House Panel Hunts the Elusive 'Millionaire on Medicaid'

Oct 03, 2011 01:52:48am

A House subcommittee convened a hearing September 21 on alleged abuses of Medicaid long-term care eligibility rules.  None of the four witnesses identified significant gaming of the system by the well-to-do, although the "elder law bar" came in for some abuse.  

In his opening remarks, Rep. Trey Gowdy (R-SC), chair of the House Oversight and Government Reform Subcommittee on Healthcare, contended that some are trying to "turn the [social] safety net into a hammock or a trampoline."

"Medicaid is not being used solely by the indigent," Gowdy said.  "Income and asset tests are easy to circumvent and abuse.  In fact, a cottage industry has arisen seeking to educate the wealthy on how to transfer or hide assets so taxpayers can pay for their long-term care."

"Millionaires should not be on welfare," Gowdy concluded.

The committee heard from four witnesses, including one former elder law attorney.  Only one witness appeared to think that abuse of the Medicaid eligibility rules by the well-off was much of a problem, and even she defined the alleged abusers as those with a few hundred thousand dollars in assets beyond their home. 

Moses Says Middle Class Eligibility Is the Problem

Lead witness Stephen Moses, President of the Center for Long-Term Care Reform, chose to focus the committee's attention on reforming Medicaid's "generous" eligibility rules that allow the middle class to qualify, and he characterized "egregious Medicaid planning" by the wealthy as just "the tip of the iceberg."

"Income almost never disqualifies anyone from Medicaid long-term care eligibility," Moses told the committee, and he went on to claim that there is "no meaningful limit" on how many exempt assets applicants may retain and still qualify for benefits.

"Because of these very generous basic eligibility rules, the vast majority of America's elderly qualify easily for Medicaid when they need long-term care," he said.  Such easy qualification discourages most people from planning early to "save, invest or insure for long-term care."   

As an example of the changes he would recommend, Moses claimed that Medicaid could save up to $30 billion a year if people had to consume their home equity before qualifying for public benefits.

David A. Dorfman, who said that he was a "Medicaid planning attorney" in New York until this past January, called the alleged abuse of Medicaid eligibility rules by the well-heeled "a myth.  That's not really what's happening.  That's not what any of my clients wanted.  None of them wanted to game the system."

"Soup kitchens are free and nobody checks five years' worth of bank statements, and millionaires don't go there for lunch," Dorfman said.  "We can't mandate abject poverty, because that's what people are terrified of.  And if that has to be created, no matter what the rules, people will do whatever they have to do to get the necessary health care for their loved ones, or they'll suffer and die without care. . . Let's create a system that invites people in who need health care, not one that punishes them."

The third witness, Janice Eulau, the Assistant Administrator of the Suffolk County (New York) Department of Social Services, was the only one to claim that alleged abuses of the Medicaid system are a significant problem.  Conceding that her county is relatively affluent, Eulau said that "people often come in and they have total resources of $300,000 to $400,000 beyond their home" and other exempt assets.  She singled out promissory notes as a legal tool most often used, at least by single clients.   For couples, she said spousal refusal is the most common method for preserving resources.

The last witness, Julie Hamos, Director of the Illinois Department of Healthcare and Family Services, also declined to climb aboard the "millionaires on Medicaid" bandwagon.  "What we are finding in Illinois is that this is more of a middle class family issue than millionaires.  Let's say there's a saving of a little pot of money, say $100,000, the family doesn't want all of that to go into nursing home care."

Hamos said that there is bipartisan acceptance of these practices in her state.  She then said that her department was looking to another front to exact savings: ending Medicaid's institutional bias. 

"Millionaires Don't Want Medicaid"

In questioning, Rep. Gowdy tried to trap Dorfman into conceding that a program designed for the poor is nevertheless aiding the non-poor.  Dorfman replied that "Medicaid is not for the indigent, but for those who qualify for the program."

Dorfman told Gowdy that his picture of millionaires who voluntarily impoverish themselves so their children can have an inheritance and taxpayers can pay for their long-term care was "not the typical experience across 20 years of doing Medicaid planning, although there are certainly exceptions."  Later, Dorman said, "Millionaires don't want Medicaid . . . they want fancy care, they want care that they control."

Gowdy also asked Moses to explain spousal refusal.  After pointing out that it is used primarily only in New York and Florida, Moses added that "The elder law bar, in frequent annual conferences, urges the rest of the country to take advantage of what they consider a 'right' under the federal law to simply have the spouse refuse to contribute to the cost of the care.  It's very, very expensive in New York and Florida and frankly I don't think most of the other states have the impunity to try to pull that off."

Towards the hearing's end, Rep. Elijah Cummings (D-MD) closely questioned Moses about his professional affiliation.  "When I asked my staff to learn more about you to try to understand where you were coming from," Cummings said, "it seems that your views are really nothing more than the views of the insurance industry." 

Cummings then tried to determine the sources of funding for Moses's Center for Long-Term Care Reform.   He established that the Center is a for-profit entity that is supported at least in part by the long-term care insurance industry, but Moses repeatedly refused to name his corporate contributors, although he did say they do not include David and Charles Koch, brothers who have funded conservative and libertarian advocacy groups.   

Committee spokesperson Jeff Solsby said the hearing was "designed to raise awareness" and that no legislation was immediately planned.

The hearing, titled "Examining Abuses of Medicaid Eligibility Rules," took place on September 21, 2011.   For hearing documents, including a link to the YouTube video of the hearing, click here.