LTC Bullet:  The DRA Bullets 

Tuesday, January 9, 2007 


LTC Comment:  Two Medicaid planners lament the DRA we praised and defended in 21 LTC Bullets last year.  Their whining, our replies plus links to all the DRA Bullets, after the ***news.*** [omitted]



LTC Comment:  Attacks on the Deficit Reduction Act's long-term care and Medicaid eligibility provisions started early and still occur, although muted by the law's success. 

Here's the latest from two prominent Medicaid planning attorneys: 

Michael Gilfix and Bernard A. Krooks, "Asset Preservation and Long-term Care:  Assault in the Name of Deficit Reduction," Probate & Property, Vol. 20, No. 6, November/December 2006, pps. 34-39, read it here

Excerpts from the article with our comments follow.  After that, you'll find a list of 21 LTC Bullets responding in detail to all the criticism lodged by opponents of the DRA. 


Article:  "The objective of shifting greater responsibility for paying the cost of care to elders is transparent. For example, DRA provisions mandate expansion of long-term care insurance as a means of financing the cost of long-term care."  (p. 35) 

LTC Comment:  Right, the DRA was an evil plot by the insurance industry to sell more of their product by yanking Medicaid away from poor people.  That's so much nonsense.  First of all, while the insurance industry did support LTC Partnerships, it did not advocate for the critical Medicaid eligibility reforms.  Second, the purpose of the DRA Medicaid reforms was to protect Medicaid as a safety net for the poor by preventing its overuse and abuse by affluent clients of Medicaid planners like the authors of this article.  

Article:  "The DRA places a punishing cap on the 'equity interest' an institutionalized individual can have in a residence if it is to retain its exempt status. That cap is $500,000, a figure so low as to strip elders of home ownership protection in many parts of the nation. DRA § 6014. Each state has the option of increasing this cap to as much as $750,000. In the current political climate, few states are expected to take this step."  (p. 35) 

LTC Comment:  Medicaid planners display their total lack of concern for the poor when they advocate letting their affluent clients shelter even more than half-a-million to three-quarters-of-a-million dollars in home equity.  Nothing in Medicaid policy does more to prevent responsible long-term care planning than the program's continuing exemption of huge amounts of real estate equity from the risks and costs of long-term care.  Just think what Medicaid could do for the needy if it weren't being used as inheritance insurance for the well-to-do. 

Article:  "State agencies may deny ongoing eligibility, creating a difficult, challenging circumstance for elderly nursing home residents and for the nursing home itself. Facilities will then be deprived of a source of payment because such elders will be without funds, yet suddenly deprived of Medicaid eligibility because of illiquid home ownership interests."  (p. 35) 

LTC Comment:  That's ridiculous.  Nursing home residents with a spouse (or other exempt relative at home) aren't affected by the home equity cap.  Single Medicaid recipients can sell their house or work out a private reverse mortgage arrangement with heirs.  If they can still manage at home, they can use a commercial reverse mortgage to help them stay there.  Whatever they do, by paying privately they'll get better access to higher quality care across a wider range of LTC services.  And the nursing home or home care provider will get a higher market rate of reimbursement than Medicaid would have provided.  Everyone benefits. 

Article:  "This DRA provision is unduly burdensome and unnecessary. Existing law provides that each state Medicaid agency must establish a program to obtain reimbursement from the estates of Medicaid recipients at the time of their deaths. If an individual owns an exempt residence, a lien or an estate claim would be asserted and the state would be repaid for Medicaid dollars expended on her behalf. This approach, which avoids any fiscal damage to the Medicaid program, dramatically enhanced the ability of family members to raise money and save the family home."  (p. 36) 

LTC Comment:  Don't worry about exempting home equity on the front end because Medicaid will grab it on the back end from estates?  This argument shows the Medicaid planners' cynicism and hypocrisy.  They know they can charge clients $300 per hour to dodge Medicaid's estate recovery "requirement" and they know that most states recover only a small fraction of the wealth recipients have sheltered or divested.  Furthermore, these same characters and their trade association (the National Academy of Elder Law Attorneys or NAELA) fought us as aggressively over mandating estate recoveries in 1993 as they fought us over the DRA this time around. 

