §§ 300gg-6(b) (effective Jan. 1, 2014), 18022(c)(2). The deductible limits do not apply to individual plans or large group plans. See id. 13. Medical loss ratio. Insurers must maintain certain ratios of premium revenue spent on the insureds’ medical care versus overhead expenses. Id. § 300gg-18(a), (b)(1). In the large group market, insurers must spend 85% of their premium revenue on patient care and no more than 15% on overhead. Id. § 300gg-18(a), (b)(1)(A)®. In the individual and small group markets, insurers must spend 80% of their revenue on patient care and no more than 20% on overhead. Id. § 300gg~ 18(a), (b)(l)(A)(ii). This medical-loss ratio requirement applies to all plans (including grandfathered plans). Id. § 300gg-18(a), (b)(1). Insurers must report to HHS their ratio of incurred claims to earned premiums. Id. § 300gg-18(a). 14. Premium increases. HHS, along with all states, shall annually review “unreasonable” increases in premiums beginning in 2010. Id. § 300gg-94(a)(l). Issuers must justify any unreasonable premium increase. Id. § 300gg-94(a)(2). 15. Prohibition on coverage rescissions. Insurers may not rescind coverage except for fraud or intentional misrepresentation of material fact. Id. § 300gg-12. 16. Single risk pool. Insurers must consider all individual-market enrollees in their health plans (except enrollees in grandfathered plans) to be members of a single risk pool (whether enrolled privately or through an Exchange). Id. § 18032(c)(1). Small group market enrollees must be considered in the same risk pool. Id. § 18032(c)(2). 17. Temporary high risk pool program. To cover many of the uninsured immediately, the Act directs HHS to establish a “temporary high risk health insurance pool program” to offer coverage to uninsured individuals with preexisting conditions until the prohibition on preexisting condition exclusions for adults becomes effective in 2014. Id. § 18001(a). The premiums for persons with a preexisting condition remain what a healthy person would pay. Id. §§ 18001(c)(2)(C), 300gg(a)(l). The Act allocates $5 billion to HHS to cover this high-risk pool. When this temporary program ends in 2014, such individuals will be transferred to coverage through an Exchange. Id. § 18001(a)-(d), (g). 18. State regulation maintained. States will license insurers and enforce both federal and state insurance laws. Id. § 18021(a)(1)(C). The Act provides for the continued operation of state regulatory authority, even with respect to interstate “health care choice compacts,” which enable qualified health plans to be offered in more than one state. Id. § 18053(a). In addition to reforming health insurance products, the Act requires the creation of Exchanges where the uninsured can buy the new products. We examine this second component of the Act, also designed to make insurance more accessible and affordable and thus reduce the number of the uninsured. E. Health Benefit Exchanges 1. Establishment of State-Run Exchanges By January 1, 2014, all states must establish “American Health Benefit Exchanges” and “Small Business Health Options Program Exchanges,” which are insurance marketplaces where individuals, families, and small employers can shop for the Act’s new insurance products. Id. § 18031(b). Consumers can compare prices and buy coverage from one of the Exchange’s issuers. Id. § 18031(b), (c). Exchanges centralize information and facilitate the use of the Act’s significant federal tax credits and other subsidies to purchase health insurance. See 26 U.S.C. § 36B; 42 U.S.C. §§ 18031, 18071, 18081-83. States may create and run the Exchanges through a governmental or nonprofit entity. 42 U.S.C. § 18031(d)(1). States may establish regional, interstate, or subsidiary Exchanges. Id. § 18031(f). The federal government will provide funding until January 1, 2015, to establish Exchanges. Id. § 18031(a). Insurers may offer their products inside or outside these Exchanges, or both. Id. § 18032(d). Importantly, the Exchanges draw upon the states’ significant experience regulating the health insurance industry. See id. § 18041. The Act allows states some flexibility in operations and enforcement, though states must either (1) directly adopt the federal requirements set forth by HHS, or (2) adopt state regulations that effectively implement the federal standards, as determined by HHS. Id. § 18041(b). In a subsection entitled, “No interference with State regulatory authority,” the Act provides that “[njothing in this chapter shall be construed to preempt any State law that does not prevent the application of the provisions of this chapter.” Id. § 18041(d). 