LTC Bullet:  Senator Snookered (R, OR) 

Monday, December 12, 2005 


LTC Comment:  Why would a Republican Senator from Oregon--a state with a reputation for thoughtful management of Medicaid--carry water for AARP, a group that seeks unconscionably to divert the welfare program's scarce resources to its affluent older members?  The answer after the ***news.*** 

*** THE NEW YORK TIMES addresses the House and Senate Conference Committee deliberations over Medicaid reform in an article and an editorial today, neither of which touch on critical efforts to curtail Medicaid planning abuse.  The article is "House and Senate Still Far Apart on Medicaid Changes" by Robert Pear at  The editorial is "The Burden of Medicaid Cuts" at *** 

*** THANKFULLY, BARRON'S addressed the Medicaid planning issue head on in "Shooting the Moon:  The American Health-Care System is Bound for Bankruptcy, Or a Drastic Change," an editorial by Thomas G. Donlan at   

"Medicaid is already undergoing a stealth expansion.  The system, which provides last-ditch coverage, is, for some, a consummation devoutly to be finagled:  Some aging Americans and their children hire lawyers to perform feats of financial prestidigitation so that the old folks hand off their assets to the young folks and enter nursing homes as paupers. 

"The temptation is strong because there are so many winners:  State and federal regulation of nursing homes usually protects the aged from receiving Dickensian care; the kids get their inheritance ahead of time; nursing homes have a secure source of payment, and only state and federal governments are defrauded. 

"But it's wrong, morally as well as legally.  Medicaid can hardly provide for the genuine poor.  It's already the largest third-party payer for long-term care.  We can't convert it into a nursing-home entitlement for the voluntary poor.  It's already breaking state budgets, and it's one of the things that could break the federal budget." *** 


LTC Comment:  "Don't throw out the baby with the bathwater."  Change the word "baby" to "elderly," and that's what Congress is in danger of doing this week with help from the most unlikely of sources.  Here's the story. 

Senate and House conferees will struggle this week to reconcile bills passed by both houses of Congress that are intended to curtail Medicaid planning abuses.  Both measures contain worthwhile improvements in Medicaid, but the Senate's, which is full of small compromises proposed by the Medicaid planners themselves to divert attention from bigger loopholes, is much tamer than the House's:  HR4241, the Deficit Reduction Act of 2005; review it at 

The House seeks to restrain the Medicaid planners' cash cow by capping the program's home equity exemption at $750,000, extending the look-back period for improper asset transfers from three to five years, and starting the penalty period for abusive asset transfers later.  These measures would have the effect of stopping the Medicaid planners from (1) putting their real estate millionaire clients on Medicaid, (2) transferring unlimited assets with impunity a mere three years before applying for Medicaid, and (3) eliminating any transfer of assets penalty simply by giving away half the wealth and spending the rest on anything under the sun. 

Now here's where "Senator Snookered" comes in.  To snooker someone means "a. To lead (another) into a situation in which all possible choices are undesirable; trap. b. To fool; dupe" according to The American Heritage Dictionary of the English Language.  That appears to be exactly what AARP and other defenders of the corrupt status quo have done to Senator Gordon Smith, Republican of Oregon. 

The State of Oregon has an excellent reputation for thoughtful management of Medicaid for the benefit of its needy elderly citizens.  The state has one of the stricter long-term care eligibility systems ensuring that the program's severely limited revenues go to people most in need.  Oregon's Medicaid estate recovery program is the envy of the rest of the country, bringing many millions of dollars every year back into the welfare system from the estates of deceased recipients.  States in general have practically begged Congress to implement the measures that the House proposes to curtail Medicaid planning abuses.  For example, the National Governors Association called for a $50,000 limit on home equity, a much more reasonable cap than the House's exceedingly generous $750,000 proposed limit. 

So, why is Senator Smith opposing these Medicaid improvements (as is common knowledge on the Hill)?  The only rational conclusion is that he has been duped into "throwing the elderly out with the bathwater."  By that I mean that there are many other measures affecting Medicaid which are under consideration by the House and Senate conference committee.  Among these are proposals about cost sharing and prescription drugs about which the New York Times published and editorialized today (   Neither the Times' article nor its editorial touched on the measures in the House and Senate bills that address Medicaid planning abuses.  Could it be that Senator Smith, and unfortunately other Senators probably, are opposing certain measures they consider negative without supporting the irrefutably positive measures in the same legislation that seek to curtail Medicaid planning abuses? 

There is only one way to find out.  Ask Senator Smith.  Put him on the spot.  Why should millionaires qualify for Medicaid while retaining unlimited home equity?  Why should Medicaid planners collect huge fees for telling people whose health is failing to give away everything they own so they'll qualify for welfare three years later?  Why should the eligibility penalty for giving away assets to qualify for Medicaid be radically less than Congress intended it to be because of the Medicaid planners' "half-a-loaf" strategy?  

If Senator Smith and others who oppose sensible Medicaid reform cannot answer these questions satisfactorily, maybe it is true they have been hoodwinked by AARP and the Medicaid planners.  If that's all it is, then an appeal to their good sense and ethics may turn them around.  Medicaid is supposed to be a safety net for the poor, not a hammock for the wealthy and their professional promoters.  As Barron's editorialized today:  "[I]t's wrong, morally as well as legally.  Medicaid can hardly provide for the genuine poor.  It's already the largest third-party payer for long-term care.  We can't convert it into a nursing-home entitlement for the voluntary poor.  It's already breaking state budgets, and it's one of the things that could break the federal budget."  

Now would be a very good time indeed for Senate leadership to have a heart-to-heart talk with recalcitrant Senators like Smith about Medicaid's proper role in financing long-term care--for the benefit of America's soon-to-be-burgeoning elderly poor and for the next generations of Americans who will have to pay for Medicaid, Medicare, and Social Security.