                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT

ELIZABETH A. SPRY; GARY SPRY;          
DEMON HARVEY; MICHAEL
MCCARTHY; MARY GAYE REYES,
              Plaintiffs-Appellees,
                v.
TOMMY THOMPSON, Secretary of
Health & Human Services; MARK                No. 04-35746
B. MCCLELLAN, Administrator,                  D.C. No.
Centers for Medicare and                    CV-03-00121-KI
Medicaid Services,
            Defendants-Appellants,
               and
GARY WEEKS, Director, Oregon
Department of Human Services,
                       Defendant.
                                       

ELIZABETH A. SPRY; GARY SPRY;          
DEMON HARVEY; MICHAEL
MCCARTHY; MARY GAYE REYES,
              Plaintiffs-Appellants,
                v.                           No. 04-35750
TOMMY THOMPSON, Secretary of                  D.C. No.
                                           CV-03-00121-GMK
Health & Human Services;
THOMAS A. SCULLY, Administrator;               OPINION
JEAN THORNE, GARY WEEKS,
Director, Oregon Department of
Human Services,
             Defendants-Appellees.
                                       
                            5917
5918                     SPRY v. THOMPSON
        Appeals from the United States District Court
                  for the District of Oregon
          Garr M. King, District Judge, Presiding

                  Argued and Submitted
            November 17, 2005—Portland, Oregon

                       Filed May 21, 2007

     Before: Andrew J. Kleinfeld and Susan P. Graber,
  Circuit Judges, and Barry T. Moskowitz,* District Judge.

                 Opinion by Judge Kleinfeld;
               Concurrence by Judge Moskowitz




   *The Honorable Barry T. Moskowitz, United States District Judge for
the Southern District of California, sitting by designation.
5920                 SPRY v. THOMPSON


                       COUNSEL

Alisa B. Klein, U.S. Department of Justice, Washington,
D.C., for appellants-cross-appellees Secretary of Health &
                      SPRY v. THOMPSON                   5921
Human Services and Administrator, Centers for Medicare and
Medicaid Services.

Charles E. Fletcher, Assistant Attorney General, Salem, Ore-
gon, for cross-appellee Director, Oregon Department of
Human Services.

Jane Perkins, National Health Law Program, Chapel Hill,
North Carolina, and Lorey H. Freeman (briefed), Oregon Law
Center, Portland, Oregon, for appellees-cross-appellants.

Rochelle Bobroff (briefed), AARP Foundation Litigation,
Washington, D.C., for amicus curiae AARP.


                         OPINION

KLEINFELD, Circuit Judge:

   We deal with what federal Medicaid restrictions apply to a
state program providing medical benefits to persons who are
not eligible for Medicaid.

   States do not have to participate in the federal Medicaid
program, but if they do, the state plans must generally con-
form to federal Medicaid regulations. In return for their par-
ticipation and conformity with federal requirements,
participating state governments get partial reimbursement
from the federal government. States also may experiment with
new types of plans. If they do, the plans must generally con-
form to Medicaid regulations for Medicaid-eligible people,
but the Secretary of Health and Human Services may waive
some requirements. If a state chooses to expand coverage to
needy people who are not eligible for Medicaid, and the Sec-
retary exercises his discretion to approve the plan, then the
needy people who are not eligible for Medicaid are neverthe-
5922                       SPRY v. THOMPSON
less regarded as though they were, for purposes of calculating
reimbursements to the state.1

   This case involves a question not previously decided. Sup-
pose the state expands its coverage in an experimental plan,
called a “demonstration project,” to needy people who are not
eligible for Medicaid, and the Secretary waives any objection
to the different provisions for those eligible for Medicaid, but
does not waive or otherwise speak to the terms of coverage
for needy people who are not eligible. These individuals are
now regarded as eligible for the limited purposes of federal
reimbursement to hospitals. But is the state bound by Medic-
aid premium and co-payment requirements (in the absence of
a Secretary’s waiver) even though these individuals remain
statutorily ineligible for Medicaid under federal law? Our
conclusion is that it is not.

                                  Facts.