2. Qualified Individuals and Employers in the Exchanges The Act provides that “qualified individuals” and “qualified employers” may purchase insurance through the Exchanges. Id. § 18031(d)(2). Although “qualified individuals” is broadly defined, “qualified employers” are initially limited to small employers, but in 2017, states may allow large employers to participate in their Exchanges. Id. § 18032(f)(2)(A), (B). Qualified employers can purchase group plans in or out of Exchanges. Id. § 18032(d)(1). 3. Qualified Health Plans in the Exchanges The Act prescribes the types of plans available in the Exchanges, known as “qualified health plans.” Id. § 18031(d)(2)(B)®. A “qualified health plan” is a health plan that: (1) is certified as a qualified health plan in each Exchange through which the plan is offered; (2) provides an “essential health benefits package”; and (3) is offered by an issuer that (a) is licensed and in good standing in each state where it offers coverage, and (b) complies with HHS regulations and any requirements of the Exchange. Id. § 18021(a)(1). The issuer must agree, inter alia, to offer at least one plan in the “silver” level and one in the “gold” level in each Exchange in which it participates, as described in § 18022(d). Id. § 18021(a)(1)(C). The issuer must charge the same premium rate regardless of whether a plan is offered in an Exchange or directly. Id. h- “Essential Health Benefits Package” and Catastrophic Plans The “essential health benefits package” is required of all qualified health plans sold in the Exchanges. Id. § 18021(a)(1)(B). States may require that a qualified health plan offered in that state cover benefits in addition to “essential health benefits,” but the state must defray the costs of additional coverage through payments directly to patients or insurers. Id. § 18031(d)(3)(B). One significant exception to the “essential health benefits package” requirement is the catastrophic plan in the individual market only. In and outside the Exchanges, insurers may offer catastrophic plans which provide no benefits until a certain level of out-of-pocket costs — $5,950 for self-only coverage and $11,900 for family coverage in 2011 — are incurred. Id. § 18022(e); see id. § 18022(c)(1), (e)(1)(B)®; 26 U.S.C. § 223(c)(2)(A)®), (g); I.R.S. Pub. 969, at 3 (2010). The level of out-of-pocket costs is equal to the current limits on out-of-pocket spending for high deductible health plans adjusted after 2014. 42 U.S.C. § 18022(e), (c)(1). This catastrophic plan exception applies only if the plan: (1) is sold in the individual market; (2) restricts enrollment to those under age 30 or certain persons exempted from the individual mandate; (3) provides the essential health benefits coverage after the out-of-pocket level is met; and (4) provides coverage for at least three primary care visits. Id. § 18022(e)(1), (2). 5. Federal Premium Tax Credit To reduce the number of the uninsured, the Act also establishes considerable federal tax credits for individuals and families (1) with household incomes between 1 and 4 times the federal poverty level; (2) who do not receive health insurance through an employer; and (3) who purchase health insurance through an Exchange. 26 U.S.C. § 36B(a), (b), (c)(l)(A)-(C). To receive the credit, eligible individuals must enroll in a plan offered through an Exchange and report their income to the Exchange. 42 U.S.C. § 18081(b). If the individual’s income level qualifies, the Treasury pays the premium tax credit amount directly to the individual’s insurance plan issuer. Id. § 18082(c)(2)(A). The individual pays only the dollar difference between the premium tax credit and the total premium charged. Id. § 18082(c)(2)(B). The credit amount is tied to the cost of the second-cheapest plan in the silver level offered through an Exchange where the individual resides, though the credit may be used for any plan purchased through an Exchange. See 26 U.S.C. § 36B(b)(2). 6. Federal Cosi^Sharing Subsidies The Act also provides a variety of federal cost-sharing subsidies to reduce the out-of-pocket expenses for individuals who (1) enroll in a qualified health plan sold through an Exchange in the silver level of coverage, and (2) have a household income between 1 and 4 times the federal poverty level. 