Article:  "For example, a couple’s combined monthly income is $2,500, in excess of the $2,489 MMMNA [minimum monthly maintenance needs allowance]. If all income is attributed to the community spouse, her CSRA [community spouse resource allowance] could not be increased. If her institutionalized spouse’s income is ignored, however, her income is so modest as to justify an increased CSRA so that additional assets would generate additional income that would be secured for her future. In some cases, this could justify a modest increase in the CSRA. . . .  By depriving elders of this approach, modest levels of income protection for truly needy elders are eliminated."  (pps. 38-39) 

LTC Comment:  Before the DRA, lawyers could help their clients shelter hundreds of thousands of dollars over and above the spousal impoverishment protection of up to $101,640 (as of 2007).  They used the "asset first" strategy which the DRA has now prohibited.  They'd search out the lowest possible interest on a CD and use that to justify shifting extra assets from the ill spouse to the well spouse in order to take the well spouse up to the monthly maintenance allowance.  It was a boondoggle for affluent clients and their lawyers that was rightly eliminated by the DRA. 

Article:  "As the DRA focuses on restricting access to Medicaid, it simultaneously elevates the role of long-term care insurance. More specifically, it calls for the expansion of programs that offer long-term care insurance in conjunction with state-approved Medicaid programs."  (p. 39) 

LTC Comment:  Finally, they get something right.  That's exactly what the DRA did.  But now, check out their interpretation of this positive development. 

Article:  "To a very large extent, passage of the DRA was an achievement by deeply partisan politicians and the long-term care insurance industry. Supporters of the DRA and others who attack attorneys who advocate for the rights of America’s elders have successfully distracted Congress from the real issue and the real culprit: the horrific and economically unmanageable cost of long-term health care."  (p. 39) 

LTC Comment:  If you think everyone has a right to free long-term care at everyone else's expense--and that Medicaid planners should get rich guaranteeing such a benefit to only a lucky few--then you should agree with the authors of this article.  But if you think Medicaid is best preserved as a safety net for the poor by getting everyone besides the poor to take personal responsibility for their own long-term care, then you belong on the side of the Center for Long-Term Care Reform in this debate. 

Here's our take on all the complicated DRA issues in a series of 21 LTC Bullets on the Deficit Reduction Act. 

LTC Bullet:  LTC Demagogy  Wednesday, December 7, 2005,  LTC Comment:  Pearl Harbor Day is a good time to reveal a sneak attack on rational long-term care policy.  (Critique of AARP's specious attack on the DRA.) 

LTC Bullet:  On Asset Transfers, Charitable Giving and Nursing Homes,  Tuesday, January 10, 2006,  LTC Comment:  Concerns that new Medicaid eligibility rules pending final passage in Congress could hurt charitable giving and nursing homes' finances are understandable but mistaken.  

LTC Bullet:  Opponents of Medicaid Reform Advocate Reverse Robin Hood Policies  Friday, January 20, 2006,  LTC Comment:  Profiteers on the status quo are mobilizing to stop Medicaid reform.  Fight back! 

LTC Bullet:  LTC Doubletalk,  Tuesday, January 24, 2006,  LTC Comment:  Medicaid planners and their academic and media enablers are talking out of both sides of their mouths:  asset transfers are rare but preventing them will devastate seniors.   Say, what? 

LTC Bullet:  Georgetown, GAO and Kaiser:  The Bermuda Triangle of Good LTC Policy  Wednesday, January 25, 2006,  LTC Comment:  LTC doubletalk is not the exclusive province of Medicaid planners and AARP lobbyists.  Otherwise often reliable analysts get long-term care policy wrong too.  

LTC Bullet:  As LTC Climax Approaches, CBO Estimates Savings  Monday, January 30, 2006,  LTC Comment:  With the critical Deficit Reduction Act vote coming day after tomorrow, the future of long-term care financing hangs in the balance. 

