dissenting.
The scope of the issue presented in this difficult case is confined to the situation in which a married applicant for Medicaid benefits is institutionalized. I believe that issue can be best understood by focusing our attention on an institutionalized applicant who is totally dependent for financial support on a spouse who is employed and who continues to live in what had been their joint home. Arguably the relevant statutory language1 might authorize the eligibility deter-*51ruination to be made in three ways: (1) none of the employed spouse’s income should be deemed available to the institutionalized spouse unless it is actually contributed; (2) all of that income should be deemed available; (3) some, but not all, may be counted in determining the eligibility of the institutionalized spouse.
Respondent persuaded the District Court that the first reading was required by the word “available” in subpart (B) of § 1902 (a) (17), and by the legislative history’s emphasis on preventing the States from assuming the “availability of *52income which may not, in fact, be available.”2 For the reasons stated by the Court, I agree that this is not a correct reading of the statute.3 The Court of Appeals decision, however, cannot be reversed on that basis. That court did not hold that deeming was never permissible; rather, it invalidated regulations which permitted virtually unlimited deeming. I am persuaded that the Court of Appeals was correct in its holding that the statute does place significant limits on the amount of income that may be deemed available to the institutionalized spouse.
The Court of Appeals set aside the Secretary’s regulations because in promulgating those regulations the Secretary had failed to consider all relevant factors as required by Citizens to Preserve Overton Park v. Volpe, 401 U. S. 402. Relying on the same legislative history as did the District Court, the Court of Appeals reasoned that the statutory scheme contemplated that cohabiting spouses would support each other but that Congress intended a flexible approach to apply in situations in which the basic assumption of cohabitation could not be made.4 The court thus held that the Secretary should *53have taken into account the impact of institutionalization of one spouse on what previously constituted a single economic unit5 and the potential disruption of the family caused by deeming.6
In revising her regulations after the Court of Appeals’ decision, then Secretary Harris specifically considered the fac*54tors discussed by the Court of Appeals.7 Although the Secretary was required by the Court of Appeals mandate to reconsider the regulation in light of the factors discussed by the court, the court’s mandate did not specify the contents of the new regulations.8 Nevertheless, the Secretary concluded that deeming in § 209 (b) States should be limited in both “duration and amount.” 9 She cogently explained her conclusion that “deeming has several adverse impacts on beneficiaries”:
“The institutionalized spouse may lose medicaid eligibility if the deemed amount is large enough to bring his or her income level over the State’s standards. If the deemed amount is not actually contributed but the State’s payments to the facility nevertheless are reduced by that amount, the individual may be asked to leave the *55institution. With respect to the spouse in the community, the use of deeming may also be unfair. This occurs principally because, in section 1902 (f) States, the amounts that are protected for the noninstitutionalized spouse’s maintenance may be set at 1972 levels. Those levels may be insufficient in light of the current cost of living. This may force the noninstitutionalized spouse either to refuse to pay the 'deemed’ amount (possibly resulting in the institutionalized spouse being required to leave the facility), or to try to live at levels that are inadequate for subsistence.
“Moreover, when income is 'deemed/ the spouse has less of an incentive actually to contribute the amount than if relative responsibility laws are used, because deeming has an adverse effect on the institutionalized individual, whereas relative responsibility laws affect the spouse in the community by requiring him or her to make support payments. These potentially severe impacts lead us to conclude that deeming should be limited in both duration and amount.” 10
In my opinion, the Court of Appeals was correct in construing the statutory mandate that “only such income and *56resources as are . . . available to the applicant” may be taken into account in determining eligibility to require consideration of the impact of institutionalization of one spouse on what was previously a single economic unit. The Secretary’s consideration of that factor led her to conclude that deeming “should be limited in both duration and amount.” The regulations that had been in effect prior to the Court of Appeals decision permitted a State to deem, for an unlimited period, the wage earner’s entire income except for an amount that might have been sufficient to supply basic living requirements in 1972. Because the wage earner and the institutionalized spouse were no longer living together and thereby sharing expenses, and because inflation in the intervening years increased the amount of those expenses, the regulations allowed a State to deem more income than could realistically be considered “available.”11 This consequence was attributable to the failure of the Secretary to give adequate consideration to the factors identified by the Court of Appeals.
