Finding Out What’s In It, Vol. CCLXIV

 

medicaidEarlier this week, The Wall Street Journal reported on the latest negative unintended consequences of Obamacare:

Millions of people have gained health coverage through Medicaid since states began expanding the program under the Affordable Care Act. That also means more Americans may find themselves caught in a little-known law that lets states go after their assets after they die.

In brief:

For more than 20 years, federal law has allowed states to recover almost all Medicaid costs if recipients are 55 or older when they die. This now applies to many of the 11 million people who joined Medicaid since the health law’s expansion of the state-federal insurance program.

The upshot: Some families are discovering they may have to sell a home or other assets of a deceased relative to reimburse the government.

To understand how this has come to pass, we need to take a brief look at some history.

Although Medicare and Medicaid have similar-sounding names, they were created for different purposes. Medicare was designed as an entitlement, something everyone pays into and everyone (eventually) benefits from. Medicaid, on the other hand, was designed as a welfare benefit, to temporarily help those who find themselves in unfortunate circumstances. So whereas Medicare eligibility is based on age, qualifying for Medicaid used to involve both income and asset tests.

At some point, families of the elderly (and their financial advisors) realized that once an elderly relative had exhausted Medicare benefits, Medicaid would pay for nursing home care if the elderly beneficiary were poor. In principle, the designers of Medicaid assumed that someone would spend down all of his or her assets before applying to Medicaid for benefits. In practice, savvy elderly began giving away assets to family in order to qualify for Medicaid.

This was a ripoff of fellow taxpayers. In effect, Joe Lunchpail was paying taxes to fund the medical care of people who could afford to pay for it themselves but were gaming the system. So in 1993, Congress mandated that states implement a “lookback” for Medicaid: if a beneficiary had unreported assets — or had given away assets within a certain window before applying — the state could go after the family for those assets. Laws beget negative unintended consequences, which beget more laws.

Which brings us to today’s new legislation, and its new negative unintended consequences.

A major feature of Obamacare is its expansion of Medicaid eligibility. No longer is Medicaid for the destitute. The Federal government will now give participating states additional funding to enroll adults who earn up to 300% of the poverty level, without an asset test. In fact, consumers have complained that the Federal Obamacare exchange steered them to Medicaid, even when they preferred to purchase true insurance.

But neither states nor the Federal government stopped to consider that the lookback laws on the books would interact with the newly relaxed eligibility standards. People enrolled in Medicare without being asked to declare their assets. And now — unlike with true insurance — surprised citizens are on the hook for the cost of their care. States have little say in the matter; Medicaid’s lookback provisions are an act of Congress.

All of this is one more example of why government is unsuited to the task of managing the mind-numbing complexity of something like health care and its financing. If the government really wants to help, it can give us all vouchers or tax credits for health insurance and then get out of our way. Let our individual decisions work their magic in a free market. Medicare and Medicaid and, yes — Obamacare too — are products of an earlier time. In the age of Amazon, Uber, TripAdvisor, we are surely empowered with enough information to make our own good decisions for our own individual circumstances.

There are 31 comments.

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  1. Arahant Member
    Arahant
    @Arahant

    Son of Spengler: In the age of Amazon and Uber and TripAdvisor, we are surely empowered with enough information to make our own good decisions for our own individual circumstances.

    Amen, brother! Preach it!

    • #1
  2. Pencilvania Inactive
    Pencilvania
    @Pencilvania

    That is eye-opening. When the ‘best and the brightest’ minds of a project turn out to be people like Jonathan Gruber, this is the result.

    • #2
  3. DocJay Inactive
    DocJay
    @DocJay

    We could handle it but we wont.  The gigantic mess of medicine will collapse and we will get single payer eventually.

    • #3
  4. Devereaux Inactive
    Devereaux
    @Devereaux

    No, DocJay, we won’t. We’ll get 2-tier medicine, which has already begun. And no one who has any ability to avoid it will. The market works, even when things are at their worst, alternatives appear. The government may holler and scream, but there will be alternatives.

    I am sure you are aware of the several out-of-country surgical operations, wherein you get the surgery a whole lot cheaper, and that includes the cost of the airfare. But there isn’t all the liability law to “protect” you. Eric Garner died for selling “loosies”, something that technically the state cannot prove, as there is no tax stamp on the individual cigarette. Still, corrupt courts and administrations simply disregard that.

    But SOS is right about one thing – government “involvement” is the kiss of death – to pretty much anything it gets involved with.

    • #4
  5. DocJay Inactive
    DocJay
    @DocJay

    Devereaux:No, DocJay, we won’t. We’ll get 2-tier medicine, which has already begun. And no one who has any ability to avoid it will. The market works, even when things are at their worst, alternatives appear. The government may holler and scream, but there will be alternatives.

