Medicaid is often referred to as the health insurance program for the poor, while Medicare is for the old and disabled. However, a big chunk of Medicaid funding –$46B in 2004– flows to nursing home care. Medicare doesn’t cover long term nursing home care, but Medicaid does. Not only does Medicaid bail out the truly needy, but it also pays for a lot of people who are poor by choice. This group transfers assets to their heirs to qualify for Medicaid, and it’s a well known phenomenon. A whole industry has sprung up to help people make this move.
Now, deficit reduction pressures are forcing the issue. Congress is on the verge of making it harder for middle class and wealthier people to qualify for Medicaid, by taking the following steps:
- Introducing a waiting period before offering Medicaid to people who transfer assets
- Make Medicaid unavailable to people with a lot of equity in their home (home equity is excluded from Medicaid wealth calculations today)
- Look back 5 years for questionable asset transfers before a Medicaid application, up from 3 today
- Classify some annuities as assets that trigger a waiting period if they appear to be designed to shelter wealth with small payouts
I’m in favor of these changes, and would also like to see the senior segment of Medicaid detached from the rest of the program so we can have some clarity on where the dollars are being spent.
See Stiffer Rules for Nursing-Home Coverage in the Wall St. Journal.December 21, 2005