42 U.S.C. § 18071. As noted earlier, the Exchanges, with significant federal tax credits and subsidies, are predicted to make insurance available to 9 million in 2014 and 22 million by 2016. We now turn to the Act’s third component: the individual mandate. F. Individual Mandate The individual mandate and its penalty are housed entirely in the Internal Revenue Code, in subtitle D, labeled “Miscellaneous Excise Taxes.” 26 U.S.C. § 5000A et seq. The Act mandates that, after 2013, all “applicable individuals” (1) shall maintain “minimum essential coverage” for themselves and their dependents, or (2) pay a monetary penalty. Id. § 5000A(a)-(b). Taxpayers must include the penalty on their annual federal tax return. Id. § 5000A(b)(2). Married taxpayers filing a joint return are jointly liable for any penalty. Id. § 5000A(b)(3)(B). 1.“Minimum Essential Coverage” At first glance, the term “minimum essential coverage,” as used in the Internal Revenue Code, sounds like it refers to a base level of benefits or services: However, the Act uses a different term' — the “essential health benefits package” in Title 42 — to describe health care benefits and services. 42 U.S.C. § 300gg-6(a) (effective Jan. 1, 2014). In contrast, “minimum essential coverage” refers to a broad array of plan types that will satisfy the individual mandate. 26 U.S.C. § 5000A(f)(l). An individual can satisfy the mandate’s “minimum essential coverage” requirement through: (1) any government-funded health plan such as Medicare Part A, Medicaid, TRICARE, or CHIP; (2) any “eligible employer-sponsored plan”; (3) any health plan in the individual market; (4) any grandfathered health plan; or (5) as a catch-all, “such other health benefits coverage” that is recognized by HHS in coordination with the Treasury. Id. The mandate provisions in § 5000A do not specify what benefits must be in that plan. The listed plans, in many instances, satisfy the mandate regardless of the level of benefits or coverage. 2. Govemmenb-Sponsored Programs For example, a variety of government-sponsored programs will satisfy the individual mandate. For individuals 65 or over, enrolling in Medicare Part A will suffice. Id. § 5000A(f)(l)(A)(i). Individuals and families may satisfy the mandate by enrolling in Medicaid, if eligible. Id. § 5000A(f)(l)(A)(ii). Qualifying children under age 19 can satisfy the mandate by enrolling in CHIP. Id. § 5000A(f)(l)(A)(iii). Government-sponsored programs for veterans, active and former military personnel and their families, active Peace Corps volunteers, and active and retired civilian Defense Department personnel and their dependents satisfy the mandate. Id. § 5000A(f)(l)(A)(iv), (v), (vi). 3. Eligible Employer-Sponsored Plans ■Individuals may also satisfy the mandate by purchasing coverage through any “eligible employer-sponsored plan.” Id. § 5000A(f)(l)(B). An “eligible employer-sponsored plan” is a “group health plan or group health insurance coverage” offered “by an employer to the employee,” which is defined broadly as: (1) a governmental plan established by the federal, state, or local government for its employees; (2) “any other plan or coverage offered in the small or large group market within a State”; or (3) a grandfathered health plan offered in a group market. Id. § 5000A(f)(2). Health plans of large employers satisfy the individual mandate whatever the nature of the benefits offered to the employee. Whether a “self-insured health plan” of large employers satisfies the mandate is another story. The mandate’s § 5000A(f)(2) refers to plans in the “small or large group market.” Id. § 5000A(f)(2)(emphasis added). A “self-insured health plan,” by definition, is not sold or offered in a “market.” It is thus not clear whether large employers’ self-insured plans will constitute “eligible employer-sponsored plans” in § 5000A(f)(2) and thereby satisfy the mandate. It may be that HHS will later recognize “self-insured plans” under the “other coverage” or “grandfathered plan” categories in the mandate’s § 5000A(f)(2). Ip. Plans in the Individual Market Individuals can also satisfy the mandate by purchasing insurance in the individual market through Exchanges or directly from issuers. Id. § 5000A(f)(l)(C). The Act imposes the “essential health benefits package” requirement on plans sold in the individual and small group markets. 42 U.S.C. § 300gg-6 (effective Jan. 1, 2014). However, in the individual market, insurers can offer catastrophic plans to persons under age 30 or certain persons exempted from the mandate. Id. § 18022(e). 