How to Fund WISH

LTC Bullet: How to Fund WISH

Friday, September 5, 2025

Seattle—

LTC Comment: Analysts and advocates have rallied around WISH, but the proposed LTC insurance plan is starved for funding. Where could the needed money come from?

LTC BULLET: How to Fund WISH

LTC Comment: New York Congressman Tom Suozzi has introduced the Well-Being Insurance for Seniors to be at Home (WISH) Act. It is a creative new approach to funding long-term care that has captured the imagination and gained the support of many LTC analysts, advocates, providers, and insurers. I’ve criticized the plan here and here. But that is not my purpose today. Rather, I’d like to say “if this is what you want to do, here’s how to pay for it.”

What is WISH?

In briefest summary, WISH proposes a new catastrophic or back-end LTC insurance program that would pay qualified recipients a cash benefit equal to the median cost of six hours per day of personal care. To qualify, participants would have to meet their own LTC costs during a waiting period of one to five years depending on their income. Higher income people would pay their own way longer than lower income people before qualifying. WISH also plans a major public education campaign; expects private insurers to wrap new, less expensive policies around the WISH chassis; and hopes that Medicaid savings will accrue.

The catch is how to pay for WISH. Earlier proposals included a mandatory payroll deduction of .3 percent from workers and .3 percent from employers. In the current economic and political climate, that plan proved impractical. With the national debt exceeding $37 trillion, interest rates and inflation on the increase, and America’s creditors balking at buying our bonds, the country’s ability to service the debt it already has is at risk. As federal expenditures already far exceed revenue, any additional spending must be borrowed or printed, further worsening the financial crisis. So, if payroll taxes are out, where could the money come from to support WISH?

Finding New LTC Money

Medicaid allows LTC recipients to retain substantial wealth in exempt form. Exempt assets include up to a million dollars in home equity; the cost of home upgrades; one business including the capital and cash flow; an automobile; personal service contracts; unlimited home furnishings and personal belongings; compliant annuities and promissory notes; and even IRAs if they are in payout status, as most are for the elderly due to required minimum distributions (RMDs). No one knows how much wealth Medicaid LTC recipients own in this exempt form. But it is likely very substantial because of a quirk in Medicaid financial eligibility rules that encourages conversion of countable assets into exempt status.

Artificial Asset Spend Down

Medicaid treats asset spend down differently than income spend down. To reach the maximum monthly income limit of $967 dollars, applicants must demonstrate that they have purchased qualified medical or LTC goods or services with their own funds. The same is not true for asset spend down. To reach the $2,000 asset limit that applies in most states, applicants may spend their excess funds on anything they choose as long as they receive fair market value in return. They do not have to purchase qualified medical or LTC goods or services. In fact, they can buy assets that Medicaid considers exempt. This gives Medicaid LTC applicants a strong incentive to “spend down” by converting their countable assets into exempt resources with a simple purchase. There is no practical limit on how much wealth Medicaid LTC recipients can shelter from actual spend down in this way.

Medicaid’s well acknowledged proper role is to be a LTC safety net for the poor and vulnerable. It is supposed to protect the middle class and affluent only after they have consumed their excess resources by purchasing their own care. The presumption that genuine spend down of assets for LTC will occur is a key element of the WISH program. It follows that we need to know how much private wealth Medicaid protects in exempt form and how common the practice of spending down countable wealth by purchasing exempt resources is. What if the sums are so large and the practice so common that Medicaid has effectively obviated the need for middle class and affluent people to spend substantial personal funds for their long-term care? This could explain why so few people plan early, save, invest or insure for LTC. If the worst happens, Medicaid pays and protects significant wealth.

