In the case of Miller v. Youakim, the U.S. Supreme Court ruled in 1978 that states cannot discriminate against foster children who are placed with relatives instead of non-relatives when distributing federal assistance funds under the Aid to Families with Dependent Children (AFDC) program. The case was brought by a couple in Illinois who were caring for their four younger siblings as foster parents and receiving less financial support from the state than they would have if they had been unrelated to the children. The court held that this policy violated Section 408(a)(3) of Social Security Act which requires equal treatment for all eligible individuals regardless of their relationship status to their caregivers.

In the dissenting opinion for Miller v. Youakim, Justice Rehnquist argued that the majority's interpretation of Section 608(a) of the Social Security Act was incorrect and overly broad. He contended that this section does not require states to provide foster care payments to relatives caring for children in their own homes on an equal basis with unrelated foster parents. Instead, he believed it only requires states to make such payments if they choose to include relative caregivers within their definition of "foster family home." Furthermore, he suggested that Illinois' policy did not violate Equal Protection Clause as it had a rational basis - namely, conserving state resources by encouraging placement with relatives who are presumed more willing than non-relatives to care for children without additional compensation. Thus, according to Justice Rehnquist’s view, there was no violation of federal law or constitutional rights in this case.