Those with means continue to abuse Medicaid

Staying Ahead

September 16, 1996|By Jane Bryant Quinn

MEDICAID PLANNING has fast become a preoccupation of a savvy middle class. It pops up when elderly people think about nursing homes. They may be able to pay the bill, but they'd prefer to leave the money to their kids.

If you're poor and enter a nursing home, you're supported by the government-funded Medicaid program. So the middle classes consult a lawyer to learn how to make themselves look poor -- by giving money to their kids, or by investing in assets that Medicaid doesn't count. The family winds up with the senior's assets. The taxpayers foot the bill.

This game can't last forever. Medicaid, although run by the states, is partly funded by the federal government, and federal spending is going to decline.

If the states hope to give even minimal medical care to the truly poor, including the elderly poor, they will have to work harder to block the middle-class phony poor from overrunning the rolls.

In this effort, Congress has given an attention-getting weapon to the states. The new health-care bill tries to turn some aspects of Medicaid planning into misdemeanors and felonies, worth up to five years in jail.

No state will toss 85-year-old nursing-home candidates into the slammer. But they could be fined up to $25,000 and have their Medicaid eligibility revoked for a year. The real jail bait might be the adult children who encourage Medicaid-planning schemes in order to get their parents' money.

The aiders and abettors -- lawyers, accountants, financial planners, insurance agents -- would be equally at risk.

Much as I support its intent, the new law looks like a loser.

First, it has serious drafting errors that make portions of it uncomprehensible. Almost certainly it will be challenged with the first attempted prosecution.

Second, you can't always know whether an act that divests you of assets will turn out to be criminal. Maybe it will and maybe it won't, depending on what Medicaid decides. Maybe this can be clarified with regulations, but maybe not.

Third, as the law now stands, the elderly can probably preserve most of their assets without even giving them away. Take a married couple, where one goes into a nursing home and the other doesn't. Medicaid doesn't count the house when deciding whether they're rich or poor. You could take all your cash, use it to buy a larger house and still present yourself as destitute. The new law does nothing about that at all.

I understand the frustration that led to new criminal provisions. For several years, Congress has been trying to curb abusive Medicaid planning, yet for every loophole closed, Medicaid lawyers open two more.

Pub Date: 9/16/96

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