 LTC Bullet: Medicaid Oversight Friday, July 11, 2025 Seattle— LTC Comment: Medicaid should help the poor, but crushes them. The affluent should pay for their own LTC, but don’t. Then they take the best Medicaid offers. What’s wrong and what to do? After the ***news.*** *** LTC PROVIDERS struggle to provide
decent LTC while Medicaid pays too little to meet that minimal standard.
Now the federal government wants to cut back even more. Fighting to keep
the already inadequate status quo is not the answer. It’s high time to
fight back. So I wrote this column for McKnight’s LTC News
suggesting how the LTC profession should proceed. Check it out and let me
know what you think: “The
best defense is a good offense,” *** LTC BULLET: MEDICAID OVERSIGHT LTC Comment: We had a chance to address the inequities in Medicaid LTC with the “One Big Beautiful Bill.” But that opportunity passed. What should we do now? Here’s one way to save billions and improve Medicaid for those who need it most. “Medicaid Oversight” Medicaid is the talk of the town. Republicans want to “fix” it (reduce costs). Democrats want to “save” it (no change). But Medicaid’s biggest component and its dirty little secret go unaddressed. Medicaid funds 61 percent of long-term care (LTC) in the USA and LTC consumes 37 percent of state and federal Medicaid spending. But only six percent of Medicaid recipients use LTC and spending on them is nine times higher than for non-LTC users. So LTC overweighs Medicaid spending. Yet the big funding debate just concluded in Washington, DC ignored LTC. Advocates and opponents of the One Big Beautiful Bill (OBBB) fought over the 63 percent of Medicaid dollars that go to the other 94 percent of recipients. That’s important of course, but it should not have excluded LTC. What about LTC should analysts and lawmakers consider more closely? The three things everyone knows about LTC are that
But Mark Twain said “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” That adage applies perfectly to Medicaid and LTC. Which things most people think they know about LTC are not so? And how should that information become part of the mission to improve Medicaid while reducing its cost? LTC wipes out the savings of millions of Americans? Not so. Only 12.9% of LTC spending comes out of people’s pockets and half of that is income (mostly from Social Security) that people already on Medicaid have to pay to offset the cost of their care. Only $1 in $15 (6.5%) could come from savings. There is no evidence of widespread catastrophic LTC spend down, only anecdotes. Medicaid LTC eligibility requires low income? Not so. Medicaid either deducts private health care costs from income before applying a limit or it allows income diversion trusts. So, high-income applicants with commensurately high private expenses qualify routinely. Medicaid LTC eligibility requires low assets? Not so. Most large assets seniors own, such as home equity, retirement savings, one business, a vehicle, personal belongings, and others, are exempt from the asset test. Mandatory estate recovery is only lightly enforced and easily avoided. Countable assets, such as cash, stocks, bonds, etc., over $2,000 preclude Medicaid LTC eligibility? Not so. Countable assets are easily reduced or eliminated entirely by using them to purchase exempt resources, a common technique explained in “Medicaid’s $100+ Billion Leak.” Medicaid LTC eligibility serves the poor, aged and disabled best? Not so. Medicaid income and asset spend down rules quickly crush the needy who have few resources and little advice from financial advisors on how to qualify for Medicaid without devastating financial consequences. All Medicaid recipients receive the same care? Not so. Poor, aged and disabled recipients tend to live in neighborhoods with nursing homes and other LTC providers that are most heavily dependent on Medicaid’s low reimbursement rates resulting in deficient access and quality. Middle class and affluent people would never seek Medicaid LTC eligibility due to its poor reputation for access and quality? Not so. The well-to-do who self-impoverish artificially hold back “key money” to pay privately before they convert to Medicaid. This ensures their access to the best nursing homes and other LTC providers that are desperate to attract private payers at much higher rates than Medicaid pays. Once in, they can’t be removed when their payment source changes. Medicaid’s dirty little LTC secret is that it punishes the poor and rewards the affluent leaving the latter with little reason to worry about LTC risk and cost. This is why few plan for LTC and most end up on Medicaid when care costs escalate beyond their incomes. Is there one thing the Congress could do that would save money and reduce this inequity? Yes. Apply the same rule to asset spend down that already applies to income. High-income people qualify for Medicaid LTC, but only after they prove they spent down for actual medical or LTC expenses. High-asset people, however, are under no such obligation to spend down for care. They can spend excess countable assets to purchase exempt resources, becoming eligible while hiding their wealth for heirs to inherit. This oversight in Medicaid LTC financial eligibility rules lets the affluent take the best of what Medicaid offers and leaves fewer resources in the program to serve its more appropriate, needier recipients. It also creates a moral hazard by eliminating the need for people to plan early for LTC by saving, investing, or insuring against the risk. Solution? Require that Medicaid LTC asset spend down be for private medical or LTC expenses, not just to buy exempt assets. Based on a 2014 Government Accountability Office report, we estimate this could save Medicaid $100 billion or more every two or three years as burgeoning numbers of elders move through the LTC financing system. Confronting LTC’s realities instead of accepting its commonplace fallacies is a foolproof way to save money and improve Medicaid for the vulnerable people who need it most. |