Medicaid’s Dark Secret
The article is long, but I'll provide some cliff notes because this shyt is hella important!
The article is long, but I'll provide some cliff notes because this shyt is hella important!
- Medicaid, the government program that provides health care to more than 75 million low-income and disabled Americans, isn’t necessarily free. It’s the only major welfare program that can function like a loan.
- Medicaid recipients over the age of 55 are expected to repay the government for many medical expenses—and states will seize houses and other assets after those recipients die in order to satisfy the debt.
- Bill Clinton signed the Medicaid Estate Recovery Program into law as part of his deficit-reduction act in 1993. Previously, states had the right to seek repayment for Medicaid debts; the new law made it mandatory.
- 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 majority of states, however, took a harder line. Some started allowing pre-death liens, tacking interest onto past-due debts, or limiting the number of hardship waivers granted. The law gave states the option to expand their recovery efforts to include other medical expenses, and many did, collecting for every doctor’s visit, pharmaceutical drug, and surgery that Medicaid covered.
- 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.
- Defenders of estate recovery see it both as a way to control the high costs of long-term care and as a necessary check on those who could pay for such care but would rather the government foot the bill. (Nursing homes cost $89,000 a year, on average, for a semiprivate room.)
- One of the reasons estate recovery works at all is that few people know about it. Although states disclose the policy in their Medicaid-enrollment forms, it’s often buried in fine print that can easily be overlooked, especially when applicants are anxiously seeking urgent medical care.
- The mortgage-interest deduction alone—a set of housing subsidies that primarily benefits Americans in the top 20 percent of the income distribution—cost the federal government $66 billion in 2017. By comparison, letting every family of a Medicaid recipient keep their property would cost just $500 million, according to 2011 data gathered by the Office of the Inspector General, the most recent available.
- Long term care insurance for your parents/elderly relatives
- Irrevocable trusts
- Transferring a deed to a family member before reaching retirement age