    I am sure you are aware of the several out-of-country surgical operations, wherein you get the surgery a whole lot cheaper, and that includes the cost of the airfare. But there isn’t all the liability law to “protect” you. Eric Garner died for selling “loosies”, something that technically the state cannot prove, as there is no tax stamp on the individual cigarette. Still, corrupt courts and administrations simply disregard that.

    But SOS is right about one thing – government “involvement” is the kiss of death – to pretty much anything it gets involved with.

    Hope you’re right.  I have another 15 years left barring illness/death/insanity.

    • #5
  6. Arahant Member
    Arahant
    @Arahant

    DocJay:Hope you’re right. I have another 15 years left barring illness/death/insanity.

    Um, Doc, about that last option… ;^D

    • #6
  7. The King Prawn Inactive
    The King Prawn
    @TheKingPrawn

    Devereaux:No, DocJay, we won’t. We’ll get 2-tier medicine, which has already begun. And no one who has any ability to avoid it will. The market works, even when things are at their worst, alternatives appear. The government may holler and scream, but there will be alternatives.

    I’m already hearing more commercials for “discount medical plans.” These are popping up (I assume) because a small monthly fee and a reduced cash price is better than the ridiculous deductibles now attached to so many insurance plans. I haven’t looked into such things, but I’m sure the CBA has to pan out if the market is offering this alternative.

    • #7
  8. Devereaux Inactive
    Devereaux
    @Devereaux

    TKP #7

    I believe if you look at the system, you find that most require you have SOME insuance. But then, you pay an up-front fee, and because the total practice size is small, you get good, personalized service. The doc can afford to because the up-front fee ends up being his salary, and the insurance payment, whatever it is, ends up being the office overhead payment. So you get quick, personalized service, tthe doc makes good money, and everyone is happy. Market wins again.

    The fly in the ointment is that the total size of the new practice is a LOT smaller than the old ones were. So suddenly there are a LOT less docs for patients to be seen by. It will become like England’s public health system – if and when they have time for you.

    • #8
  9. DocJay Inactive
    DocJay
    @DocJay

    Dev/KP, the insurance industry has plans to shut down all alternatives not in their control. Now that there are just a few big players and the smaller insurance companies have been lessened/eliminated by the expensive care act, the lobbyists for these giants wield immense influence. They wrote vast swaths of the ACA and effectively are running the show going forward. Government picks the winners and losers. Lobbyists own the government. As the medical industry challenges the establishment you will see increasing laws/regulations designed to stifle the free market. I have little optimism for the future of our dysfunctional system. Hope you’re right Dev. Hope I’m wrong.

    • #9
  10. Devereaux Inactive
    Devereaux
    @Devereaux

    DocJay – I won’t disagree with your view of insurance companies and lobbyists – and government control. It is my sense, however, that people are finally getting tired of government over reach. Look at what all is happening in so many state legislatures. Many of them are pushing changes the federal governemnt would never push. But if this gains traction, and there are many many states that are going there, the fed will end up having to do the same.

    I DO believe the youth are tired of all this noise. They don’t particularly believe much of the noise of the left, never mind the college students, who are pretty universally dumb. They wise up when they can’t find jobs. Making a living has a sobering effect. It certainly has had on my kids & friends (the 30-some). Note that many here on RICO are not old fossils like me but young people who don’t like what they see.

    All is not lost – yet. Even if buying your body armor may not be a bad thought. (Insurance – of a different form.)

    • #10
  11. user_86050 Inactive
    user_86050
    @KCMulville

    Spengler – great post, as usual. It explains the issue clearly, and why it’s relevant. Nice job.

    • #11
  12. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    KC Mulville:Spengler – great post, as usual. It explains the issue clearly, and why it’s relevant. Nice job.

    Thanks!

    • #12
  13. Tommy De Seno Contributor
    Tommy De Seno
    @TommyDeSeno

    Sounds like a bad loan.

    Is there an age threshold here?  In other words, does the look back provision apply to folks of all ages, or just the elderly?

    • #13
  14. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    Tommy De Seno:Sounds like a bad loan.

    Is there an age threshold here? In other words, does the look back provision apply to folks of all ages, or just the elderly?

    From what I can gather, the estate recovery provisions apply only to Medicaid recipients who die when they are 55 or older. At the same time, I’m pretty sure that standard Medicaid enrollment forms require 5 years of disclosure for the lookback, regardless of age.

