John Goodman highlights 4 reasons to reform Medicaid. Number 3 caught my eye:
3. An entire consulting industry now teaches how to do financial planning around Medicaid’s long-term care offerings, and not surprisingly, taxpayers now finance 40 percent of long-term care services in America through Medicaid. (Sources: The Center for Long-Term Care Reform: Medicaid Planning Quotes and Kaiser Commission on Medicaid and the Uninsured: Medicaid and Long-Term Care Services and Supports. March 2011)
This strongly implies that purposeful spend down to Medicaid is a major reason that Medicaid spends so much on LTC. This is the opposite message provided in a post I wrote a couple of weeks ago based on purposeful spend down to Medicaid: the evidence suggests it is uncommon. My post was based on a peer reviewed paper that reported on a community-based representative sample of the elderly in the mid-1990s and found:
- Around 4 in 10 were spent down in the community and eligible for Medicaid financing of NH care. There are far more poor elderly than there are rich elderly.
- Around 2 in 10 could never qualify for Medicaid due to their income being above their state’s Medicaid income test.
- Around 4 in 10 respondents had enough assets that they could have plausibly benefited from purposeful spend down. Of these, only 1 in 10 of them had a trust of any type (respondents were asked about trusts generally, and not in relation to spend down). Most had assets equal to several months of NH costs, and not massive wealth.
So, 4% of this sample had a potential spend down motive and a trust of any type, the most common way to accomplish purposeful spend down. I don’t doubt that there are people who fraudulently obtain Medicaid financing for a nursing home. I explicitly doubted that this is very common, and that is why I did the study written about above. Based on the results of that paper, I really doubt that purposeful spend down is a large problem, and I believe that focus on this red herring detracts our attention from figuring out how to improve our long term care system.
A serious question:
- Is there a peer review study that documents the prevalence of persons using such techniques to qualify themselves for Medicaid?
A serious offer:
- If you are sure that I am wrong and that the key to fixing Medicaid and long term care is ending such shenanigans, write me and lets develop a way to study this and prove it with data that can lead to a peer reviewed paper.