   The five plaintiffs in this case are not eligible for Medicaid,
although their income is low. They would have to be blind or
disabled, or would have to have children (they do not), to be
eligible.2 Oregon has developed a health plan to cover them
despite their ineligibility. They have to pay higher premiums
and higher co-payments on doctor visits, medications, etc.
than they would if eligible under Medicaid. Medicaid is not
totally free to recipients; they are required to pay nominal
amounts as co-payments for their government provided insur-
ance coverage, medications, doctor and hospital visits, etc.
Under the Oregon plan, the premiums for these needy but
Medicaid-ineligible people range from $5.00 to $20 per
month, depending on income, compared to Medicaid limits of
  1
     We have written this opinion in plain English, to facilitate our own and
others’ understanding of the matters discussed. For those who specialize
in the field and typically use acronyms in their writing or as search terms,
this is a case about OHP, OHP2, DSH, and HIFA (but not SCHIP).
   2
     See 42 U.S.C. § 1396a(a)(10).
                         SPRY v. THOMPSON                      5923
$1.00 to $6.00 per month. Likewise, their co-payments for
medical care, prescriptions, and hospitalization are between
$5.00 and $250, compared to Medicaid limits of $0.50 to
$3.00.

   Oregon created the predecessor to this plan in 1992, cover-
ing both people that had to be covered for the state to get
Medicaid reimbursements, and people not as badly off as
those that had to be covered. The plan cost the state govern-
ment too much money, even after the partial federal reim-
bursements, so it developed in 1994 the new somewhat less
ample demonstration project, which is the subject of this liti-
gation. This lawsuit tests the permissibility of the reductions
in benefits for those not eligible for Medicaid compared to the
previous Oregon plan.

   The federal legislation providing grants to states for medi-
cal assistance programs separates people into classes: (1) the
“categorically needy,”3 generally those eligible for welfare;
aged, blind, or disabled individuals who are qualified for
social security disability benefits; and low-income pregnant
women and children, and (2) the “medically needy,”4 individ-
uals who are above the poverty line but would not be if they
were not assisted with medical expenses. In order to receive
federal Medicare funds, the state must provide for the categor-
ically needy population and may provide for the medically
needy population.5

   States may also create “experimental, pilot, or demonstra-
tion” projects to serve “expansion populations”—individuals
who are not as badly off as the categorically needy and the
medically needy.6 If they do, the Secretary of Health and
  3
     See Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 651 &
n.4 (2003).
   4
     See id. at 651 & n.5.
   5
     See 42 U.S.C. § 1396a.
   6
     42 U.S.C. § 1315.
5924                   SPRY v. THOMPSON
Human Services may waive compliance with some of the fed-
eral Medicaid requirements7 for the expansion populations
and entitle the states to put the expenses for them into the for-
mula for federal reimbursements.8 A demonstration project
may cover people who would not be eligible for Medicaid
without a waiver from the Secretary. The agencies call these
people “expansion populations” because the state demonstra-
tion project has expanded its coverage to include them and
they are counted for federal reimbursements only because of
the Secretary’s waiver. These “expansion populations” are
covered in addition to the categorically needy and the medi-
cally needy.

   The Oregon application for waiver described the people in
this lawsuit as “not otherwise eligible for Medicaid (including
parents, singles and couples) with incomes up to 185 percent
FPL [federal poverty line].” What is critical is that they are
not eligible for Medicaid, either as a “mandatory” population
(the “categorically needy”) or as an “optional” population (the
“medically needy”). They are childless, non-disabled adults.
Oregon’s plan expands public medical benefits beyond those
eligible for Medicaid, even though the state could, if it chose,
leave them with no benefits whatsoever under its Medicaid
program.

   The Secretary approved the Oregon demonstration project
and gave the state its requested waiver for the “optional,”
“medically needy” population. For the “expansion popula-
tion,” though (those people not eligible for Medicaid), the
Secretary took the position that no waiver was needed and
neither gave nor denied a waiver for the expansion popula-
tion. If the law requires compliance with Medicaid standards
for people in the expansion population in the absence of a
waiver, then the plan fails, because their monthly medical
  7
    For example, the Secretary may waive insurance premium and co-
payment limits. 42 U.S.C. § 1396o.
  8
    42 U.S.C. § 1315(a).
                             SPRY v. THOMPSON                         5925
insurance premiums of $6 to $20 (depending on income) and
co-payments of $2 to $250 would be too high.

  The plaintiffs sought class certification and injunctive and
other relief under 42 U.S.C. § 1983 to prevent Oregon from
requiring them to pay the premiums and co-payments. They
sought summary judgment. The federal and state governments
moved for summary judgment on the theory that no waiver
was necessary for the expansion population. The state argued
as well for dismissal on the ground that the federal statute
does not create a private right of action.

   The district court denied class certification, but granted
summary judgment in favor of plaintiffs on the co-payments,
and enjoined collection of them. This victory for plaintiffs
was based on the absence of a waiver. The court granted sum-
mary judgment in favor of defendants on the premiums, and
did not preclude subsequent waiver, which would eliminate
the reason for the injunction on co-payments, if the Secretary
went through the procedure for granting waivers.

