WSJ: Some Heirs Find A Costly Surprise: Bill From Medicaid

[question everything]

Final Notice

Some Heirs Find A Costly Surprise: Bill From Medicaid

As Spending Surges, Officials Claim Assets of Estates To Recoup Nursing Costs

Fighting to Keep Mom's Home

By SARAH LUECK
Staff Reporter of THE WALL STREET JOURNAL
June 24, 2005; Page A1

As Medicaid spending surges, many states are embracing an aggressive way to recoup some of their costs: going after the estates of Medicaid recipients when they die.

State officials promoting the idea say Medicaid is a program for poor people, so if beneficiaries leave behind significant property it should be used to lessen taxpayers' burden. Critics call the practice "the other death tax" and say it's a posthumous slap at people who worked hard to hand down something to their children. Sometimes heirs are forced to sell the home of the deceased to pay the bill for years of nursing-home care. While alive, people on Medicaid are generally allowed to keep their homes. For many families, the Medicaid bills come as a surprise. Medicaid applicants are supposed to be told that their estates may be subject to claims after they die, but there's no system for warning heirs of the potential debt.

(snip)

The debate over estate recovery is part of the growing battle over the high cost of Medicaid, the health-care program for the poor that is jointly funded by the federal government and state governments. Altogether Medicaid cost an estimated $290 billion in 2004, a 7.9% rise from the previous year. Of that, $89 billion went to pay for long-term care including $46 billion for nursing-home care, according to Medstat, a health consulting firm. Medicaid covers nearly half of the nation's nursing-home bills. The Bush administration and Congress are looking for ways to reduce federal spending on Medicaid. Congress is aiming to trim it by $10 billion over five years.

Placing claims on estates isn't a new Medicaid practice -- the federal government has ordered states to do it since 1993 -- but it has taken a bigger role amid the cost crunch. Until a few years ago, many states declined to follow the federal order or did so half-heartedly. Some figured it was a waste of time because few Medicaid recipients leave behind estates of significant value. Others didn't feel like pressuring bereaved heirs, typically people of modest means, into selling the property of their loved ones.

(snip)

West Virginia has made a notable about-face. Twice the state took the federal government to court challenging the directive to do estate recovery. In court documents filed in 2000, the state called the practice "abhorrent" and a Web site for the state attorney general urges people to complain to Congress about it... But with the state facing a $156 million shortfall in its Medicaid budget, it said in May it intends to recover nursing-home costs from estates worth as little as $5,000... Previously West Virginia targeted only estates worth more than $50,000. "We're looking at all the ways we can to contain the costs," says Nancy Atkins, who runs West Virginia's Medicaid program.

(snip)

Roughly one in seven elderly Americans receives Medicaid coverage, including many who aren't in nursing homes. The bigger issue behind the estate-recovery debate is how generous Medicaid should be. Some Bush administration officials portray the program as a target of abuse by middle-class elderly people who adopt a veil of poverty to get cheap nursing care. "There is a whole industry that actually helps people shift costs to the taxpayer," said Secretary of Health and Human Services Mike Leavitt in a February speech.

(snip)

Write to Sarah Lueck at [e-mail]

URL for this article:
http://online.wsj.com/article/0,,SB111958313460968617,00.html