Elderly benefit most from Medicaid Welfare recipients unjustly targeted

February 17, 1993|By Tom Bowman | Tom Bowman,Staff Writer

Medicaid.

You hear the word and an image comes to mind: Poor people, single mothers on welfare, responsible for this ever escalating health care program that is driving the state into bankruptcy.

And you'd be wrong.

It is the elderly and disabled, many in the middle class, who are gobbling up most of the Medicaid dollars, as much as 70 percent in Maryland and around the country.

Today Medicaid can be found in the most unlikely places, such as Meridian Nursing Center, a stately establishment set in a leafy neighborhood in Severna Park. The annual cost of a room is $43,000. Nearly half of Meridian's 141 mostly middle-class residents rely on Medicaid to pay their bills.

Created in 1965 as part of President Lyndon Johnson's Great Society, Medicaid was designed to assure that low-income children and their parents got adequate medical care. But over the years, Congress expanded the program to cover two other groups regarded as vulnerable: the elderly and disabled, even those with higher incomes.

Today, though poor families still make up the vast majority of people on Medicaid, their routine medical care remains relatively inexpensive. The elderly and disabled are largely responsible for soaring Medicaid costs that are virtually crippling states like Maryland.

There are roughly 430,000 Marylanders on Medicaid, and they are expected to cost the state and federal governments nearly $2 billion next year. Some 43,000 elderly and disabled recipients will use up $1.4 billion of the money.

"Ten percent of the [Medicaid] population is consuming 70 percent of the costs," Health Secretary Nelson J. Sabatini told the state House Appropriations Committee recently. "That, as far as I'm concerned, is the heart of the problem we're facing."

The health secretary then hit the assembled lawmakers with a statistic that raised eyebrows and drew a startled "Whew!" Just 912 elderly and disabled patients cost the state $143 million in 1992.

The elderly and disabled account for so much of Medicaid spending because, quite simply, the care they require is expensive. They may need to be in nursing homes for long periods of time or stay in chronic care hospitals, where high-tech machines and other pricey technology can prolong lives.

One 85-year-old Maryland man spent the last few months of his life at a chronic care hospital at a cost to the government of $500,000. Among the most expensive Medicaid patients in the state last year were 150 infants, many ravaged by drugs and AIDS. Their annual care averaged $157,622.

"Medicine is literally working miracles," Mr. Sabatini said. "But miracles don't come cheap anymore."

The program was considered expensive enough in 1980, when it cost $380 million in Maryland, about a twelfth of the total state budget. Next year, Medicaid's $2 billion price tag will consume roughly a sixth of the budget. Many of the cuts in other state programs over the past three years have been made to pay Medicaid's rising bill.

Throughout the nation, the statistics are similar. The Medicaid program has become the fiscal version of a monster in a 1950s Medicaid's horror movie: So far, nothing has been able to stop it. But its future will be one of the key decisions facing President Clinton and Congress as they try to overhaul the nation's health care system.

Congress, in the 1970s and 1980s, opened up Medicaid to cover long-term care for the elderly and disabled at the behest of advocacy groups for both populations, especially the elderly.

Medicare, the federal health program for the elderly, covered only short-term hospitalizations. And societal changes were putting more Americans in nursing homes. Fewer elderly parents were moving in with their children, who increasingly lived in households with no one at home during the day.

By using Medicaid to pay for such long-term care, policy makers deliberately chose a program in which the states would help to pay the cost -- as much as 50 percent in many states, including Maryland.

Here's how the government steps in:

A middle-class elderly man might find himself entering a nursing home like Meridian and start paying the costs -- at Meridian, $43,000 a year -- on his own. He would rely on his annual income of perhaps $15,000 from Social Security and his pension, as well as savings and other assets of, say, $40,000.

After a year, he would find he could no longer afford the expense. Since his annual income was below the cost of a yearly stay at the home, he would be eligible for Medicaid once his assets dropped to $2,500. The government would cover the difference between what the man could pay and the cost of the room -- up to a point.

The state pays nursing homes a lesser rate, which averages $30,000 for a patient each year. The nursing home can either absorb the difference or pass it on to privately paying patients, which many nursing homes do.

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