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Loopholes let well-off seniors skirt Medicaid rules
USA
Today, July 7, 2003 In March, Colorado voted to cut 3,500
low-income legal immigrants off Medicaid, the joint federal-state program
that provides health care to the poor. In Oklahoma, more than 9,000
residents living in poverty saw their drug bills climb because of new state
Medicaid restrictions on prescriptions. Other states are planning similar
cutbacks in Medicaid benefits and eligibility this year. Targeting Medicaid makes sense for
cash-strapped states trying to drain their budgets of red ink as their new
fiscal year begins this month. The program eats up 20% of state spending,
second only to education, and its cost is rising rapidly. From 1994 through
2002, state Medicaid spending shot up more than 80% to $110 billion. Yet many states are cutting aid only to
the poor while sparing a huge -- and unintended -- Medicaid benefit enjoyed
by middle- and upper-income families: nursing-home stays. These households
are taking advantage of loopholes in the law to hide elderly relatives'
wealth so the seniors can qualify for costly long-term care at public
expense. A fairer way to limit Medicaid costs
would be to curb services for those best able to afford them. States,
however, have been reluctant to tighten eligibility rules exploited by
middle-class voters. As a result, all taxpayers are being forced to pay
higher nursing-home bills, which top $40,000 a year per patient and consume
one in five Medicaid dollars. Relatively well-off seniors can game
the system through smart financial planning that protects their children's
inheritances. While the rules require a patient to have no more than $2,000
in assets, the value of cars, a business and a home -- even a mansion -- are
exempt. And clever lawyers have found ways around state Medicaid eligibility
boards, such as by transferring assets to other family members. According to a recent Connecticut
survey, more than a third of seniors in the state shifted assets to qualify
for Medicaid, instead of dipping into their personal savings to cover
nursing-home bills. An earlier federal study found that as many as 22% of
nursing-home patients relied on tricks to qualify for Medicaid payments. If
such loopholes were closed nationwide, the savings could total $4 billion a
year. In spite of the potential savings, only
three states have taken even modest steps to rein in this expensive
middle-class entitlement program. Connecticut, Massachusetts and Minnesota
have filed requests for waivers from federal Medicaid regulations so they
can tighten up their eligibility rules. Connecticut estimates it can save
state taxpayers $16 million a year. Minnesota puts its annual savings at $12
million. So far, Washington has been slow to act
on the requests. Connecticut submitted its petition more than a year ago and
is still waiting for an answer. If more states pushed for similar rule
changes they would step up the pressure for swifter federal approval. Defenders of the current system say
relatively few seniors take advantage of the rules, and the potential
savings to states are meager. Still, whatever the actual extent of the
abuses, they undermine the purpose of Medicaid -- to help the truly needy. While limiting access to Medicaid's
nursing-home benefits won't solve state budget crises alone, it is a fair
place to start. The need to rein in spending does not
require states to make the poor suffer even more so those who are better off
can protect their inheritances. Copyright ©
2002 Global Action on Aging
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