MEDICAID: NEW LTC RESTRICTIONS IN KASSEBAUM/KENNEDY
Advocates for senior citizens are in an "uproar" over aThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
little-noticed measure in the "Health Insurance Portability and
Accountability Act of 1996" that makes it a federal offense for
people to "'knowingly and willfully' transfer their financial
assets in order to qualify for Medicaid coverage of nursing home
and other long-term-care services." The law only applies to
transfers made within the 36 month waiting period that Medicaid
requires for nursing home coverage. HOSPITALS & HEALTH NETWORKS
reports that "[n]early 70% of all nursing home residents wind up
having their care at least partly paid for by Medicaid." And,
with nursing homes costing an average of $40,000 per year, an
increasing number of "elder law" attorneys are specializing in
the business of helping older adults transfer their assets to
their kids so they can qualify for Medicaid.
SO WHAT'S WRONG?: Trish Nemore, of the National Senior
Citizens Law Center in Washington, said that "the law is likely
to frighten the needy from applying for Medicaid in the first
place." She also said that the vague language in the law makes
it "impossible to tell who can be charged and precisely what
behavior is a crime." Elder law attorneys also charge that the
law "mostly affects people of modest means, those who don't
receive sophisticated legal advice and those who don't plan far
ahead." Meanwhile, wealthier people who give away their assets,
but retain enough to cover three years of nursing home care, can
still qualify for Medicaid. The National Academy of Elder Law
Attorneys in Tucson, AZ, has promised to lobby to change the law,
"saying rules against asset transfers are strict enough already."
SO WHO PAYS?: States say that too many people who can
afford to pay for their own nursing home care are spending down
to qualify for Medicaid. One-third of Medicaid funding goes to
nursing home care, "much of it for middle-class Americans."
However, a 1993 Massachusetts study conducted by the U.S. General
Accounting Office, found that "asset transfers occurred in only
12% of cases reviewed, and that most of the people who divested
assets were denied Medicaid eligibility anyway or withdrew their
application." Providers have an interest in increasing the
number of private-pay, long-term care patients because "Medicaid
typically reimburses 30% below private rates." They argue that
private insurance is a more effective way to finance long-term
care. Stephen Moses, of Seattle-based LTC, which designs and
markets insurance products, said, "It's not because middle-class
people want to go on welfare. But if they ignore their risk of
needing nursing home care, their heirs benefit by getting their
estate, their attorneys get lots of money and Uncle Sugar pays.
Then Medicaid suffers skyrocketing costs and doesn't have enough
money left to cover truly poor old people and children."
PRIVATE INSURANCE: Private insurance also has its problems
-- mainly the fact that premiums are high -- HOSPITALS & HEALTH
NETWORKS reports. Dr. Joshua Weiner, of the Brookings
Institution, points out that working Americans, "who perhaps
could afford the premiums have more pressing financial demands,
like mortgages." In addition, more and more companies are
offering policies, but are not paying for them. Younger
employees often resist "paying $30 or $40 a month in premiums for
services they won't need for decades, if ever." Despite
significant growth "in the last several years" in long-term care
insurance policies, only six percent of elderly are covered.
Weiner projected that "even 25 years into the future, no more
than one-fifth of the elderly will be able to afford long-term
care coverage."
A BLEND: Four states -- Connecticut, California, Indiana
and New York -- are testing a combination of public and private
coverage. The states make long-term care insurance policies more
attractive by allowing buyers to retain more of their assets when
they are forced to go on Medicaid. Unfortunately, not enough
policies (21,000) have been sold to demonstrate the plan's
effectiveness. Minnesota has received approval for another
combination approach to coverage. The Minnesota plan combines
"Medicare and Medicaid coverage for disabled senior citizens and
provide[s] a full range of acute care and long-term care through
managed care." The idea is to cut costs by replacing nursing
homes with more home care and community-based care. Several
other states are seeking approval to initiate similar plans.
Some analysts, however, "question whether expanding home care
will actually save money."
SOLUTIONS: The issue of forcing middle-class Americans to
foot the bill for nursing home care "is politically explosive,"
HOSPITALS & HEALTH NETWORKS reports. The Kassebaum/Kennedy bill
does contain provisions designed to make private long-term care
coverage more attractive. It "makes long-term care expenses and
premiums tax-deductible, and sets consumer protection standards
for long-term care policies to qualify for tax-favored
treatment." However, some experts still "favor a national
insurance program for long-term care, perhaps through an
expansion of Medicare and a new payroll tax." Congressional
members from both parties and President Clinton have proposed a
modest expansion in coverage, but have met intense resistance
from the insurance industry, which argues that "most seniors
could afford private insurance if they tapped the value of their
homes." Moses commented, "There's a trillion-and-a-half dollars
in net home equity, more than enough to solve the long-term care
financing problem." Some providers, however, do favor a public
solution. Winthrop Cashdollar, legislative policy director for
the American Health Care Association, which represents for-profit
nursing homes, said, "Medicaid has been a backdoor way of
publicly financing long-term care. Our association is thinking
that maybe we should go through the front door and integrate
long-term care into Medicare" (Meyer, 10/20 issue).