5. Grandfathered Plans An already-insured individual can fulfill the individual mandate by being covered by any “grandfathered health plan,” 26 U.S.C. § 5000A(f)(l)(D), which is any group health plan or health insurance coverage in which an individual was enrolled on March 23, 2010. 42 U.S.C. § 18011(a)(1), (e). While not subject to many of the Act’s product reforms, grandfathered plans must comply with some provisions, among them the extension of dependent coverage until age 26, the medical-loss ratio requirements, and the prohibitions on (1) preexisting condition exclusions, (2) lifetime limits on coverage, (3) excessive waiting periods, and (4) unfair rescissions of coverage. Id. § 18011(a)(2)-(4), (e). Under the “interim final regulations” issued by HHS, plans will lose their grandfathered status if they choose to significantly (1) cut or eliminate benefits; (2) increase copayments, deductibles, or out-of-pocket costs for their enrollees; (3) decrease the share of premiums employers contribute for workers in group plans; or (4) decrease annual limits. 45 C.F.R. § 147.140(g). 6. “Other Coverage Recognized” by HHS The individual mandate even provides a catch-all that leaves open the door to other health coverage. The “minimum essential coverage” requirement may be met by any other coverage that HHS, in coordination with the Treasury, recognizes for purposes of meeting this requirement. 26 U.S.C. § 5000A(f)(l)(E). 7. Exemptions and Exceptions to Individual Mandate The individual mandate, however, does not apply to eight broad categories of persons, either by virtue of an exemption from the mandate or an exception to the mandate’s penalty. The Act carves out these three exemptions from the individual mandate: (1) persons with religious exemptions; (2) aliens not legally present in the country; and (3) incarcerated persons. Id. § 5000A(d). The Act also excepts five additional categories of persons from the individual mandate penalty: (1) individuals whose required annual premium contribution exceeds 8% of their household income for the taxable year; (2) individuals whose household income for the taxable year is below the federal income tax filing threshold in 26 U.S.C. § 6012(a)(1); (3) members of Indian tribes; (4) individuals whose gaps in health insurance coverage last less than three months; and (5) as a catch-all, individuals who, as determined by HHS, have suffered a “hardship” regarding their ability to obtain coverage under a qualified health plan. Id. § 5000A(e).. 8.Calculation of Individual Mandate Penalty If an applicable individual fails to purchase an insurance plan in one of the many ways allowed, the individual must pay a penalty. Id. § 5000A(b)(l). The annual penalty will be either: (1) a flat dollar amount, or (2) a percentage of the individual’s income if higher than the flat rate. Id. § 5000A(c)(l). However, the percentage-of-income figure is capped at the national average premium amount for bronze-level plans in the Exchanges. Id. The flat dollar penalty amount, which sets the floor, is equal to $95 in 2014, $325 in 2015, and $695 in 2016. Id. § 5000A(c)(2)(A), (c)(3)(A)-(C). Beyond 2016, it remains $695, except for inflation adjustments. Id. § 5000A(c)(3)(D). The percentage-of-income number that will apply, if higher than the flat dollar amount, is a set percentage of the taxpayer’s income that is in excess of the tax-filing threshold (defined in 26 U.S.C. § 6012(a)(1)). Id. § 5000A(c)(2). In any event, the total penalty for the taxable year cannot exceed the national average premium of a bronze-level qualified health plan. Id. § 5000A(c)(l). 9. Collection of Individual Mandate Penalty An individual who fails to pay the penalty is not subject to criminal or additional civil penalties. Id. § 5000A(g)(2)(A), (B). The IRS’s authority to use liens or levies does not apply to the penalty. Id. § 5000A(g)(2)(B). No interest accrues on the penalty. The Act contains no enforcement mechanism. See id. All the IRS, practically speaking, can do is offset any tax refund owed to the uninsured taxpayer. We now review the Act’s fourth component aimed at reducing the number of the uninsured: the employer penalty. G. Employer Penalty The Act imposes a penalty, also housed in the Internal Revenue Code, on certain employers if they do not offer coverage, or offer inadequate coverage, to their employees. Id. § 