Medicaid Costs

Many Americans benefit from Medicaid every year, and the program is intended to provide health insurance and other medical services only to those individuals who cannot afford them. Individuals with incomes below the federal poverty line or who have less than $2,000 in cash or investments are eligible for Medicaid. The Sixty-nine million people who currently use Medicaid cost federal and state governments over $400 billion last year.

Only 9% of Medicaid beneficiaries are elderly, though elderly beneficiaries account for 23% of Medicaid’s cost. Many of the elderly beneficiaries are still able to legally pass large amounts of assets to their heirs in part because Medicaid’s federal poverty-income is calculated after subtracting medical expenses. Many states also allow Medicaid recipients to retain a set amount of home equity, home furnishings, term life insurance, and an automobile.

According to Stephen A. Moses, head of the Center for Long-term Care Reform in Seattle, federal and state governments could save $30 billion a year if Congress required Medicaid beneficiaries to spend down the equity on their homes prior to receiving Medicaid for long-term care.   

See Thomas G. Donlan, A Medical Mess, Barron’s, Jan. 14, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.