    • #14
  15. The King Prawn Inactive
    The King Prawn
    @TheKingPrawn

    Dev, these plans provide a network of doctors that accept (I presume) a negotiated cash price for the services. Paying into the service buys access to the list and the cash price which is probably around the insurance payment price but without the paperwork and headache. What you described is more of a concierge service, on which DocJay is the much more qualified expositor.

    • #15
  16. Fake John Galt Coolidge
    Fake John Galt
    @FakeJohnJaneGalt

    DocJay:

    Devereaux:No, DocJay, we won’t. We’ll get 2-tier medicine, which has already begun. And no one who has any ability to avoid it will. The market works, even when things are at their worst, alternatives appear. The government may holler and scream, but there will be alternatives.

    I am sure you are aware of the several out-of-country surgical operations, wherein you get the surgery a whole lot cheaper, and that includes the cost of the airfare. But there isn’t all the liability law to “protect” you. Eric Garner died for selling “loosies”, something that technically the state cannot prove, as there is no tax stamp on the individual cigarette. Still, corrupt courts and administrations simply disregard that.

    But SOS is right about one thing – government “involvement” is the kiss of death – to pretty much anything it gets involved with.

    Hope you’re right. I have another 15 years left barring illness/death/insanity.

    Not sure you are going to make 15 on the insanity one.  As the libs take control your personality type will be declared insane.  The funny part will be that personality types that were traditionally considered insane or a mental issue will now be considered the norm.

    • #16
  17. Ed G. Member
    Ed G.
    @EdG

    DocJay:Dev/KP, the insuranceindustry has plans to shut down all alternatives not in their control.Now that there are just a few big players and the smaller insurance companies have been lessened/eliminated by the expensive care act, the lobbyists for these giants wield immense influence.They wrote vast swaths of the ACA and effectively are running the show going forward. Government picks the winners and losers.Lobbyists own the government.As the medical industry challenges the establishment you will see increasing laws/regulations designed to stifle the free market.I have little optimism for the future of our dysfunctional system.Hope you’re right Dev.Hope I’m wrong.

    Yeah, the insurance industry is like Vito Corleone from Godfather 2 – handling Don Fanucci and his friends too all in one masterstroke. Insurance companies help the patients by mitigating real risk, and they also help the providers both by taking on the risk/cost of patient collections and by providing a pipeline of customers. After awhile, they got so useful that they also accumulated power. Now despite a decrease in the value proposition, the value proposition remains while the alternatives are gone and patients and providers alike can’t go elsewhere even if they want to.

    • #17
  18. Devereaux Inactive
    Devereaux
    @Devereaux

    The King Prawn:Dev, these plans provide a network of doctors that accept (I presume) a negotiated cash price for the services. Paying into the service buys access to the list and the cash price which is probably around the insurance payment price but without the paperwork and headache. What you described is more of a concierge service, on which DocJay is the much more qualified expositor.

    You are right – I was thinking more of the concierge type. Don’t really have exposure to all the different versions of medicine. But I am sure that there are other than the more traditional versions, if for no other reason than that the traditional ones have become SO burdened with paperwork (mostly demanded by government, and followed closely by insurance companies) that it becomes hard to actually care for the patient. What ought to be the center of concern becomes almost a peripheral issue.

    • #18
  19. JimGoneWild Coolidge
    JimGoneWild
    @JimGoneWild

    DocJay:We could handle it but we wont. The gigantic mess of medicine will collapse and we will get single payer eventually.

    Please sir, may I have more.

    • #19
  20. The Reticulator Member
    The Reticulator
    @TheReticulator

    Devereaux: It is my sense, however, that people are finally getting tired of government over reach.

    Oh, they are. People have been getting tired of it since the 1930s.  Those who were glad to have government help for farmers soon wanted government to bug out.  Look at the history of the Farm Bureau organizations of the time.  Clark Brody in Michigan told about this, and about how like-minded farmers in Michigan reacted, although some of this story is in his private papers and never made it into his official memoirs.   Funny thing, though.  People were tired of it, but the government didn’t get out.

    • #20
  21. Arahant Member
    Arahant
    @Arahant

    The Reticulator:Funny thing, though. People were tired of it, but the government didn’t get out.

    They never do.

    • #21
  22. Devereaux Inactive
    Devereaux
    @Devereaux

    Arahant:

    The Reticulator:Funny thing, though. People were tired of it, but the government didn’t get out.

    They never do.

    Yet the ramifications of THIS kind of comment, if true, (and I’m not claiming it is not) are truly frightening. Rather like what Sam Adams faced in his lifetime.

    • #22
  23. Arahant Member
    Arahant
    @Arahant

    Devereaux:Yet the ramifications of THIS kind of comment, if true, (and I’m not claiming it is not) are truly frightening. Rather like what Sam Adams faced in his lifetime.