I believe the Court of Appeals was correct in perceiving this defect in the regulations and in concluding that the Secretary failed to give consideration to a relevant factor required by the statute. I would therefore affirm the judgment of the Court of Appeals.
Section 1902 (a) (17) of the Social Security Act, 79 Stat. 346, as amended, and as set forth in 42 U. S. C. § 1396a (a) (17), provides:
“ (a) A State plan for medical assistance must—
“(17) include reasonable standards (which shall be comparable for all groups and may, in accordance with standards prescribed by the Secretary, differ with respect to income levels, but only in the case of applicants or recipients of assistance under the plan who are not receiving aid or assistance under any plan of the State approved under subchapter I, X, *51XIV, or XVI, or part A of subchapter IV of this chapter, and with respect to whom supplemental security income benefits are not being paid under subchapter XVI of this chapter, based on the variations between shelter costs in urban areas and in rural areas) for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the objectives of this subchapter, (B) provide for taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary, available to the applicant or recipient and (in the case of any applicant or recipient who would, except for income and resources, be eligible for aid or assistance in the form of money payments under any plan of the State approved under subchapter I, X, XIV, or XVI or part A of subchapter IV, or to have paid with respect to him supplemental security income benefits under subchapter XVI of this chapter) as would not be disregarded (or set aside for future needs) in determining his eligibility for such aid, assistance or benefits, (C) provide for reasonable evaluation of any such income or resources, and (D) do not take into account the financial responsibility of any individual for any applicant or recipient of assistance under the plan unless such applicant or recipient is such individual’s spouse or such individual’s child who is under age 21 or (with respect to States eligible to participate in the State program established under subehapter XVI of this chapter), is blind or permanently and totally disabled, or is blind or disabled as defined in section 1382c of this title (with respect to States which are not eligible to participate in such program); and provide for flexibility in the application of such standards with respect to income by taking into account, except to the extent prescribed by the Secretary, the costs (whether in the form of insurance premiums or otherwise) incurred for medical care or for any other type of remedial care recognized under State law.”
“Another provision is included that requires States to take into account only such income and resources as . . . are actually available to the applicant or recipient .... Income and resources taken into account, furthermore, must be reasonably evaluated by the States. These provisions are designed so that the States will not assume the availability of income which may not, in fact, be available . . . S. Rep. No. 404, 89th Cong., 1st Sess., 78 (1965) (emphasis supplied); see H. R. Rep. No. 213, 89th Cong., 1st Sess., 67 (1965) (hereinafter 1965 House Report).
See also Norman v. St. Clair, 610 F. 2d 1228, 1237-1238 (CA5 1980), cert, pending sub nom. Schweiker v. Norman, No. 80-498; Brown v. Stanton, 617 F. 2d 1224, 1233-1234 (CA7 1980) (Pell, J., dissenting in part and concurring in part), cert, pending, No. 79-1690.
The court noted that the 1965 House Report indicated that deeming should not be employed unless the income is “in fact, available”:
“These provisions are designed so that the States wiE not assume the availability of income which may not, in fact, be available or overevaluate income and resources which are available. Examples of income assumed *53include support orders from absent fathers, which have not been paid or contributions from relatives which are not in reality received by the needy individual.” 1965 House Report, at 67.
Thus the legislative history recognizes that if the basic assumption underlying a support requirement is not correct, the income of the spouse or parent is not “actually available.” Just as the premise that fathers should support their children should not apply when the father is absent, the premise that spouses pool income and resources to support each other should not apply when one spouse is institutionalized.