Clues from GAO

We have more questions than answers, but here are some clues. GAO conducted a study in 2014 that attempted to estimate the amount of exempt assets Medicaid LTC recipients own. GAO’s findings were not “generalizable” to the whole country due to limits in their methodology. But in a paper for the Paragon Health Institute titled “Medicaid’s $100+ Billion Leak,” I asked “what if GAO’s findings were projectable? How much money lies fallow, unused to purchase private LTC, because Medicaid exempts that wealth and pays the bills instead?” The sums were impressive. For example:

“Half or more of Medicaid’s $217 billion annual LTC budget [$278 billion as of 2023] goes to beneficiaries who could otherwise afford to pay privately.”
“Medicaid covered 5.6 million LTC recipients in 2020. If 12.6 percent of them had over $100,000 in noncountable resources, as GAO found, then at least $70.4 billion went unused for private LTC financing at Medicaid’s expense. That’s a lot of wealth for a poverty program to protect, fully 32.5 percent of the total $217 billion Medicaid spent on LTC.”
“If [as GAO found] 75 percent of LTC recipients owned a median amount of $12,530 in noncountable assets each, then at least $52.6 billion found its way into sheltered wealth, largely as prepaid burial expenses, which are sometimes permitted for the entire family, including adult children. That is a giant subsidy for the funeral industry at the expense of LTC financing for the poor, fully 24.2 percent of total Medicaid LTC expenditures.”
“If [according to GAO] 31 percent of 5.6 million Medicaid recipients owned homes with a median value of $68,350, then $118.7 billion of real estate value was diverted from private LTC financing. (The $68,350 is from the GAO report and would be much higher if the analysis was done today and not a decade ago.) Given that Medicaid exempts nearly all home equity, it is clear that Medicaid replaces practically all personal LTC liability from home equity. The loss is 54.7 percent of what the program spends on LTC.”

That is a lot of money (54.7 percent of 2023 Medicaid LTC expenditures [$278 billion] would be $152 billion) that Medicaid protects from the cost of paying privately for LTC. But what if the actual amount is much higher? GAO analyzed the total of exempt assets in only two counties in each of three states, Florida, New York and South Carolina. They researched and analyzed only a small sample of 350 cases. GAO based its findings on case record reviews and interviews with eligibility workers, but it did not verify the completeness and accuracy of the case records by reviewing bank accounts or public records, such as property ownership or transfers. Given these shortcomings, and others GAO acknowledges in this and other reports, it is safe to say that this study found only a fraction of the exempt assets that the Medicaid recipients possessed.

Follow the Money

To identify funds that could be tapped to fund WISH, Congressman Suozzi should ask GAO and CBO to conduct comprehensive studies of (1) the kind and amount of exempt assets held by Medicaid recipients in the United States and (2) the extent of the practice of qualifying for Medicaid LTC benefits by purchasing exempt assets to spend down countable wealth.

These studies should …

Review sample sizes sufficient to generalize results to the whole U.S. population.
Include critical review of case records, followed by interviews with Medicaid eligibility workers, supervisors, recipients and family members.
Review public records such as county assessors (real property ownership) and recorders (property transfer).
Conduct matches with IRS, Social Security, and other data bases to find unreported assets.
Verify the incidence and equity value of home ownership by Medicaid LTC recipients.

Home equity incidence and amount is especially important to determine because it is currently unknown, likely very high and could easily be used to reduce Medicaid expenditures, saving money WISH could employ, if Congress required home equity conversion as a condition of eligibility.

Make Asset Spend Down Real

Once we know how much exempt wealth Medicaid protects from actual LTC spend down, Congress should consider making two changes in Medicaid financial eligibility policy.

Change the asset spend down rules to comport with the income spend down requirements. In other words, require that asset spend down be for qualified medical or LTC expenses as is already mandatory for income spend down.
Disallow the practice of purchasing exempt assets to reduce countable wealth artificially.

These measures could entirely replace the revenue WISH would have generated from a payroll tax, probably around $78 billion per year, vastly relieve the burden on Medicaid of funding LTC and substantially increase the incentive for the middle class and affluent to plan for LTC, purchase private insurance, and stay off Medicaid.

More to Come

Does it seem far-fetched that more than half of what Medicaid spends on LTC, over $150 billion, could be protecting wealth that people might otherwise have used to purchase quality care in the private market? What if I told you that amount is dwarfed by the total wealth that could go to fund private LTC, but doesn’t, because of various third parties? To get the evidence and logic to support this claim, stay tuned for a forthcoming LTC Bullet, provisionally titled “Better LTC for Billion$ Less.” Coming this month.

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