NCPA - National Center for Policy Analysis

SOME HEIRS FIND A COSTLY SURPRISE: BILL FROM MEDICAID

June 27, 2005

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

The debate over estate recovery is part of the growing battle over the high cost of Medicaid -- an estimated $290 billion in 2004, or 7.9 percent higher than the previous year. Medicaid covers nearly half of the nation's nursing-home bills.

In 1993, the federal government began ordering states to place claims on estates but many states declined to follow the federal order or did so half-heartedly. Now Congress is aiming to trim federal Medicaid spending by $10 billion over five years and states are feeling the cost crunch.

In recent study, commissioned by the AARP Public Policy Institute, researchers found many states are defining estates more broadly and capturing assets protected in the past:

  • Total collections by the 46 states providing data have more than tripled since 1995 to $347.4 million a year; Louisiana collected the least with $85,907 while California, the nation's most populous state, recovered the most, nearly $54 million.
  • Estate recovery amounts are modest but not insignificant; the average and median recovery per estate amounted to $8,116 and $5,081 respectively.
  • Rules and practices vary widely from state to state and the average estate recovery ranged from $93 in Kentucky to $25,139 in Hawaii.

Besides a house, estates might include other assets that do not count against a person's eligibility for Medicaid, such as a car, a small bank account or certain life-insurance policies. State officials promoting estate recovery say Medicaid is a program for poor people, so if beneficiaries leave behind significant property it should be used to lessen taxpayers' burden.

Source: Sarah Lueck, "Some Heirs Find A Costly Surprise: Bill From Medicaid," Wall Street Journal, June 24, 2005; Naomi Karp, Charles P. Sabatino and Erica F. Wood, "Medicaid Estate Recovery: A 2004 Survey of State Programs and Practices," AARP Public Policy Institute, June 2005.

For text:

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

 

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