LTC Bullet:  Cut Medicaid to Help the Poor

Friday, November 16, 2012

Seattle—

LTC Comment:  Counterintuitive, but true.  Dramatic targeted cuts to Medicaid could dodge the fiscal cliff and improve Medicaid LTC for the needy.  Details follow.

 

LTC BULLET:  CUT MEDICAID TO HELP THE POOR

LTC Comment:  The Center for Long-Term Care Reform’s new report on Medicaid and long-term care financing in Maine explains how the Pine Tree State can save money, improve long-term care for the poor, and divert the middle class away from welfare dependency. 

Titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net,” the report recounts how counterproductive federal laws and regulations rob LTC benefits from the poor and shower them on the well-to-do.

Read the full report here.  Following is an op-ed piece that briefly explains the study’s major findings and their significance.  For more information on the same problem and solutions, please see our reports on Medicaid and LTC financing in New York, California, Pennsylvania and many other states here as well as our study titled Save Medicaid LTC $30 Billion Per Year AND Improve the Program.

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“Cut Medicaid to Help the Poor”
by
Stephen A. Moses

Cut Medicaid to help the poor?  Sounds crazy.  Everyone knows Medicaid benefits low-income people impoverished by catastrophic medical expenses.  How could cutting Medicaid possibly help the poor?

It’s a fascinating story we uncovered in a study of Medicaid and long-term care financing in the State of Maine.  You see, Maine’s Medicaid program, called MaineCare, helps the poor, but it also showers generous benefits on the middle-class, the affluent and even the wealthy!

Frustrated MaineCare eligibility workers complained that rich Mainers--“even millionaires”--qualify instantaneously for the program’s most expensive long-term care (LTC) benefit using “Medicaid-compliant annuities.”  Nearly $6 million dodged MaineCare spend down requirements that way last year.

MaineCare recipients can retain $750,000 of home equity and--without any dollar limit--one income-producing business, household goods, one auto, prepaid burials, term life insurance, and individual retirement accounts.  Literally hundreds of thousands of dollars.

But if you still have too much wealth to qualify for free LTC, not to worry.  “MaineCare planners” will gladly help you self-impoverish artificially for legal fees of $10,000 to $15,000, little more than you’d pay privately for one month in a nursing home.

Our study concluded that “just about anyone qualifies for MaineCare’s expensive LTC benefits without much problem, except, ironically, the poor, who often lose everything quickly for lack of professional financial and legal advice.”

No wonder MaineCare is busting the state budget. 

But who’s to blame?  Certainly not the dedicated public officials and staff who administer MaineCare.  Their hands are tied by extravagantly generous and elastic federal Medicaid eligibility rules and regulations that all states are compelled to administer.

What little flexibility states had in the past to target their Medicaid programs to people in need they lost when, first the stimulus and then health reform, imposed a “maintenance of effort” requirement that froze their most generous eligibility rules in place.

The consequences are grave.  Two of three nursing home patients and four of five assisted living residents in Maine have their bills paid by MaineCare.  Reimbursements to LTC providers are so low that care access and quality are threatened.  The poor suffer most because they depend exclusively on MaineCare, whereas the affluent have choices. 

Few Mainers buy private insurance for LTC or spend their own assets, including home equity, for care.  Decades of easy access to publicly financed benefits after the insurable event occurs have desensitized them to the real risk and cost of long-term care.

MaineCare’s growing LTC costs already threaten to pull resources away from education and other state priorities.  A bulging wave of aging baby boomers in Maine will swamp this foundering system in time.  Our report concluded that Maine should

  • redouble its efforts to escape the federal “maintenance of effort” rule,
  • tighten MaineCare LTC eligibility rules to stop the affluent from commandeering public benefits intended for the needy, and
  • encourage everyone to plan responsibly so they do not become dependent on public welfare for their own care someday.

In a nutshell:  “Cut Medicaid to Help the Poor.”

Stephen A. Moses is president of the Center for Long-Term Care Reform, a public policy research institute in Seattle, www.centerltc.com.  Contact him at 206-283-7036 or smoses@centerltc.com.