    Exactly. They never do get out…willingly. They must be forced out.

    • #23
  24. Sisyphus Member
    Sisyphus
    @Sisyphus

    It is time to push again for the repeal of Congress’ exemption from the Unaffordable Care Act.

    In the other hand, you expected to live forever?

    • #24
  25. Cato Rand Inactive
    Cato Rand
    @CatoRand

    I’m trying to figure out what the problem is.  Why shouldn’t the government seek to recover what it laid out if the recipient had assets?

    • #25
  26. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    Cato Rand:I’m trying to figure out what the problem is. Why shouldn’t the government seek to recover what it laid out if the recipient had assets?

    For a welfare program, that makes sense. But not for an insurance program. Obamacare has used Medicaid as a kind of substitute insurance program for people who aren’t poor. In the process, it has pushed people unwittingly into a situation in which large medical claims can wipe them out financially. This is precisely the situation people try to avoid by buying medical insurance — yet the government has steered them away from insurance. So after people die, the government confiscates their property. Pre-Obamacare, this would not have been the case. They would have bought individual policies. Or, in the worst case, if they had been uninsured, large claims would have forced them to go through the bankruptcy process.

    Adding insult to injury, the government never told them this was a possibility when they signed up — most likely because the agency in charge never even understood how the laws work.

    • #26
  27. Fake John Galt Coolidge
    Fake John Galt
    @FakeJohnJaneGalt

    Cato Rand:I’m trying to figure out what the problem is. Why shouldn’t the government seek to recover what it laid out if the recipient had assets?

    Of course the government should trick taxpayers to take all they own after they die.

    After all they did not build that!

    • #27
  28. Cato Rand Inactive
    Cato Rand
    @CatoRand

    Son of Spengler:

    Cato Rand:I’m trying to figure out what the problem is. Why shouldn’t the government seek to recover what it laid out if the recipient had assets?

    For a welfare program, that makes sense. But not for an insurance program. Obamacare has used Medicaid as a kind of substitute insurance program for people who aren’t poor. In the process, it has pushed people unwittingly into a situation in which large medical claims can wipe them out financially. This is precisely the situation people try to avoid by buying medical insurance — yet the government has steered them away from insurance. So after people die, the government confiscates their property. Pre-Obamacare, this would not have been the case. They would have bought individual policies. Or, in the worst case, if they had been uninsured, large claims would have forced them to go through the bankruptcy process.

    Adding insult to injury, the government never told them this was a possibility when they signed up — most likely because the agency in charge never even understood how the laws work.

    I guess I understand the distinction you’re drawing, but the way I look at it, if you’re paying for it, it’s an insurance program, if the government is paying for it, it’s a welfare program.  I’m not, by the way, defending the Obamacare bait and switch you’re objecting to.  Clearly people ought to have clear information about their options and the consequences, and if the government is misleading them, that’s a problem.  But if you choose, either just because it’s got a lower current cost or because it’s the only thing you can afford, to go the welfare route, I don’t have a problem with the government seeking to recover those expenditures from your assets down the road.  Frankly, I’d be fine with that with other welfare programs as well.  Basically, if it got redistributed to you, and you later have the means to repay it, I don’t see why you shouldn’t.

    • #28
  29. Cato Rand Inactive
    Cato Rand
    @CatoRand

    Fake John Galt:

    Cato Rand:I’m trying to figure out what the problem is. Why shouldn’t the government seek to recover what it laid out if the recipient had assets?

    Of course the government should trick taxpayers to take all they own after they die.

    After all they did not build that!

    Here all you’re talking about is the government recovering the handouts it gave out earlier.  It’s not a Warrenesque claim that you owe everything you have to the government.  It’s more like a debt.  The government fronted you $X when you needed it, and now that you’re flush, you should pay it back.

    • #29
  30. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    Cato Rand:But if you choose, either just because it’s got a lower current cost or because it’s the only thing you can afford, to go the welfare route, I don’t have a problem with the government seeking to recover those expenditures from your assets down the road. Frankly, I’d be fine with that with other welfare programs as well. Basically, if it got redistributed to you, and you later have the means to repay it, I don’t see why you shouldn’t.

    Here’s a further problem: Obamacare exchanges have enrolled 10 million people in Medicaid, and studies show that 80% of them had private insurance before. We know that the overwhelming majority of these people had their plans pulled out of the market because Obamacare made them illegal. Medicaid is known to have worse medical outcomes than having no insurance at all. First, the government took away their plan. Then the government comes to take their house. It’s not welfare as usual — it’s one more example of how perverse and terrible Obamacare is for liberty in the abstract and people’s real lives in the here and now.

    • #30

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