Since We're Going to Spend Money on Health Care, Spend it Wisely!

As noted in my last post, the CLASS Act -- a provision of the Obama health care law that included modest long-term care benefits (not exceeding $75 per day) for those willing to pay the premiums -- has been scrapped as financially unsustainable.  The fact that has gone largely unspoken, however, is that their is money available to cover a substantial portion of long-term care expenses.  As former New York Times reporter Jane Gross points out recently in this excellent column, it's not that we lack the funds to cover a substantial portion of long-term care costs; rather, Medicare spends too much on the wrong type of care. 

As but one example supporting her argument, Gross points out that Medicare will cover the costs for a hip replacement for a frail senior citizen who will likely require long-term care with our without the procedure.  If the senior ends up in a long-term care facility, however, Medicare will at most cover a portion of the cost for 100 days' of rehabilitation.  Once Medicare stops paying the tab, if the senior is already of limited means -- or becomes impoverished as a result of an asset spend down -- then taxpayers, through the Medicaid program, will be on the hook for the senior's long-term care costs for the rest of her life. 

Why, you may ask, does it matter whether Medicare or Medicaid covers the cost of care -- both of federal programs, right?  As Gross points out, however, Medicare is supported by payroll taxes and thus at least has a significant element of being a self-funded program.  Medicaid, in contrast, is essentially a pure "welfare" program that is completely taxpayer supported.

The solution, Gross argues, is to have a serious national conversation about the reallocation of our precious health care dollars away from pointless and wasteful procedures (hip replacements for Alzheimer's patients) and towards the costs of custodial long-term care that is increasingly bankrupting our seniors.  Of course such a conversation will inevitably lead to the "R" word -- that is a discussion of the rationing of health care services.  I am continually amazed that conservatives who  complain about runaway government spending will decry rationing of health care -- even raising the phony spectre of "death panels" -- and seem unwilling to have a serious conversation about the irrational nature of spending on health care in this country.

Proposed GOP Budget Plan Would Slash Nursing Home Medicaid Benefits

Most of the analysis of the Republican's proposed budget (crafted largely by Wisconsin Rep. Paul Ryan) has focused on its potential impact to the Medicare program.  As discussed in yesterday's New York Times, however, the impact of that budget on seniors might be felt more acutely in the reduction in Medicaid payments for nursing home costs. 

Approximately seventy percent of all nursing home residents are on Medicaid. A significant portion of those residents began receiving nursing home Medicaid coverage only after spending down most of their assets (or if they had good legal advice, after protecting a portion of their assets through effective planning).  Under the proposed GOP budged, Medicaid (like Medicare) would be doled out in block grants to the states, with the annual grants to increase only at the rate of inflation.  Since health care costs have consistently increased well in excess of the inflation rate, states would necessarily have to curtail their Medicaid expenditures, unless they were to raise state taxes to cover the shortfall.

Click here to read the New York Times article. 

New York's 2011 Budget Includes Modest Changes to Long-Term Care Medicaid Rules

In my last post, I described the significant changes that were proposed by Governor Cuomo's "Medicaid Redesign Team" as they pertained to the Community Long-Term Care Medicaid program.  Specifically, the proposals included the elimination of "spousal refusal" and the imposition of transfer penalties for the Community Medicaid program.  Longstanding New York law has permitted the "well" spouse to refuse to contribute their income and assets towards the care of the "ill" spouse.  In addition, a person applying for Community Medicaid is permitted to transfer any amount of assets to children or other family members without having those transfers result in a period of Medicaid ineligibility for the person seeking Community Medicaid benefits.

To the surprise of many elder law attorneys and other senior advocates, the budget bill approved last night by the Legislature did not include either the repeal of spousal refusal or the imposition of transfer penalties for Community Medicaid.  One change that we will see will be the expansion of "estate recovery" against the assets of a deceased Medicaid recipient to include "non probate" transfers including transfers from trusts, retained life estate interests and similar "testamentary substitutes."  Under existing law, estate recoveries are permitted only against probate assets, or those that pass via intestacy.

Cuomo's Budget Proposal Includes Significant Changes to Community Medicaid

It's no secret New York -- like many states -- is facing a significant budgetary crisis.  Medicaid is one of costliest programs administered by the state, and not surprisingly Gov. Cuomo's proposed budget includes significant cuts to Medicaid spending.

From an elder law perspective, the most dramatic of the proposed Medicaid changes is in the area of Community Medicaid.  Under present law, there are no "transfer penalties" associated with a Community Medicaid application.  That is, a medically-needy person living in the community (e.g., other than in a nursing home) can transfer all their non-exempt assets (e.g, assets excluding the home and a $13,800 resource allowance) to children or other persons and immediately qualify to receive Medicaid services.  The proposed legislation would incorporate a sixty-month "look back" period for non-exempt transfers, the same period that is used for eligibility for the nursing home Medicaid program.  Non-exempt transfers made during the look back period would result in a period of ineligibility for Community Medicaid, the duration of which would be determined by the amount of the non-exempt transfers made during the look back period.

The proposed rules also call for the elimination of "spousal refusal," which currently permits a spouse to refuse to make his or her assets or income available for determining the Medicaid eligibility of the other spouse.  Spousal refusal is used routinely in New York to permit an ill spouse to obtain Medicaid coverage without requiring a spend down of the couples' assets.  Only a handful of other states (the most prominent of which is Florida) permits spousal refusal under any circumstance.  Note that the budgetary proposal does not appear to eliminate spousal refusal for nursing home Medicaid cases.

Since enacting controversial legislation is the ultimate "sausage making" process, the final budget is sure to include significantly different provisions than are found in this initial proposal.  Nonetheless I expect that the final bill will include at least some dramatic changes to the Medicaid program that will affect seniors and their families. I will be sure to keep my readers informed as developments unfold.