The court stated:
“[T]he general rule of mutual support proceeds from the assumption that the spouses maintain a common household, ‘sharing’ income and expenses, see 42 Fed. Reg. 2685, 2686 (1977), and constituting a single economic unit. But where institutionalization has caused one spouse to be absent from the home, two households, not one, in effect must be maintained. Expenses can no longer fairly be characterized as jointly incurred, and ‘deeming’ no longer accurately reflects the economic norm. An important condition that makes ‘deeming’ ordinarily reasonable between spouses is thus not met.” Gray Panthers v. Administrator, Health Care Financing Administration, 203 U. S. App. D. C. 146, 151, 629 F. 2d 180, 185.
“The legislative history of Section 1396 (a) (17) recognizes that, especially in the context of the family structure, great care must be exercised to ensure that governmental regulation does not needlessly disrupt people’s lives. In contrast with the ordinary situation of cohabiting spouses, institutionalized individuals and their husbands or wives are particularly vulnerable to the disruptive forces than can be exerted by governmental regulations. In most cases the individual’s continued institutionalization depends upon his or her spouse’s ability (or willingness) to pay the ‘deemed’ amount. The spouse is thus faced with the ‘choice’ of reducing his or her standard of living to a point apparently set near the poverty line, or being responsible for the eviction of his or her spouse from the institution. The institutionalized individual is often literally helpless to temper the harshness of this dilemma.” Id., at 152, 629 F. 2d, at 186 (footnotes omitted).
The Secretary also considered “additional factors we believe important” :
“(1) The extent to which deeming is consistent with the best interests of program beneficiaries;
“(2) The Federal-State nature of the Medicaid program;
"(3) The extent to which the regulations would be simple to administer; and
“(4) The fiscal effects of the regulations on Medicaid programs budgets.” 45 Fed. Reg. 82254, 82256 (1980).
In response to a comment arguing that the Court of Appeals decision prohibited any deeming, the Secretary responded:
“We disagree with the eommenters’ interpretation of the Court of Appeals’ decision. The only issue before the Court was whether deeming is appropriate in section 1902 (f) States for spouses separated by institutionalization. Because the Court of Appeals ordered that we consider the factors relevant to deeming in its limited context, it authorized us to approve deeming if our consideration of the factors led to this result. We have concluded, through balancing these factors that limited deeming is appropriate in this context.” Id., at 82258.
The new regulations apply the deeming rule currently in effect for SSI States, which permits deeming only until the month following institutionalization when only the institutionalized spouse is otherwise eligible for Medicaid and for six months when both spouses are eligible. See ibid.; 42 U. S. C. §§ 1381a, 1382 (a), 1382c (b), 1382c (f).
45 Fed. Reg., at 82256. The Secretary further stated:
“We also believe that, although there is a general expectation that spouses should support one another, their ability to do so is substantially undermined when one spouse is institutionalized. The expectation for support is based, in part, on the assumption that spouses maintain a common household, will share income and expenses, and therefore constitute a single economic unit. However, that assumption is undercut when a spouse is institutionalized. In deciding what constituted a period of institutionalization long enough to overcome the assumption that the spouses are a household unit, we looked at the rules used in the SSI program and whether those rules were suitable for Medicaid.
“We believe that, in cases where only one spouse is eligible, the couple should no longer be viewed as maintaining a common household beginning with the month following the month of institutionalization.” Id., at 82256-82257.
In his opinion concurring in part and dissenting in part from the Court of Appeals decision in this case, Judge MacKinnon stated:
“The only villain here is the level of need which has not been adjusted to reflect sky-rocketing costs of living. However well-intentioned, the court cannot through a remand to the Secretary affect the inflationary pressures which are particularly burdensome to people on fixed incomes.” 203 U. S. App. D. C., at 155, 629 F. 2d, at 189.
I believe, however, that although the courts and the Secretary cannot affect inflation, the Secretary can and should, as was done here, consider the effects of inflation on a determination of what income is “available” to an institutionalized spouse.