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Medicaid - A Metaphor

By Patricia McGinnis

While rescue and recovery personnel continue to retrieve bodies from the wreckage left by Hurricane Katrina, an inordinate number of whom were patients, mostly elderly, who died in hospitals and nursing homes, none of this tragedy has deterred Health and Human Services (HHS) Secretary Michael Leavitt from pushing forward on his Medicaid agenda that would make it even more difficult for the elderly and chronically ill to qualify for Medicaid.

Although the Senate Aging Committee, including its Chair, Senator Gordon Smith (R-Ore) had previously recommended an independent commission to study Medicaid, the Bush administration and Secretary Leavitt forged ahead with their own Medicaid Commission, all of whom were appointed by Secretary Leavitt, to come up with recommendations to cut $10 billion from Medicaid. The Commission’s report, published last week, identified approximately $11 billion in savings and includes recommendations, some previously submitted by the Bush Administration and the National Governors Association, to impose onerous new restrictions on the transfer of assets. The commission’s report is available on the internet

The Medicaid Commission’s charge was to identify $10 billion in savings over five years and submit a report to the Secretary by September 1, 2005. By December 31, 2006, the Commission is to submit a report making longer-term recommendations to the Secretary on the future sustainability of the Medicaid program.

The September 1, 2005 report made six recommendations:

  1. Reform the prescription drug reimbursement formula: estimated savings = $4.3 billion
  2. Extend the Medicaid drug rebate program to Medicaid Managed Care: = $2 billion
  3. Tiered co-payments for prescription drugs: estimated savings = $2 billion
  4. Reform Medicaid Managed Care Provider Tax requirement: savings = $1.2 billion
  5. Increase the look-back period to five years: est. savings = less than $100 million
  6. Move the start date of the period of ineligibility for transfer of assets from the date of the transfer to the date of application for Medicaid or the date of institutionalization, whichever is later: estimated savings = $1.4 billion
The elimination of the exemption of the home has long been sought by the nursing home and LTC insurance industries, who won’t rest until every Medicaid beneficiary is homeless, as well as destitute.

So, there you have it: While Congress debates the repeal of the estate tax, which would cost about $1 trillion over 10 years when interest on the debt is included, and while they debate cuts to dividend and capital gains taxes totaling $70 billion over five years, the administration is willing to wreak havoc on the lives of nursing home residents and their families and to deny Medicaid to low income nursing home residents for transfers made five years before they even thought of a nursing home - all for an estimated savings of less than $300 million per year.

A "Christian" Solution

One non-voting member of the commission, Doug Struyk, president of the Christian Health Care Center in Wyckoff, New Jersey, worried about nursing homes having to evict residents who transferred assets and were subject to the penalty period or, more importantly, having to absorb the costs themselves. His solution? Nursing homes should be permitted to conduct a more thorough investigation of prospective residents’ assets before admitting them and they should be allowed to require a responsible party. In essence, Mr. Struyk suggests that nursing homes should be permitted to deny admission to those who can’t pay privately or, when they can no longer pay, to stick the bill on some unsuspecting family member whom the nursing home can later sue for payment.

NGA, GAO and Moses

The National Governors Association’s (NGA) proposals for Medicaid reform were released in late August and are chilling in their brutality. Along with endorsing a five-year look back period, the NGA also endorsed the Bush administration’s proposal to shift the penalty start date to the date of application, rather than the date of the transfer. Even more chilling, the governors’ proposal would eliminate the exemption of homes. They wrote: "Home equity should be considered a countable asset in order to require individuals to use (it) to offset long-term and other medical expenses that would otherwise be paid by Medicaid."

"Already the National Governors Association has proposed and Congress is seriously considering, elimination of Medicaid’s wide-open asset exemptions and implementation of a hard-dollar limit on assets. That would put home equity at risk for long term care. Once home equity is at risk, more people will buy LTC insurance."

Steve Moses, president, Center for LTC Reform, Inc.

Long sought by the long-term care insurance industry, who won’t rest until every Medicaid beneficiary is homeless, as well as destitute, the home equity proposal was also praised by Steve Moses, of the Center for Long Term Care Reform, Inc., a private institute funded in part by the long term care insurance industry. According to Mr. Moses, he was asked by the Government Accountability Office (GAO) to submit names of Medicaid planners — "...especially the more aggressive ones who push the legal envelope." And submit names, he did, along with his diatribes against Medicaid planning and advertisements for his web site. The GAO report on transfer of assets was recently submitted to Congressmen Dingell and Waxman and should be available to the public soon. It will make interesting reading, and advocates need to be prepared to present the other side of Medicaid.

All Is Not Over

If one can discern any benefits at all from Hurricane Katrina, it has distracted Congress, specifically the Senate Finance Committee and the House Energy and Commerce Committee, from the budget reconciliation packages, originally due out on September 16. The budget reconciliation is now postponed at least until October, perhaps longer, so we do have a reprieve during which members can be educated. And educated they must be. Thus far, they have heard from the providers and the long-term care insurance industry, whose representatives dotted the Medicaid Commission. They have not heard from you or from your clients. Congressman Henry Waxman (D-LA) is a key player in any Medicaid changes, just as he was with OBRA ’93. Letters and faxes can be sent to:

Congressman Henry Waxman at 2204 Rayburn House Office Bldg., Washington, D.C. 20515. Fax: (202) 225-4099 or to his Los Angeles Office at 8436 West Third Street, Ste. 600, Los Angeles, CA 90048. Fax: (323) 655-0502.

The Senate Committee on Finance, 219 Dirksen Senate Office Building, Washington, D.C. 20510-6200. Senator Charles Grassley, (R-Iowa) Chair.

The House Committee on Energy and Commerce, 2125 Rayburn House Office Building, Washington, D.C. 20515. Congressman Joe Barton (R-Texas) Chair.

Don’t Mourn - Organize!

If, as one scholar stated, the measure of a society is how we treat our elderly, then we have failed miserably in these United States. The tragedies of Katrina are only symptoms of the disregard and neglect of our poor, our disadvantaged, our disenfranchised, our elderly and our disabled that has festered at the state and national levels for years.

The Medicaid proposals, whose purposes are purportedly to make "meaningful long-term changes to better serve beneficiaries," should be exposed for what they truly are: more cruel and ruthless attacks on those least able to afford health care in order to feed the ravenous mouths of the nursing home and insurance industries. Do we truly want to live in a society where we deny care to the aged or disabled because they gave a gift five years ago? Where only the rich and healthy can keep their homes? Where only the rich and healthy can leave their homes to their children and grandchildren? If not, then pick up your pens and pencils and start writing.

Patricia L. McGinnis is the Executive Director of California Advocates for Nursing Home Reform.