     Both sides appeal the final judgment.

                                 Analysis.

I.        Private Cause of Action.

   [1] The State of Oregon argued, relying on Blessing v. Free-
stone9 and its progeny, that the plaintiffs did not have any fed-
eral right enforceable under 42 U.S.C. § 1983. Although the
question was arguable when the briefs were filed, it was set-
tled after argument by a panel with priority over ours.10 Wat-
son v. Weeks11 holds that 42 U.S.C. § 1396a(a)(10) “creates a
private right of action enforceable under section 1983.” We
     9
      520 U.S. 329 (1997).
     10
        Ninth Circuit General Order 4.1(a).
     11
        436 F.3d 1152, 1155 (9th Cir.), cert. denied, 127 S. Ct. 598 (2006).
5926                      SPRY v. THOMPSON
do not see a sound basis for distinguishing Watson, and con-
clude that if there is a violation in this case of the statutory
standards, then the plaintiffs in this case have a private right
of action enforceable under section 1983.

II.    Is Waiver Necessary?

   The question whether the Secretary’s waiver is necessary to
allowing Oregon to collect the premiums and co-payments is
one of law, decided by summary judgment, so we review de
novo.12 The statute speaks unambiguously, so we do not reach
Chevron13 deference (the Secretary has taken the position that
waivers are not necessary for coverage of expansion popula-
tions not eligible for Medicaid).

   [2] The waiver statute14 enables the Secretary to “waive
compliance” with certain Medicaid provisions for demonstra-
tion projects, and it provides that costs that would otherwise
not be included in the reimbursement formula “shall . . . be
regarded as expenditures under the State plan” and costs that
would otherwise not be permissible shall be regarded as permis-
sible.15 The key section for this appeal is 42 U.S.C. § 1396o,
regarding waivers for premiums and co-payments (termed
“cost sharing” by the statute).

   [3] The restrictions on imposition of premiums and co-
payments under § 1396o are delineated by subsections (a) and
(b). Although premiums and co-payments are distinguished
and treated somewhat differently under 1396o(a) and (b), both
subsections apply only to the categorically needy and medi-
cally needy populations, not to expansion populations. Under
  12
     See Vasquez v. County of Los Angeles, 349 F.3d 634, 639 (9th Cir.
2003); Brower v. Evans, 257 F.3d 1058, 1065 (9th Cir. 2001).
  13
     Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
842-43 (1984).
  14
     42 U.S.C. § 1315.
  15
     Id.
                           SPRY v. THOMPSON                 5927
subsection (a), a “State plan shall provide that in the case of
individuals described in subparagraph (A) or (E)(i) of section
1396a(a)(10)(A) of this title who are eligible under the plan,”
only nominal cost sharing may be imposed. Under 42 U.S.C.
§ 1396o(b), a “State plan shall provide that in the case of indi-
viduals other than those described in subparagraph (A) or (E)
of section 1396a(a)(10) of this title who are eligible under the
plan,” income-related premium and nominal cost sharing may
be imposed. The “individuals described in subparagraph (A)
or (E)(i) of section 1396a(a)(10)” are mandatory populations.
That means subsection (a) permits a state plan to impose nom-
inal premiums and cost sharing on mandatory populations.
Subsection (b) permits a state plan to impose income-related
premiums and nominal cost sharing on non-mandatory popu-
lations who are Medicaid eligible, i.e., optional, medically
needy populations.

   [4] Subsection (f) of this provision16 limits waivers of the
premium and co-payment provisions for demonstration proj-
ects. But this limitation on waivers only applies to the manda-
tory populations “described” under section 1396o(a) or the
optional populations addressed by 1396o(b)—not expansion
populations. People in the expansion population are not made
worse off by inclusion in a demonstration project less favor-
able to them than to the categorically and medically needy
because, without the demonstration project, they would not be
eligible for Medicaid at all.

   [5] The waiver for demonstration projects under section
1315 can cover expansion populations as well as the categori-
cally and medically needy. But that is for a different purpose,
one that benefits state governments rather than (except indi-
rectly) covered individuals. The waiver in section 1315
enables state governments to count costs “which would not
otherwise be included” or “which would not otherwise be per-
missible use” to be “regarded as” state plan expenditures and
  16
    42 U.S.C. § 1396o(f)
5928                     SPRY v. THOMPSON
permissible use of funds for purposes of federal reimburse-
ment. As we held in Beno v. Shalala,17 section 1315 “obli-
gates the Secretary to evaluate the merits of a proposed state
project, including its scope and its potential impact on AFDC
recipients.”18 This policy evaluation is not the same thing as
the precise limits under section 1396.

