ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Monday, December 25, 1995 TAG: 9512270028
SECTION: MONEY PAGE: 16 EDITION: HOLIDAY
DATELINE: NEW YORK
SOURCE: JANE BRYANT QUINN WASHINGTON POST WRITERS GROUP
A tremendous tussle is about to take place, between the middle class and the poor. They'll be fighting over whatever is left of the Medicaid program, once Congress and the president come to terms over how to cut its soaring cost.
The middle class normally doesn't think it has a stake in Medicaid. This program, funded jointly by the federal government and the states, pays the medical bills of the poor. The feds write the program's rules, but the states have some discretion over who's covered. One group qualifies everywhere: indigent residents of nursing homes.
That's where the middle class comes in. Many nursing-home residents don't start out poor. They pay their own bills until their savings run out, which often isn't long considering annual nursing-home costs range from $30,000 to around $50,000, depending on where you live. After that, they're supported by Medicaid.
A small but growing portion of residents turn themselves into ``fake poor,'' to qualify for taxpayer aid. They shift their assets to their spouse or adult children, using various legal tricks. That forces the public to cover their costs.
``Virtually anyone, regardless of income or assets, can get on Medicaid simply by getting good legal advice and skirting the eligibility rules,'' says Stephen Moses, director of research for LTC Inc., in Seattle, a company that designs and sells nursing-home insurance.
Since the program's inception, Medicaid spending has risen by roughly 10 percent a year. One-third of its 1995 $154 billion budget went to support the elderly in nursing homes.
The Republicans want to end the guarantee that the poor - including the nursing-home poor - automatically qualify for coverage. They'd let the states decide whom to cover, drawing on a limited package of federal funds. Estimated savings: $163 billion over seven years.
President Clinton wants to maintain the guarantee and the federal control to prevent any hardhearted state from ditching the truly poor. But he'd permit state experimentation with new programs and cap average federal spending at a specified sum per person - saving an estimated $54 billion.
No matter how this debate turns out, Medicaid will have less money than if no change had been made at all. Over time, the states will be facing such choices as paring the number of poor who qualify for coverage, putting more of them into health maintenance organizations and covering fewer medical services.
That's when the tussle will start. In one corner is the 800-pound gorilla known as the middle class, backed by influential operators or nursing homes. In the other corner are the true poor, with no money to give to political campaigns, hence no influence in Congress or the statehouses.
If the middle class keeps or increases its share of the Medicaid pool, more of the true poor - including the elderly poor - are going to be squeezed.
Grabbing too much from the poor, however, won't play well in the newspapers. So I'd guess that the middle class will have to accept at least some cuts. They will feel it three ways:
Medicaid may pay nursing homes less money per person. Over time, this could lower the quality of nursing-home care. Consequently, you'll be more inclined to search out home care. Seniors with mild disabilities might gamble on ``assisted living,'' where you have your own house or apartment but get meals and some forms of physical help.
Medicaid pays for some forms of home care, and so do many nursing-home insurance policies. Otherwise, you cover the cost of these services yourself.
The feds or the states may pass stiffer rules to stop the fake poor from abusing the system. Supposedly, you don't qualify for full Medicaid coverage if you gave away property within the past three years. But plenty of loopholes exist for clever lawyers to exploit. So this rule will mean nothing until the loopholes are closed.
What's more, many states hardly bother to enforce the rule. They don't look very far to see if a Medicaid applicant, ``impoverished'' today, was well-off a month ago.
More states may bill your estate, to recover the money it spent on your nursing-home care. All states are supposed to be doing this already, under a law passed in 1993. But some states - specifically Florida, Michigan and Texas - are ignoring it, Moses says and many of the rest aren't very effective. The most aggressive: Oregon, California, New Hampshire, Massachusetts and Wisconsin.
This approach converts Medicaid from a grant to a loan, for everyone but the truly poor.
LENGTH: Medium: 88 linesby CNB