Medicaid for the aged population requires payback for long term care which involves chronic medical conditions such as dementia. The payment for these benefits is due when the recipient dies and states are very aggressive in their collection. The payback is often in the tens of thousands of dollars forcing families to sell the family home to make a payment on the bill. No other government service requires payback. So why does this happen?
Often times in conversation when the question comes up, “Why do we have estate recovery?” the quick reply is “Well if they don’t pay for the services they got, the Taxpayers will have to.” This is often met by heads shaking in agreement.
The problem is the speaker has not thought about what he said. Let’s give the subject a bit of context here. The Medicaid payback is for “long term care services and supports.” Those include items like paying the nursing home and in-home care as well as medical expenses that Medicare does not pay. It only applies to recipients over age 65 and in some cases over age 55. For example, if we look at nursing home cases, the average recipient is often in their mid-80’s and has a diagnosis of dementia. This average person has been a Taxpayer for almost 70 years! They are in a nursing home for no fault of their own. We note here that Medicare will pay for medical treatment of any recipient even if the treatment is caused by their abuse of alcohol or drugs. Medicare has no payback requirement.
If we were to ask a question of the Objector, “What should YOU payback upon your death? Medicare? Free, taxpayer paid education? Police and fire protection?” He would object again and say “I paid taxes for those services!” We note that the aged Medicaid recipient is also taxpayer and has been longer than most people have been alive..
Let’s get back to the main question: Why do we have Medicaid Estate Recovery?
MER came from the 19th Century welfare history of what’s been called the “Protestant Ethic.” This approach posited that people were poor because of the lack of good moral character. There were poor farms, poor houses where they would be “taught” good work habits. To enter they had to give up their property and in the 20th Century it evolved into payback up return to productive work. In the Great Depression of the 1930’s the Roosevelt administration terminated payback requirements for out of work people. However states continued payback in their welfare programs and when it came to the aged, the theory was that the children should not inherit wealth from their parents. It was considered better that the state received payback. As federal money replaced state programs payback was terminated for all programs except Medicaid for the benefits for the aged and here it was optional for the states. Not all adopted recovery.
In 1993 the federal Medicaid program was changed to require all states to make recovery from the aged recipients. The main driving force behind the requirement was the long term care insurance industry. The theory was more insurance would be sold if recipients faced Medicaid estate recovery. The theory failed and the booming market collapsed by 2010.
The final remaining reason for MER is that it helps fund the program through an estate “Death Tax.” There is no deduction or exemption. Still MER It the funding purpose by returning less than .5% of the Medicaid budget. We might note here that millionaires have a $13,200,000 exemption from their estate “Death Tax.” Medicaid allows $0.00 in exemption for all recipients.
There’s more to say, but that’s enough for now!