4980H(a), (b). The penalty applies to employers with an average of at least 50 full-time employees. Id. § 4980H(a), (b), (c)(2). The employer must pay a penalty if the employer: (1) does not offer its full-time employees the opportunity to enroll in “minimum essential coverage” under an “eligible employer-sponsored plan” as defined in § 5000A(f)(2); or (2) offers minimum essential coverage (i) that is “unaffordable,” or (ii) that consists of a plan whose share of the total cost of benefits is less than 60% (i.e., does not provide “minimum value”); and (3) at least one full-time employee purchases a qualified health plan through an Exchange and is allowed a premium tax credit or a subsidy. Id. § 4980H(a), (c). The employer penalty is tied to an employer’s failure to offer “minimum essential coverage.” Id. § 4980H(a), (b). Recall that “minimum essential coverage” is not the same thing as the “essential health benefits package.” Thus, a large employer may avoid the penalty so long as it offers any plan in the large group market in the state, and the plan is “affordable” and provides “minimum value.” Id. § 4980H(b)(l), (c)(3). A small employer’s plan, however, must include an “essential health benefits package” and also be “affordable” and provide “minimum value.” 42 U.S.C. §§ 300gg-6(a) (effective Jan. 1, 2014), 18022(a)(l)-(3). The Act also provides tax incentives for certain small employers (up to 25 employees) to purchase health insurance for their workers. 26 U.S.C. § 45R. 1. Calculation of Penalty Amount The penalty amount depends on whether the employee went to the Exchange because the employer’s plan (1) was not “minimum essential coverage” or (2) was either “unaffordable” or did not provide “minimum value.” The penalty translates to $2,000 to $3,000 per employee annually. Id. § 4980H. An employer that does not offer “minimum essential coverage” to all full-time employees faces a tax penalty of $166.67 per month (one-twelfth of $2,000) for each of its full-time employees, until the employer offers such coverage (subject to an exemption for the first 30 full-time employees). Id. § 4980H(a), (c)(1), (c)(2)(D). This particular penalty applies for as long as at least one employee, eligible for a premium tax credit or a subsidy, enrolls in a qualified health plan through an Exchange. Id. In the “unaffordable coverage” or “no minimum value” scenarios, the employer faces a tax penalty of $250 per month (one-twelfth of $3,000) for each employee who (1) turns down the employer-sponsored plan; (2) purchases a qualified health plan in an Exchange; and (3) is eligible for a federal premium tax credit or subsidy in an Exchange. Id. § 4980H(b)(l). 2. Automatic Enrollment An automatic enrollment requirement applies to employers who (1) have more than 200 employees and (2) elect to offer coverage to their employees. Id. § 218a. Such employers must automatically enroll new and current full-time employees, who do not opt out, in one of the employer’s plans. Id. The maximum 90-day waiting period rule applies, however. Id.; 42 U.S.C. § 300gg-7 (effective Jan. 1, 2014). 3. Temporary Reinsurance Program for Employers’ Early Retirees To reduce the number of the uninsured, the Act provides for immediate coverage for even retired employees 55 years and older who are not yet eligible for Medicare. A federal temporary reinsurance program will reimburse former employers who allow their early retirees and the retirees’ dependents and spouses to participate in their employment-based plans. The federal government will reimburse a portion of the plan’s cost. 42 U.S.C. § 18002(a)(1), (a)(2)(C). We turn to the Act’s fifth component: the Medicaid expansion, which alone will cover millions of the uninsured. H. Medicaid Expansion The Act expands Medicaid eligibility and subsidies by amending 42 U.S.C. § 1396a, the section of the Medicaid Act outlining what states must offer in their coverage plans. The Act imposes these substantive requirements on the states’ plans, starting in 2014, unless otherwise noted: (1) States will be required to cover adults under age 65 (who are not pregnant and not already covered) with incomes up to 133% of the federal poverty level (“FPL”). Id. § 1396a(a)(10)(A)(i)(VIII). This is a significant change, because previously the Medicaid Act did not set a baseline income level for mandatory eligibility. Thus, many states currently do not provide Medicaid to childless adults and cover parents only