HEALTH CARE/Joan Retsinas

Medicaid: The Patient’s Dilemma

Depending on political vantage, Americans have called Uncle Sam: Satan, the Taxman, the Enabler, or the Godsend. We are adding Repo-Man to the list.

Consider today’s version of a Frank Capra movie: Repo-Man rings the bell. The family trembles inside their bungalow, their “home” for decades. The marks on the door jamb show growth spurts of the now-adult children. The tulip bulbs that Mom planted before arthritis set in are budding. The hand-sewn curtains still hang, slightly askew. Repo-Man doesn’t care.

Frank Capra aside, we understand the harsh economics of debt. Years of foreclosures have inured neighborhoods to evictions, as banks, mortgage companies, sometimes cities step in. The house, whatever its worth, is an asset; and the creditors want it.

The media have given us a new villain, Medicaid — as-Repo Man, who seizes estates to pay for medical debts. (“New Wrinkle for Health Law: Medicaid expansion means states may go after more Americans’ estates to recover costs,” Wall Street Journal, April 12). Thanks to the Affordable Care Act, millions more Americans, many middle-aged, have insurance via Medicaid. (Before Medicaid expansion, most enrollees were mothers of dependent children, or elderly residents of institutions.) The Wall Street Journal tells of one new enrollee who delays gall bladder surgery when she realizes that the “government” will have a lien on her estate after she dies. She had planned to leave the house to her children. How unfair! That is the thrust of the tale, indeed, the thrust of politicians’ reactions to her plight.

But please, let’s reconsider government’s role – not as Satan, Taxman, Enabler, or Godsend, but as Lender. Under Medicaid, the government has been precisely that. And for more than 20 years, enrollees have accepted, if reluctantly, the deal.

To date, most Medicaid “debt” has reflected nursing home stays. Briefly, when a person enters a nursing home as a “private-pay” patient, that person’s income (from social security, investments, pensions) will rarely cover the tab. So many residents typically “spend down” their savings to a legislatively-set level of penury. At that point, the state and federal government (under Medicaid) will pay the tab. Medicare, which is universal health insurance, pays for only specific skilled services (for example, wound care); Medicaid, designed for poor people, is the key payer.

A house is a major asset, especially if the homeowner-now-resident has paid off the mortgage. Since 1993, the federal government has authorized states to take the homes of deceased nursing home residents, provided that a spouse or dependent children not live there. States can also claim reimbursement from patients’ estates for medical bills. With the expansion of Medicaid under the Affordable Care Act, more Americans are covered by Medicaid, and, consequently, subject to the estate-provisions. The state of California, for instance, could seek reimbursement for the enrollee’s gall bladder surgery, once she has died (though with luck the surgery will help the woman live for many more years).

The dilemma for people who own property is real. On the one hand, they want to bequeath estates to children. That home can pay for a grandchild’s tuition or a child’s downpayment on a house. On the other hand, they risk losing those estates to the government if they incur huge bills.

This is largely a middle-class dilemma. Many poor people do not own homes, let alone ones that constitute major assets. Indeed, owners may have borrowed against their homes, with reverse equity mortgages or equity loans, often to help children out.

For middle-income families, though, the home is a major asset; and families have tried to shelter assets through “estate planning” maneuvers. (But “clawback” provisions, up to 5 years, let Medicaid claim some assets that aging parents transferred to children.)

Twenty years ago the Robert Wood Johnson Foundation spurred four states (Indiana, New York, California and Connecticut) to undertake “partnerships.” People who bought long-term care insurance could shelter an equivalent amount of assets if they entered a nursing home: a $100,000 policy would shelter $100,000 in assets. In 2006 the Deficit Reduction Act let other states follow suit. Ideally, states will save money, because people will enter nursing homes with long-term care insurance. At the same time, nursing home residents will safeguard assets without hiring estate lawyers. To date, 36 states have passed some kind of partnership program; most are reciprocal with other states. It is too early to assess the results. But the policies are costly, and there has not been a groundswell of enthusiasm.

The notion of government as creditor seems strange. Admittedly, the government does not recover a substantial amount towards costs. Yet the notion of personal responsibility is not strange: it is a hallmark of our nation. Health care, whether in hospitals or nursing homes, costs money. “Somebody” needs to pay the bill. When patients cannot pay, the government will step in. Legislators are justifiably trying to tweak Medicaid to protect the assets of poor families who desperately need a parent’s estate. But surely we can recognize government assistance as the debt that it is. The decision revolves around the person who pays the debt. The surviving family? Or the taxpayer?

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, June 1, 2015

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