Medicaid’s Dark Secret
January 1, 2020 12:59 PM Subscribe
“I can’t think of a single person who has come to me to avoid estate recovery,” Gregory Wilcox[, an elder-law attorney,] says, “because they’re usually not aware of it.” Instead, those who do find out [...] “come to me for estate planning. I tell them, ‘I’ve got good news for you: I can help you avoid probate, and if you avoid that you can also avoid Medicaid estate recovery.’ They’re not even aware of the need to do that.” (SLAtlantic)
Estate recovery was billed as a sensible reform: States would recoup costs for the largest category of Medicaid spending—long-term care, such as nursing homes—from the people most likely to incur them (those 55 and older) in order to replenish the program’s coffers and help others in need. (If there was no money to be had in an estate, then the debt simply went unpaid.) The goal was not to deter people from going on Medicaid, but to mitigate the cost of an already expensive program that the Baby Boomer generation was projected to bankrupt. [...]
As projected, aging Boomers were straining the system. States’ spending on Medicaid services soared from $137 billion in 1994 to $577 billion in 2017, when the oldest Boomers reached their 70s. Much of the cost comes from long-term care: Medicaid pays for about 50 percent of the nation’s 1.4 million nursing-home residents, coverage that’s often denied by private insurers and even by Medicare, the low-cost federal insurance available to anyone age 65 or over, regardless of income. Medicaid also bears the brunt of costs for patients with illnesses such as Alzheimer’s and Parkinson’s disease, whose needs often fall under “custodial” rather than “medical” care, and who therefore are largely denied coverage by Medicare as well. “It’s Medicaid, a low-income program, that has by default turned into our long-term-care system, and that is absolutely unsustainable,” Matt Salo, the executive director of the National Association of Medicaid Directors, told me. [...]
But the overwhelming majority of estates are not worth hundreds of thousands of dollars. In 2005, the Public Policy Institute of the AARP published a study of the first decade of mandatory estate recovery. Massachusetts, it found, recovered an average of $16,442 per estate in 2003, in total offsetting a little more than 1 percent of its long-term-care costs that year. That made its efforts among the most effective in the nation. In Kentucky, by contrast, the average amount collected from an estate was $93; the state recovered just 0.25 percent of its long-term-care costs. The total amount states recouped jumped from $72 million in 1996 to $347 million seven years later—but even so, estate recoveries accounted for less than 1 percent of Medicaid’s total nursing-home costs in 2003.
Opponents of estate recovery say that the harm of destabilizing low-income families does not justify the meager returns. “It’s a drop in the bucket given the amount of misery they cause people,” says Patricia McGinnis, the executive director of the California Advocates for Nursing Home Reform, which co-sponsored successful 2016 legislation to limit the assets Medicaid can recover in California. “It’s a terrible program, it’s a punitive program, and it doesn’t do anything to reimburse the billions of dollars spent,” she told me. “The purpose of recovery was to support Medicaid and bring money back, but how? By collecting anything from the poorest of the poor? It’s ridiculous.” By contrast, she says, “you could have a $100,000 heart operation on Medicare and there’s no recovery.” One lawyer in Tennessee recalled a case in which a woman went to her late mother’s Medicaid auction to buy back quilts that had been passed down for generations.
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