 LTC Bullet: How Real is Medicaid Asset Spend Down? Friday, January 9, 2026 Seattle— LTC Comment: Does Medicaid asset spend down devastate everyone who needs long-term care or does it crush the poor, but exempt the well-to-do? We explore; you decide; after the ***news.*** *** ARGENTINA: Damon and I are about to take a rare vacation together. There will be a hiatus in our regular bi-weekly LTC Bullets and weekly LTC E-Alerts, but we will continue to send our daily LTC Clippings. We’re headed to Bariloche, Argentina from which we’ll journey by public transportation through Patagonia to Ushuaia, South America’s southernmost city, then on by ship to Antarctica. In the meantime, we’ll have full phone and internet connectivity, so keep your comments and questions coming. The Center for Long-Term Care Reform’s initiatives on behalf of responsible LTC financing policy will resume fully upon our return. *** *** VENEZUELA: Fifty-eight years ago I arrived in Caracas, Venezuela with thirty fellow Peace Corps volunteers to begin a two-year stint in an agricultural reform program. Venezuela had experienced its first ever peaceful, democratic transition of government only ten years before. Yet it seemed like there were teenagers with submachine guns on every corner. Rumor (untrue) had it that two PC volunteers had been shot and killed recently after accidentally running a police checkpoint. It was like the wild west for this newly minted Poli Sci BA and my now-late-wife, Judith. We settled in to our site three hours by bus from Caracas with water we had to boil, electricity only four hours at night, and little access to groceries beyond bodegas selling beer, sardines and a hard cheese we were told not to eat. When the Venezuelan agricultural extensionist and home demonstrator we were supposed to back up didn’t make an appearance, we improvised, teaching in the elementary school, working with kids in a 5V club (like 4H), and building furniture (me) and teaching sewing (Judy). Two kids, Vidal (10 years), now my son’s middle name, and Dolores, aka “Goofy,” (8 years) hung out at our house most of the time. Fifty years later, Dolores, who at the time lived in a mud house, but is now a nun in Colombia, tracked me down on the internet. We had a reunion a couple years ago in Bogota and we stay in touch. So, imagine my chagrin watching Venezuela collapse economically over the past decades causing untold misery for the people in Carmen de Cura, Estado Aragua, with whom I worked and got to know so well. I hope their long repression and suffering will end at last with the departure of Maduros and the death, hopefully, of Chavismo, although so much remains at risk. Viva Venezuela Libre! ***
LTC BULLET: HOW REAL IS MEDICAID ASSET SPEND DOWN LTC Comment: How real is Medicaid asset spend down? It’s a critical question. If, as the conventional wisdom holds, people all across America are spending down their life’s savings on LTC before they get any help from Medicaid, we have one kind of problem. It cries out for even more government money and regulation, the usual appeal. But if Medicaid asset spend down only crushes the poor and financially marginal people while giving the middle class and affluent an asset-spend-down off ramp, as I believe, the problem is totally different. That suggests we should reconfigure government LTC spending so it helps the needy first without discouraging everyone else from planning privately to meet LTC risk. The Center for Long-Term Care Reform has tackled the Medicaid asset spend down question many times over the years. See, for example, most recently, “Understanding Medicaid Spend Down,” July 12, 2024. Or check out the rest of our 15 “Medicaid Spend Down Bullets” dating back to June 15, 1999. I summarized the issue in a paper titled “The Myth of Medicaid Spend-Down” in 1991. But today, let’s take a fresh look at the spend down issue. On December 4, 2025, JAMA Network Open published “Asset Spend-Down and Medicaid Enrollment in Nursing Homes,” by Gabriella Aboulafia, MPP1; Amanda C. Chen, PhD, and David C. Grabowski, PhD. I sent the following letter to the article’s “corresponding author,” Ms. Aboulafia. Later I received a thoughtful response from one of the other authors, the influential, virtually omnipresent scholar, David Grabowski. I urge you to read the subject article and my letter. Dr. Grabowski’s feedback and my reply to him may be a topic for another time if he agrees. In the meantime, here’s my letter. Your comments are welcome. December 16, 2025 Gabriella
Aboulafia, MPP Dear Dr. Aboulafia, I am writing in response to your article titled “Asset Spend-Down and Medicaid Enrollment in Nursing Homes” published December 4, 2025 in JAMA Network Open. In that article, you and your co-authors addressed the issue of nursing home asset spend-down leading to Medicaid eligibility. You explain that your “main outcome was whether an individual spent down their assets and became enrolled in Medicaid during their nursing home stay.” (p. 1/11) You define “spend-down in nursing homes as a transition from non-Medicaid enrolled to Medicaid enrolled.” (p. 3/11) You conclude: “Of those who were initially not Medicaid enrolled, 16.4% spent down their assets during their stay and enrolled in Medicaid ….” (p. 1/11) You infer: “This finding raises concerns both about individuals impoverishing themselves because of the high cost of care and the long-term financial sustainability of the Medicaid program.” (p. 1/11) Although it is not stated explicitly in your article, the clear implication is that people spend down their assets for private nursing home or other care before becoming eligible for Medicaid. That is not necessarily true. There are many ways for middle class and affluent people to “transition from non-Medicaid enrolled to Medicaid enrolled” without expending their assets for long-term care (LTC). While Medicaid has a very low limit on countable assets, usually $2,000, most large assets seniors own are exempt, such as home equity, retirement savings, a vehicle and many more. Excess countable assets are easily excluded from consideration by using them to purchase exempt resources as I explain in “Medicaid’s $100+ Billion Leak.” Besides this simple method of artificial self-impoverishment, Medicaid planning specialists use special irrevocable income-only trusts, Medicaid compliant annuities, and other legal techniques to qualify much wealthier people for Medicaid. Your article does mention one method of “shielding assets,” but as you point out, asset transfers are rare and small compared to the commonplace practices just described. You observe that “individuals who once spent their savings on nursing home care now may deplete their assets in the assisted living sector and then transition to a nursing home at or near Medicaid eligibility.” (p. 8/11) That is true, but the same methods people use to qualify for Medicaid without spending down assets while institutionalized are equally effective while they remain in the community. In fact, Medicaid planners routinely advise families to reconfigure their loved one’s income and assets long before care is needed. They do this not to ensure Medicaid eligibility upon nursing home admission. Rather, paying privately for a short time before converting to Medicaid ensures access to top-quality care. The best nursing homes and home health agencies compete aggressively for private patients who pay on average 150 percent of the Medicaid reimbursement rate. By retaining “key money” in this way, middle class and affluent people lock in access to better nursing homes than poor and financially borderline individuals, who lack resources to pay privately for a while, can obtain. Transition to Medicaid LTC eligibility does not necessarily involve expending assets for care. The peer-reviewed literature you cite rarely acknowledges this fact, but the evidence adduced above establishes it. Assuming transition to Medicaid requires high private spending leads to unfounded assumptions about ruinous LTC spending that I rebut in “The Fallacy of Impoverishment,” “Better Long-Term Care for Billions Less” and “Long-Term Care: The Solution.” I respectfully invite you to consider these points and I would welcome the opportunity to discuss them with you. Sincerely Steve Moses Stephen A.
Moses |