LTC
Bullet: Medicaid Estate
Recover. . .up Thursday, July 5, 2007 Seattle-- LTC Comment: Medicaid
estate recovery could be a major source of non-tax revenue for the
ailing LTC safety net for the poor, but AARP would tie the program in
bureaucratic knots. Details
after the ***news.*** *** HAIL TO JESSE:
An important development thanks to Jesse Slome's dedication and
persistence: Ten of the nation's leading long-term care insurance
providers have joined forces to significantly increase awareness and
sales of LTC protection during the month of November.
"This is a milestone, a significant first for the long-term
care insurance industry," declares Jesse Slome, Executive Director
of the American Association for Long-Term Care Insurance (AALTCI).
"Top long-term care insurers have committed to work together
with the Association in conjunction with 2007 Long-Term Care Awareness
Week which takes place November 4 - 10.
Long-Term Care Awareness Week was established by the American
Association for Long-Term Care Insurance (www.AALTCI.org).
The national professional organization, founded in 1998, serves
insurance and financial professionals who market LTC solutions. *** *** SEND STEVE TO LTC PARTNERSHIP SUMMIT.
As announced in Tuesday's LTC E-Alert, Dr. Mark Meiners,
who is organizing the LTC Partnership Summit meeting to be held in
Arlington, VA on August 1-2, has invited Center president Steve Moses to
attend and cover the session for the press.
Get all the details on the conference at http://www.gmu.edu/departments/chpre/ltcedfoundation/.
Attend if you can. If you'd like Steve to attend, cover the meeting, and keep
you informed through our daily "LTC Embed" reports, the Center
needs to raise $2,000 to cover expenses.
So far, since Tuesday, we've raised $825 toward that goal. Any amount is welcome. Everyone
will be recognized publicly for their support.
Pledges over $500 will also receive a "Bullet
sponsorship" and a month's ad on the LTC Blog at www.centerltc.com.
For details or to pledge, contact smoses@centerltc.com,
damon@centerltc.com, or call us
at 206-283-7036. Read
Tuesday's LTC E-Alert for all the specifics.
It's archived in The Zone or simply scroll down at www.centerltc.com
until you find it. *** LTC BULLET: MEDICAID
ESTATE RECOVER. . .UP LTC Comment: Listen
up, folks. This is
important. According to
studies conducted by the National Bureau of Economic Research, Medicaid
crowds out between two-thirds and 90 percent of the market for private
long-term care insurance. (See
for example: http://www.nber.org/papers/w10989).
What follows is a big part of the reason why this is true. AARP has published another of its occasional
reports downplaying the importance of Medicaid estate recoveries and
urging additional restrictions on the program. Check
out "Protections in Medicaid Estate Recovery: Findings, Promising Practices, and Model Notices" by
Erica F. Wood, Ellen M. Klem, and the ABA Commission on Law and Aging,
AARP Public Policy Institute, Washington, DC, May 2007 at http://assets.aarp.org/rgcenter/il/2007_07_medicaid.pdf.
Following
is a sample of excerpts from the report followed by our comments and
analysis: AARP: "By
law, states can collect funds from estates after institutionalized or
older Medicaid beneficiaries die by recovering against their homes and
bank accounts to repay the government for services received."
(p. ii) LTC Comment: This
quote from the second paragraph of the report's "Foreword"
displays its bias. Medicaid
does not recover "against . . . homes and bank accounts." It recovers funds from estates to reimburse Medicaid for
costs incurred so that the same funds do not pass as "free,"
welfare-financed inheritance insurance to heirs who did not pay for
their parents' long-term care. AARP: "Estate
recovery makes the Medicaid program very different from the vast
majority of federal programs, which do not require such repayment."
(p. ii) LTC Comment: The
"vast majority of federal programs, which do not require such
repayment" are social insurance programs like Medicare and Social
Security. You pay a premium
and you're entitled to a benefit. Medicaid
is welfare; you pay no premium and you're entitled to no benefit that is
not reimbursed from your estate. It's
the law. AARP: "AARP
is publishing this research to clarify the protections in Medicaid
estate recovery programs, to encourage strong and effective protections,
and to put forth promising practices and model notifications that can be
replicated throughout the country." (p. ii) LTC Comment: Here
we agree. In fact, we'd go
much further. State
Medicaid programs should shout it from the rooftops that LTC financing
is not a personal entitlement, that paying for long-term care is a
personal responsibility, and that anyone who relies on public welfare to
pay for LTC will absolutely, positively pay it back out of his or her
estate before any remaining wealth passes to heirs as a
tax-payer-financed windfall. Unfortunately,
that's not what happens and the "protections" recommended by
AARP are meant to hamstring Medicaid estate recoveries more than to
facilitate them. AARP: "Recovery
amounts are increasing at a modest rate, and the financial impact of
estate recovery on state budgets remains slight but not insignificant.
Amounts collected through estate recovery represent between 0.01%
and 2.09% of total state long-term care Medicaid expenditures, with only
six states above 1%. The
average proportion has remained constant at 0.61% (FY 2005), compared
with 0.63% (FY 2003) two years earlier, as reported in the 2005 study.
The amount recovered nationally in FY 2005 was
$411,133,981—almost $81 million more than in FY 2003.
