Despite continuing evidence and predictions of expanded enrollment for private health insurance pursuant to the Patient Protection and Affordable Care Act (ACA), Medicaid planning, especially for long-term care costs, continues to represent a settlement priority for many past and present personal injury victims.
Medicaid is a means-tested program jointly funded by the Federal government and the states that provides health insurance to eligible low-income individuals. Each state manages its own Medicaid program with flexibility to determine eligibility and other criteria.
Two recent government reports addressing Medicaid issues should interest settlement planners and structured settlement consultants, as well as special needs and elder law attorneys.
CEA Medicaid Expansion Report
In addition to expanding private health insurance, the ACA also expanded eligibility for Medicaid by offering financial support to states that expand Medicaid eligibility to non-elderly individuals in families with incomes below 133 percent of the Federal Poverty Level. Through 2016, the Federal government has committed to paying participating states 100 percent of the related costs reducing to 90 percent in 2020 and subsequent years.
The U.S. Supreme Court ruled in 2012 that the Federal government could give states a choice to accept Medicaid expansion but could not require them to do so. To date, 26 states and D.C. have expanded Medicaid and 24 states have not. A political battle continues between President Obama's administration and states that have declined to expand Medicaid.
To promote further Medicaid expansion, the Council of Economic Advisers (CEA) published a report this month titled "Missed Opportunities: The Consequences of State Decisions Not to Expand Medicaid" (CEA report). The report states that 5.2 million people have gained Medicaid or CHIP coverage in states that have expanded Medicaid. It also cites an Urban Institute estimate that 5.7 million people will be deprived of health insurance coverage in 2016 if the other 24 states do not.
The CEA report concludes: "by expanding their Medicaid programs, States can improve access to essential medical care, reduce financial hardship, improve their citizens' mental health and longevity, and claim billions of dollars in Federal funding that could boost their economies today."
To quantify the benefits of expanded Medicaid to newly insured individuals, the CEA report relies on estimates from the Oregon Health Insurance Experiment (OHIE). The OHIE, which the CEA characterizes as "a unique research opportunity", resulted from Oregon's 2008 decision to allocate Medicaid coverage by lottery.
Acknowledging "[t]he limited sample size of the OHIE makes it more difficult to reach firm conclusions about the effect of Medicaid on objective measures of physical health", the CEA report also relies on parallel research literature that uses "quasi-experiments created by past policy changes."
The CEA report quantifies the following purported benefits for newly insured individuals on a state-by-state basis with supporting maps and tables:
- Improved access to care
- Greater financial security
- Better mental and overall health
In addition, the CEA report utilizes data from the Congressional Budget Office and Urban Institute to quantify the following projected benefits of expanding Medicaid for state economies with supporting state-specific maps and tables:
- Additional Federal funds
- Increased employment
- Greater overall economic activity
CEA Report Criticism
Perhaps predictably, given the political debate that surrounds the ACA and Medicaid expansion, many commentators have criticized the CEA report. One example is Robert Samuelson, whose op-ed titled "The Real Medicaid Problem" appeared in the July 14, 2014 issue of the Washington Post.
Samuelson questions whether the promised 90 percent Federal reimbursement rate will remain permanent. He quotes Matt Salo of the National Association of Medicaid Directors: “The ACA says what it says. Future Congresses can repeal or modify it.”
Samuelson also points out how demographic trends ("ignored by the [CEA] report") could become a financial albatross for the states. As one result of rising Medicaid costs, according to Samuelson, "[t]he competition between nursing homes and home health care — on the one hand — and classroom teachers, higher education, police and other governmental services — on the other — will intensify."
In a similar critique, a July 11, 2014 Wall Street Journal article , written by Chris Jacobs and titled "Why States are Hesitating to Expand Medicaid", highlights a recent study of "State Healthcare Spending on Medicaid" sponsored by the Pew Charitable Trusts and findings by the Commerce Department’s Bureau of Economic Development to explain why many states have not rushed to expand Medicaid.
For a state-specific example (Virginia) of opposing political viewpoints concerning Medicaid expansion, compare this July 11, 2014 Wall Street Journal op-ed by Fred Barnes with this July 11, 2014 Washington Post editorial.
GAO Medicaid Report
The Government Accountability Office (GAO) has also published a recent Medicaid report titled "Medicaid: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage" which may prove cause for concern among special needs and elder law attorneys.
As justification for its study, which was requested by Senators Tom Coburn (R-OK) and Richard Burr (R-NC) and Representatives Darrell Issa (R-CA) and Trey Gowdy (R-SC), the GAO points out:
- "Medicaid paid for nearly one-third of the nation’s $158 billion in nursing home expenditures in 2012"; and
- Many individuals utilize various planning techniques to reduce their assets and qualify for Medicaid - despite continuing efforts by Congress to discourage such activity and to address financial eligibility requirements for Medicaid coverage of nursing home care. See, for example "The Deficit Reduction Act of 2005".
Historically, many special needs and elder law attorneys have devised these asset reduction techniques and advised their clients when and how to utilize them.
In responding to the Congressional request for information about the extent of asset reduction techniques to qualify for Medicaid nursing home coverage, the GAO report:
- Examined financial characteristics of applicants approved for Medicaid nursing home coverage in selected states; and
- Identified methods used to reduce countable assets to qualify for Medicaid as well as information state Medicaid workers consider most useful in assessing an applicants’ financial eligibility.
Among its findings, the GAO report identifies four main methods used by applicants to reduce their countable assets (income and resources) and qualify for Medicaid coverage:
- "Spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements;
- "Converting countable resources into noncountable resources that generate an income stream for the applicant, such as an annuity or promissory note;
- "Giving away countable assets as a gift to another individual—such gifts could lead to a penalty period that delays Medicaid nursing home coverage; and
- "For married applicants, increasing the amount of assets a spouse remaining in the community can retain, such as through the purchase of an annuity."
NAELA Response
Promising a thorough analysis of the GAO report, the National Academy of Elder Law Attorneys (NAELA) has responded with a press release recommending the GAO report as "a starting point for an urgent review of the long-term crises that millions of Americans and their families are facing."
The GAO report, according to NAELA, "highlights the impact of a public policy that requires persons needing long-term services and supports for chronic diseases such as dementia, ALS, and Parkinson's to impoverish themselves to be eligible for treatment under Medicaid while those with heart disease and more acute maladies receive health care coverage through Medicare."
For additional NAELA resources addressing long-term care and Medicaid, see:
For additional S2KM reporting about Medicaid and the ACA, see the structured settlement wiki.
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