   The plaintiffs argue that our decision in Portland Adventist
Medical Center v. Thompson19 requires a contrary analysis,
that if a state covers an expansion population, then the pre-
mium and co-payment limits apply to the expansion popula-
tion. The core of the argument is that the people in an
expansion population are deemed “eligible” for Medicaid.
That is not what Portland Adventist held.

   [6] In Portland Adventist, hospitals providing services to
low-income populations sued to have their services to expan-
sion populations counted in federal reimbursement formulas.
We held that, under section 1315, expenditures on services
provided in an approved demonstration project should “be
regarded as expenditures under the state plan.”20 But section
1315 only discusses which “expenditures,” not which individ-
uals for whom the money is expended, are to be “regarded as”
being under the state Medicaid plan. Section 1396, on the
other hand, affects limitations on Medicaid-eligible patients’
premiums and co-payments. Expenditures being “regarded as
eligible” for Medicaid for purposes of calculating hospital
reimbursement is not the same thing as an individual being
“eligible” for Medicaid benefits. Thus, Portland Adventist
does not affect our determination that the term “eligible” in
section 1396o means eligible for Medicaid, not merely eligi-
  17
     30 F.3d 1057 (9th Cir. 1994).
  18
     Id. at 1068.
  19
     Portland Adventist Med. Ctr. v. Thompson, 399 F.3d 1091, 1096 (9th
Cir. 2005).
  20
     Id.
                        SPRY v. THOMPSON                    5929
ble to receive benefits under a state plan, or “regarded as” eli-
gible for Medicaid federal reimbursement.

III.   Class Certification.

   Because our conclusion on the merits obviates the plain-
tiffs’ challenge of the district court’s exercise of discretion
regarding class certification, we need not reach it.

                              Conclusion

   [7] The Secretary is correct as a matter of law that no
waiver is necessary for expansion populations not eligible for
Medicaid, to enable the state to exceed the co-payment and
premium limitations applicable to these individuals. This flex-
ibility for the state facilitates the goal of demonstration proj-
ects, developing new and better ways to provide medical
assistance to the needy, including those who are not eligible
for Medicaid.

  AFFIRMED IN PART AND REVERSED IN PART.
Each party to bear its own costs on appeal.



MOSKOWITZ, District Judge, concurring:

   While I concur in the result reached by the majority, I write
separately because I do not agree that the statute in question
speaks unambiguously on the issue of the requirements for
expansion population coverage under a demonstration project.
In particular, I am unable to find the clear statutory mandate
for limiting the applicability of Section 1396o(f) to only man-
datory and optional, but not expansion, populations within a
demonstration project.

  However, we are not left to search blindly for the meaning
of the relevant statutes. Rather, the Secretary has already
5930                   SPRY v. THOMPSON
interpreted the statutory strictures relevant to demonstration
projects and determined that a Section 1315 waiver of Medic-
aid program regulations is not needed for, nor does it have
any applicability to, expansion populations. This is because
Medicaid regulations do not apply to individuals who are not
eligible for Medicaid, such as the expansion populations cov-
ered under Oregon’s demonstration project. The Secretary’s
approval of the Oregon project was given in accordance with
this determination.

   I find that the Secretary’s view is “based on a permissible
construction of the [relevant] statute.” Chevron U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837, 843
(1984). Accordingly, I would defer to the reasonable interpre-
tation of the Secretary, who is entrusted to administer the
demonstration project authority specified in 42 U.S.C. § 1315.
See id. at 844-45 (“[C]onsiderable weight should be accorded
to an executive department’s construction of a statutory
scheme it is entrusted to administer . . . .”).

   This deference is all the more appropriate in light of the
difficulty attendant to parsing the dense and technical lan-
guage employed in the Medicaid provisions at issue and
determining the appropriate scope of Medicaid plan strictures
when coverage is expanded to otherwise ineligible popula-
tions. As the Supreme Court has recognized, deference to
administrative interpretations is appropriate “ ‘whenever [a]
decision as to the meaning or reach of a statute has involved
reconciling conflicting policies, and a full understanding of
the force of the statutory policy in the given situation has
depended upon more than ordinary knowledge respecting the
matters subjected to agency regulations.’ ” Id. at 844 (quoting
United States v. Shimer, 367 U.S. 374, 382 (1960)).