The average state recovery was $8,061,451, compared with
$6,477,206 in FY 2003." (p. v) LTC Comment: What
if every state recovered from estates at the same rate as the best state
(2.09%)? How much less
would Medicaid depend on taxes? Or
how much more would the program have to spend on desperately need care? The answer is one billion four hundred and eight million
dollars! That's real money!
But search the AARP report from beginning to end and you'll find
nothing to encourage underperforming Medicaid estate recovery programs
to improve and increase their contribution to the welfare program's
scarce resources. AARP:
"Fifty of the 51 states (including the District of
Columbia) have a Medicaid estate recovery program.
As of this writing, Michigan had no program, and Georgia was in
the process of implementing one. New
Mexico reported an inactive program." (p. v) LTC Comment: In
other words, 14 years after Medicaid estate recovery was made mandatory
by OBRA '93, two states still ignore the requirement entirely.
Why does the federal government allow those states to receive
federal matching funds when they are out of compliance with federal law?
The feds have been lax in that regard from the beginning.
The rest of the story is that Texas only recently implemented
estate recoveries and most states do not enforce recoveries
aggressively. The Centers for Medicare and Medicaid Services (CMS) has not
sponsored a conference on Medicaid estate recoveries since the year
2000. Such a meeting should
be scheduled immediately. How
else can practitioners of this complicated specialty learn from the
successes and failures of each other? Federal taxpayers bear the brunt of the state and
federal government's carelessness about Medicaid estate recovery.
That's the real issue that needs studying.
But don't hold your breath waiting for AARP or anyone else to do
the job. It is too
politically sensitive: much
easier to paper over these problems with more government spending than
to tackle them with responsible public policy. TRIPLY TAXED: Just
remember who gets the bill. Responsible
Americans pay once in taxes to support Medicaid, then they pay again for
their own LTC insurance premiums, and then again in higher private-pay
rates for their long-term care to make up for Medicaid's dismally low
reimbursements. As Jane
Bryant Quinn asked once long ago in her Newsweek column: "Do Only the Suckers Pay?" AARP: "Estate
recovery and accompanying lien policies directly affect specific
individuals—frail residents of long-term care facilities whose homes
are subject to liens, surviving spouses, and other family members or
potential heirs of deceased Medicaid recipients." (p. xi) LTC Comment: This
statement is at best misleading; at worst, false. Liens cannot be placed on an institutionalized Medicaid
recipient's property unless and until it has been determined that the
recipient is medically unable ever to return to the home. No estate recovery can be made (obviously) until after the
recipient dies and therefore has no further use for the real estate
equity. No estate recovery
can be made until after the death of a surviving spouse.
Of course there is an impact on "other family members or
potential heirs of deceased Medicaid recipients."
The purpose of Medicaid is not to indemnify them for the cost of
their relatives' long-term care. If
that were the case, why would anyone ever plan, prepare or insure for
the risk and cost of long-term care? AARP:
"The highest percent decreases were in Delaware (-100%),
Washington (-95%), and Oregon (-92%)."
Explanation in End Note #32:
"According to
Medicaid officials in Washington and Oregon, amounts recovered actually
increased between FY 2003 and FY 2005." LTC
Comment: Nothing in the
whole report annoyed me more than this.
Oregon has one of the best (if not arguably THE best) estate
recovery program in the United States.
Back in the 1980s, when I studied the program for the Health Care
Financing Administration and the Office of Inspector General of the U.S.
Department of Health and Human Services, Oregon recovered $5 million
dollars per year from estates. For the 2007-09 state budget biennium, Oregon estimates
annual recoveries will be over $20 million per year.
Yet AARP left all but a tiny fraction of Oregon's and
Washington's estate recoveries out of the current report because of
glitches in some federal reporting form.
I captured Oregon's actual recoveries for the reporting period
with a simple phone call. AARP
could have reported the same, complete, accurate facts. If
you'd like to learn more about Medicaid estate recoveries and the
critical role they could and should play in funding quality long-term
care for people in need, following are some resources to check out: "The
Medicaid Estate Recoveries Study," draft November 1985 at http://www.centerltc.com/mer_study.pdf:
I wrote this report for the Health Care Financing Administration.
It inspired national studies by the GAO and the DHHS OIG. "Medicaid
Estate Recoveries: National
Program Inspection," June 1988 at http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf:
I wrote this report for the DHHS Office of Inspector General.
Many of its recommendations became law in OBRA '93, including the
provision making Medicaid estate recoveries mandatory for all state
Medicaid programs. "Medicaid:
Recoveries from Nursing Home Residents' Estates Could Offset
Program Costs," March 1989 at http://archive.gao.gov/d15t6/138099.pdf:
Excellent GAO report. "LTC
Bullet: The Critical Role
of Medicaid Estate Recoveries," September 30, 2005" at http://www.centerltc.com/bullets/archives2005/579.htm.
For
more: search LTC Bullet
archives at http://www.centerltc.com/bullets/date.htm
for "Medicaid estate recovery" and/or "Medicaid estate
recoveries." Bottom line: Medicaid estate recoveries help preserve the LTC safety net for the poor and encourage responsible long-term care planning for everyone else. By discouraging estate recoveries, AARP hurts America's neediest, and ironically, impedes the marketability of the organization's own LTC insurance product. Go figure! |