House Subcommittee Hears Testimony on Proposals To Limit Medicaid Asset Transfers

Members of the House Energy and Commerce Subcommittee on Health on Wednesday at a hearing listened to testimony on proposals to limit "Medicaid estate planning," in which individuals transfer assets to qualify for the program, the AP/San Francisco Chronicle reports (Freking, AP/San Francisco Chronicle, 4/27).

Prior to the hearing, committee Chair Joe Barton (R-Texas) sent a letter to states to ask them to document efforts to prevent asset transfers by seniors to family members to "spend down" to qualify for Medicaid nursing home coverage. At the hearing, Congressional Budget Office Director Douglas Holtz-Eakin testified that limits on asset transfers could save Medicaid $2.6 billion over five years (CQ HealthBeat, 4/27).

One proposal to address the issue would extend the period in which states review whether Medicaid applicants have transferred assets from three to five years. A second proposal would increase the amount of time that the federal government can withhold Medicaid eligibility when asset transfers occur.

In addition, some subcommittee members said that they support proposals to encourage seniors to purchase long-term care insurance or use reverse mortgages (AP/San Francisco Chronicle, 4/27). Subcommittee Democrats raised concerns about mandated use of reverse mortgages, and one lobbyist said that some House members support such a proposal, CQ HealthBeat reports.

However, CMS Administrator Mark McClellan testified that the Bush administration does not support mandated use of reverse mortgages. "We need to encourage people to learn about them -- that's not the same thing as a requirement," McClellan said.

McClellan also discussed an administration proposal that would allow the sale of "partnership" policies in all states. Under such policies, which currently are available in only four states, individuals can retain more assets than Medicaid would allow but must cover more of their long-term care costs. McClellan said, "The program works," adding that "in partnership states, people who purchase the long-term care insurance almost never end up needing Medicaid assistance with long-term care costs."

McClellan also promoted an administration proposal in the fiscal year 2006 federal budget plan that would allocate $1.75 billion over five years for a demonstration program under which more Medicaid beneficiaries could receive care in home- and community-based programs rather than in nursing homes (CQ HealthBeat, 4/27).

Barton said, "We are concerned that some individuals who seek nursing home care under Medicaid may be engaging in certain financial practices -- through their attorney and financial planners -- that are forcing the states and the federal government to absorb the medical costs of individuals for whom Medicaid was never intended to cover."

However, Rep. Sherrod Brown (D-Ohio) said, "Do we really think that today's nursing homes are filled with scheming seniors who are free-riding on the taxpayer's dime? There will always be people who work the system, but most Medicaid beneficiaries do not want to be Medicaid beneficiaries. They have no choice."

Rep. John Dingell (D-Mich.) said, "Long-term care insurance is not appropriate for millions of low- and modest-income families that are already finding it difficult to secure food, shelter, transportation and health care, along with saving for retirement." He added that proposals to encourage individuals to purchase long-term care insurance might "do little to alleviate the weight on public programs today" (AP/San Francisco Chronicle, 4/27).