at much lower income levels. (2) States will be required to provide Medicaid to all children whose families earn up to 133% of the FPL, including children currently covered through separate CHIP programs. Id. §§ 1396a(a) (10) (A) (i) (VII), 1396a(i )(1)(D), 1396a(£ )(2)(C). States currently must provide Medicaid to children under age 6 with family income up to 133% of the FPL and children ages 6 through 18 with family income up to 100% of the FPL. Id. §§ 1396a(a)(10)(A)(i)(IV), (VI), (VII), 1396a(i )(1)(B)-(D), 1396a(Z )(2)(A)-(C). (3) States are required to at least maintain existing Medicaid eligibility levels for adults and children (that were in place as of March 23, 2010) until a state’s Exchange is fully operational. Id. § 1396a(gg)(l). Whereas states previously had the option to raise or lower their eligibility levels, states cannot institute more restrictive eligibility standards until the new policies take place. Id. (4) Children under age 26 who were receiving Medicaid but were “aged out” of foster care will be newly eligible to continue receiving Medicaid. Id. § 1396a(a)(10)(A)(i)(IX) (effective Jan. 1, 2014). (5) The new law will increase Medicaid payments for primary care services provided by primary care doctors to 100% of the Medicare payment rates for 2013 and 2014. Id. § 1396a(a)(13)(C). States will receive 100% federal funding for the cost of the increasing payment rates for 2013 and 2014. Id. § 1396d(dd). Having covered the Act’s five major components, we examine the two components challenged as unconstitutional: (1) the Medicaid expansion and (2) the individual mandate. III. CONSTITUTIONALITY OF MEDICAID EXPANSION The state plaintiffs challenge the district court’s grant of summary judgment in favor of the government on the state plaintiffs’ claim that the Act’s expansion of the Medicaid program, enacted pursuant to the Spending Clause, is unduly coercive under South Dakota v. Dole, 483 U.S. 203, 211, 107 S.Ct. 2793, 2798, 97 L.Ed.2d 171 (1987). For the reasons given below, we conclude that it is not. A. History of the Medicaid Program Medicaid is a long-standing partnership between the national and state sovereigns that has been in place for nearly half a century. “In 1965, Congress enacted the Medicaid Act, 42 U.S.C. § 1396 et seq., as Title XIX of the Social Security Act.” Moore ex rel. Moore v. Reese, 637 F.3d 1220, 1232 (11th Cir.2011); see also Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784 (1980). “Medicaid is a jointly financed federal-state cooperative program, designed to help states furnish medical treatment to their needy citizens.” Reese, 637 F.3d at 1232. The Medicaid Act “prescribes substantive requirements governing the scope of each state’s program.” Curtis v. Taylor, 625 F.2d 645, 649 (5th Cir.1980). “Section 1396a provides that a ‘State plan for medical assistance’ must meet various guidelines, including the provision of certain categories of care and services.” Reese, 637 F.3d at 1232 (citing 42 U.S.C. § 1396a). “Some of these categories are discretionary, while others are mandatory for participating states.” Id. (citing 42 U.S.C. § 1396a(a)(10)). Under the Act, the Medicaid program selves as a cornerstone for expanded health care coverage. As explained above in Section 11(H), the Act expands Medicaid eligibility and provides significant Medicaid subsidies to the impoverished. As a result of the Act’s Medicaid expansion, an estimated 9 million of the 50 million uninsured will be covered for health care by 2014 (and 16 million by 2016 and 17 million by 2021). The federal government will pay 100% of the fees associated with the increased Medicaid eligibility and subsidies beginning in 2014 and until 2016; that percentage will then drop gradually each year until reaching 90% in 2020. 42 U.S.C. § 1396d(y)(l). The federal government will not cover administrative expenses associated with implementing the new Medicaid policies. See id. Under 42 U.S.C. § 1396c, a state whose plan does not comply with the requirements under § 1396a will be notified by HHS of its noncompliance, and “further payments will not be made to the State (or, in [HHS’s] discretion ... payments will be limited to categories under or parts of the State plan not affected by such failure), until [HHS] is satisfied that there will no longer be any such failure to comply.” Id. § 1396c. B. Congress’s Power under the Spending Clause The Spending Clause provides that “Congress shall have P