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As I sat down to write this month's column, I found myself torn. On the one hand, I kept
coming back to government announcements about cost-cutting Medicaid changes that,
if enacted, will profoundly impact the health care industry and the good citizens of
southern Illinois. On the other, there is a need to write about the changes that have
already occurred and which are currently harming your friends and neighbors – and,
perhaps, your own family.

Life Care Planning, Estate Protection, Disability,
VA & Medicaid Assistance Lawyers

Health Care System and Middle Class Will Be Harmed

Health Care System and Middle Class Will Be Harmed

By Proposed Medicaid Changes

 

As I sat down to write this month's column, I found myself torn. On the one hand, I kept

coming back to government announcements about cost-cutting Medicaid changes that,

if enacted, will profoundly impact the health care industry and the good citizens of

southern Illinois. On the other, there is a need to write about the changes that have

already occurred and which are currently harming your friends and neighbors - and,

perhaps, your own family.  See accompanying article.

 

Although the media hype of "Millionaires Seek Medicaid" is just that, the irony of the

illogical proposals that are currently being pushed through congressional budget

committees is that only the wealthy will be able to afford to privately pay the $50,000

nursing home cost for 5 years before qualifying for Medicaid.  That's a total of

$250,000!

 

A recent Georgetown University study debunks the myth that millionaires seek

Medicaid, concluding that "there is little evidence that nursing home residents transfer

assets to gain eligibility for Medicaid."  The paper cites a GAO study that concluded that

only a small fraction of Medicaid applicants transfer assets for Medicaid eligibility, and

the average amount transferred was $46,000.  Medicaid's Coverage of Nursing Home

Costs: Asset Shelter for the Wealthy or Essential Safety Net, Georgetown University,

Long-Term Care Financing Project, May 2005.

 

The practical ramifications of the proposed Medicaid changes are chilling. Any infirm

senior who gifted to assist loved ones for college, health needs, a deposit on a home or

who gave generously to charities prior to seeking admission to a care facility would now

be penalized by Medicaid ineligibility after they exhaust their private pay ability.

 

When a nursing home resident runs out of money privately paying for their care and is

unable to qualify for Medicaid because they have made the mistake of making a gift to

a loved one or a charity, the nursing home will be required to provide uncompensated

care for the duration of the Medicaid penalty period or until hospitalization.  The nursing

home will be "stuck" providing for the resident's care and will simply have to eat the cost

of care because the law imposes severe penalties for "dumping" a resident out on to

the street.

 

On the other hand, with no money and no Medicaid, nursing homes with no payment

source will refuse to accept hospitalized patients deemed a "financial risk" or,

conversely, will "transfer" impoverished residents to hospitals at the earliest sign of

illness. This, in turn, will exacerbate the problem of charity care experienced by

hospitals. This vicious cycle makes no economic or social sense.

 

Furthermore, bear in mind that the average $46,000 transferred (referenced in the

Georgetown Study) in very many cases forms a safety net for the nursing home

resident. In Illinois, once one qualifies for Medicaid nursing home assistance, all of their

income must be applied toward their cost of care except for a $30 per month allowance.

This paltry amount isn't enough to pay for hair care for a month, let alone, pay for

incidentals not covered under Medicaid such as telephone and cable services,

newspaper subscriptions, greeting cards and toiletries.  In fact, many families who have

engaged in gifting hold the gifted money as a safety net from which to draw to make

sure that the elderly parent will be provided for during their lifetime.

 

Without doubt, the Medicaid system is in need of reasonable and responsible reform;

however, the "quick fix" and ill-considered transfer penalty restrictions will punish middle

class and poor seniors. The savings from the changes will be paltry compared to the

suffering they will cause seniors.

 

Moreover, a goodly portion of the economic burden imposed by the changes will fall on

the health care system.  If the proposed changes are adopted by congress, nursing

homes and hospitals will soon be saying "ouch".

 

     Richard Habiger is an elder law attorney.  You may contact him at 618-549-4529

or Richard@HabigerElderLaw.com.