LTC Bullet:  Medicaid LTC More Generous than English Socialized System 

Thursday, October 20, 2005 


LTC Comment:  England's means test for nursing home care is stricter than Medicaid's.  In fact, it's even stricter than new far-tighter Medicaid limits proposed by the Governors and opposed by advocacy groups.  More after the ***news.*** 

*** NCOA BOOKLETS ON REVERSE MORTGAGES.  New National Council on the Aging Booklets Help Seniors Understand Reverse Mortgages.  October 13, 2005.  Through its Use Your Home to Stay at Home initiative, NCOA has published two new booklets that help consumers understand how home equity might help them continue to live at home.  "Use Your Home to Stay at Home:  A Planning Guide for Older Consumers" helps consumers learn about the benefits and challenges of using reverse mortgages as part of their retirement planning.  "Use Your Home to Stay at Home:  A Guide for Homeowners Who Need Help Now" helps consumers decide whether tapping their home equity is the right choice for meeting the financial challenges of living at home with a chronic health condition.  Both booklets identify financing options and tell where to find more information.  A grant from the National Reverse Mortgage Lenders Association and its members made the booklets possible. *** 

*** GAO ON LTC.  On October 11, 2005, the Government Accountability Office (GAO) released the following letter report:  "Overview of the Long-Term Care Partnership Program," GAO-05-1021R, September 9, 2005.  Read it at . *** 



LTC Comment:  As we've written and thoroughly documented in this space and elsewhere repeatedly, there are no hard limits on income or assets for Medicaid long-term care eligibility.  Income is unlimited as long as medical expenses are high enough or a Miller income diversion trust applies.  Assets are unlimited as long as they are held in exempt form, such as a home, business, automobile, home furnishings, prepaid burials, term life insurance, etc.  For thorough documentation of these facts, see "Aging America's Achilles' Heel:  Medicaid Long-Term Care" at and "The Realist's Guide to Medicaid and Long-Term Care" at  

Contrast Medicaid's wide-open LTC eligibility rules with those applied in England's reputedly socialist health care system as described in Donald Hirsch, Facing the Cost of Long-Term Care:  Towards A Sustainable Funding System, Joseph Rowntree Foundation, York Publishing Services Ltd., Layerthorpe York, Great Britain, 2005,

"People with below £20,500 in capital (including the value of their own home unless a spouse or certain other categories of people are living in it) are eligible for local authority help towards their costs based on a means test of their weekly income and 'tariff income' on any capital above £12,500.  However, the local authority pays only for the residual cost of the care after the recipient has used all of his or her income, minus a small weekly allowance for personal expenses (currently £18.80) to pay for it."  (p. 9) 

In other words, converting British pounds to dollars at today's exchange rate of $1.77 to the pound, the English system exempts only $36,285--including home equity--from its means-tested spend down requirement.  All of the recipient's income must be spent for care except a "small weekly allowance" of £18.80 or $33.28.  [NB:  The English income allowance is actually more generous than Medicaid's personal needs allowance, which is usually no more than $50 per month.  This may be feasible because of the Brits' stricter asset test.] 

Recently, the National Governors Association proposed limiting Medicaid's home equity exemption to $50,000 or 10 percent of the home's market value, whichever is less.  (See "Short Run Medicaid Reform from the National Governors Association," August 29, 2005 at, p. 4.)  This proposal is considerably more generous than the means-test for home equity actually imposed in England.  Nevertheless, advocacy groups in the United States aggressively oppose such reasonable limits on home equity.  By inference, they support diverting Medicaid's scarce welfare resources away from the genuinely needy and toward the affluent heirs of well-to-do elders with expensive homes. 

Here's a recent example taken from Victoria Wachino, et al., "An Analysis of the National Governors Association's Proposals for 'Short-Run Medicaid Reform'," Center on Budget and Policy Priorities (CBPP), October 14, 2005,  

"Another far-reaching NGA proposal would count home equity as an asset in determining seniors' eligibility for Medicaid long-term care services, including home- and community-based services and nursing home care.  . . .  Counting home equity against these limits could present many seniors with the agonizing choice of selling their home or going without Medicaid coverage for long-term care."  (p. 4) 

LTC Comment:  Well . . . hello! . . . let's get a clue here.  Medicaid is supposed to be a safety net protecting the ability of needy people to obtain quality long-term care when they cannot afford to pay for it on their own.  By protecting home equity in unlimited amounts, Medicaid has become inheritance insurance anesthetizing baby boomers from the risk and cost of long-term care.  That's why the big boomer generation doesn't buy private LTC insurance.  That's why their parents donít use reverse mortgages.  That's why most people end up in nursing homes on Medicaid when they require high-cost long-term care.  And that's why Medicaid LTC is collapsing financially even as it bankrupts the federal budget, state budgets, LTC providers, and tax payers. 

The CBPP report continues:  "To address this problem, NGA proposes that seniors obtain 'reverse mortgages' and use the mortgages to pay for long-term care expenses.  There is little research, however, which suggests that reverse mortgages would work adequately for low-income seniors.  Some seniors might not be able to secure such mortgages.  In addition, there are important unanswered questions about how the use of reverse mortgages would affect spouses and dependent disabled children who live in the home.  Reverse mortgages must be repaid once the home is no longer the borrower's primary residence, raising questions about whether a spouse and dependent children would be forced out of the home if an individual had to enter a nursing home.  Finally, research in the field raises questions about whether requiring reverse mortgages would be more effective in controlling costs than the current policy that requires states to recover costs from the estates of beneficiaries who received long-term care services." (p. 4) 

LTC Comment:  These objections are specious, tantamount to saying "My mind is made up; don't confuse me with the facts."  Obviously, the Center on Budget and Policy Priorities authors have not taken the trouble to study the topic before writing about it.  (One of the co-authors rebuffed repeated attempts of ours to meet and discuss this exact subject.)  Abundant information is available on reverse mortgages.  For example, see the many excellent reports produced by the National Council on the Aging, AARP, and the National Reverse Mortgage Lenders Association.  The basic purpose of reverse mortgages is to help low-income seniors to maintain their customary life styles and to fund special expenses such as long-term care.  Exempt dependent relatives who continue to live in the home can be protected as they are now by reverse mortgage rules and by Medicaid's eligibility regulations.  The idea that reverse mortgages (which tap private resources up front) would be less effective than today's estate recoveries (which attempt to recover assets dissipated by many years of legal and illegal divestitures) is preposterous. 

Knee-jerk reactions to sensible long-term care public policy reforms reflect negatively on the "advocacy" organizations that make them.  The Center on Budget and Policy Priorities represents itself as a protector of the poor.  But how does sheltering unlimited home equity from long-term care costs help the poor?  It doesn't.  It hurts the poor by trapping middle-class and affluent people on Medicaid who would have, could have and should have purchased private LTC insurance or used their home equity for long-term care.  That leaves less revenue for Medicaid to spend on care and leads directly to the program's institutional bias and access and quality problems.  These problems hurt the poor most, because poor people lack "key money" to buy their way into the best Medicaid facilities which are readily available to more affluent Medicaid planning clients.  What such advocacy organizations are protecting is the bankrupt status quo, not the truly needy.