LTC Bullet:  LTC Showdown  Tuesday, January 31, 2006,  LTC Comment:  One day before the historic vote on Medicaid and long-term care financing, here's a summary of why it matters in five sentences. 

 LTC Bullet:  LTC Embed--Report from the Front  Wednesday, February 1, 2006,  LTC Comment:  Over-the-top Medicaid planner maxes political contributions to pliant Republican Congressman who opposes DRA's Medicaid reform. 

LTC Bullet:  LTC Victory  Thursday, February 2, 2006,  LTC Comment:  The Deficit Reduction Act of 2006 passed yesterday curbing Medicaid abuse and unleashing LTC Partnerships.  Celebrate?  Sure.  But don't take a victory lap until you consider what can go wrong. 

LTC Bullet:  LTC Insanity  Tuesday, February 14, 2006,  LTC Comment:  Like the persistent paramour in "Fatal Attraction," mindless opposition to the Deficit Reduction Act just won't die.  Is the DRA the law of the land or not? 

LTC Bullet:  The Plot Thickens  Thursday, February 16, 2006,  LTC Comment:  A NAELA Medicaid planner in Alabama has sued the federal government to enjoin enforcement of the Deficit Reduction Act of 2005. 

LTC Bullet:  The Brave New World of LTC Financing  Thursday, February 23, 2006,  LTC Comment:  What hath Congress wrought?  The brave new world of LTC financing since the Deficit Reduction Act of 2005. 

LTC Bullet:  "Analysis:  Congress Strengthens Long-Term Care"  Thursday, March 9, 2006,  LTC Comment:  Read Steve Moses's article on Medicaid reform, LTC Partnerships, and the Deficit Reduction Act in Health Care News. 

LTC Bullet:  NAELA's New Nadir  Thursday, March 16, 2006,  LTC Comment:  Medicaid planners, as represented by their trade association NAELA, have sunk to a new low.  

LTC Bullet:  The Deficit Reduction Act of 2005  Wednesday, April 5, 2006,  LTC Comment:  The DRA is the most important legislation affecting long-term care service delivery and financing in over a decade.  Find out what it all means. 

LTC Bullet:  Who Still Gets Medicaid LTC Without Spending Down?  Thursday, April 20, 2006  LTC Comment:  Do you think Medicaid requires impoverishment?  Think again.  Even after the Deficit Reduction Act, the vast majority of seniors who need long-term care can get it from Medicaid without spending down their own assets for care.  Explore the evidence and the consequences. 

LTC Bullet:  LTC Embed Report from the Policy Front in Hagerstown, Maryland  Monday, July 10, 2006  LTC Comment:  Medicaid planners have unfairly attacked members of Congress for their votes in favor of the DRA '05.  We fight back in their behalf at a hearing this morning.  

LTC Bullet:  Untangling the Deficit Reduction Act  Wednesday, July 26, 2006,  LTC Comment:  When Congress passes and the President signs a law, the hard work of interpreting and implementing it begins.  See what a struggle that is for the DRA's complicated changes to Medicaid and long-term care. 

LTC Bullet:  Bravo CMS!  Monday, July 31, 2006, LTC Comment:  Implementation of the DRA '05 probably seems agonizingly slow to most observers.  But to those of us in the public policy trenches for decades, new CMS guidance to states on long-term care partnerships and Medicaid eligibility arrived in record time. 

 LTC Bullet:  The Long-Term Care DRAma in Congress  Friday, September 1, 2006,  Seattle--  LTC Comment:  Moses defends Maryland congressman's vote for the Deficit Reduction Act before a congressional hearing. 

LTC Bullet:  What States Should Do About the DRA, LTCi and HEC  Tuesday, October 3, 2006,  LTC Comment:  New report by Steve Moses from the Flint Hills Center for Public Policy is a guidepost for states on DRA implementation, Medicaid savings, and private LTC financing growth.