Sunday, February 21, 2016

Obamacare and Medicaid: looting your estate after you die

Courtesy of a link at Phlegmmy's place, we learn that Obamacare is forcing more and more people into the Medicaid program, and into a situation where their estates - the inheritance they hope(d) to leave to their loved ones - may be in danger of confiscation.

Prior to ObamaCare, state Medicaid programs (enacted in 1965 and expanded in 1993) offered help to poor people who couldn't afford health coverage but required states to recover their health costs from their estates when they died. However, state exemptions for personal goods and residences meant that such “estate recovery” efforts were modest as most people either had no other assets or had “spent down” those that they had to a minimal level.

But with the expansion under ObamaCare, more and more people will qualify for Medicaid without realizing that the coverage is really not free, but instead a hidden secured loan whose terms aren't explicit. As Carol Ostrom, the Seattle Times health reporter, explained:

... health insurance via Medicaid is hardly “free” ... It’s a loan, one whose payback requirements aren't well advertised. And it penalizes people who, despite having a low income, have managed to keep a home or some savings they hope to pass to heirs ...

. . .

Barry Blake lived with his mother who owned her own home and was covered under Medicaid. When she died, the state of Kentucky “took the house ... to be sold and pay those expenses” according to a suit Blake filed to recover it in 2009. The state also took the washer and dryer, their lawn mower, gardening tools, kitchen appliances and other personal items.

There's more at the link, with a lot more details of how this works.  Important reading.

Obamacare has also just raised individual tax rates across the board.  The more we learn about this program, and the more we see of its implementation, the more obvious it becomes that it was nothing but a scam on the US electorate from beginning to end.  It's raised medical costs, drained the pockets of millions of individuals who can't afford its premiums, and engendered tens of thousands of new bureaucrats dedicated to making our lives a misery.

Who will have the courage to end it?  I'd like to hear each of the current Presidential candidates commit themselves, one way or another.

As for the confiscatory policies of Medicaid under Obamacare, I suspect that for those who have sufficient time to make arrangements, creative planning will soon become the order of the day.  If John Smith learns he has incurable cancer, he might choose to buy a number of assets in his final months of life - for example, gold coins.  If those assets can't be found after he dies, the state won't be able to confiscate them.  Pity about that . . .  Of course, that will mean that taxpayers have to foot the bill;  but since we do so anyway under the present system, that won't be an additional burden.

There will doubtless be those who argue that we should take the assets of people who consume taxpayer resources in this way, to repay at least part of their debt.  I can understand that perspective from an economic point of view.  Unfortunately, that also impoverishes those who may be reliant on their parents for the final gift of a financial fresh start.  How many people do you know who relied on a bequest to put down a deposit on a home, or pay off a student loan?  I know several.  If they're unable to do those things, is the economy as a whole better off, or worse?  I suspect the latter.

There's also the problem of individuals demanding end-of-life care that may be uneconomic and impose crippling side effects.  I'm facing this reality myself (hopefully in the distant future) in terms of the long-term impact of my injury-caused disability.  Should I demand the maximum possible expenditure in a "do-everything, keep-me-alive-at-all-costs" approach?  Or should I accept that death is inevitable, one way or another, and I can do my family and friends a lot more good by going out as peacefully and painlessly as possible when the time comes, without imposing a crippling future financial burden on them to pay for care that will only give me an extra few months of life?  I incline towards the latter approach.  (Interestingly, so do many doctors, particularly because many treatments do nothing for the remaining quality of life as opposed to the remaining quantity.)

Spending money on extravagant end-of-life care also means that less is available for others needing health care.  As a doctor put it recently in the Wall Street Journal:

By paying without limit to slow any progressive disease ... we destroy other opportunities for promoting healthy and fulfilled lives. Without a dialogue about the value of costly interventions, we are failing to ask how our choices can do the most good for the greatest number of people. We forget that paying for one medicine is often synonymous with denying another group an equally necessary intervention – one that may add far more value.

Again, more at the link - and thought-provoking, too, despite the doctor being unashamedly utilitarian in his approach.



Anonymous said...

One of the reasons Matt Blevin won as governor of KY against a Democrat. He promised to get rid of this program if elected and has already started to disassemble it.


Divemedic said...

There is a finite amount of healthcare. For that reason, any system of delivering that care MUST happen. It will either happen through high prices of certain treatments (like a true free market system), through an outside agency choosing who will or will not receive care (in a truly communist system).
Obamacare is attempting the latter, but will fail, because the wealthy and well connected will always be able to afford to pay for better care, whether that is the free market or the black market, it will always be the case.

freddie_mac said...

Without a dialogue about the value of costly interventions, we are failing to ask how our choices can do the most good

Faced this a few years back with a cat. While the vet was willing to do whatever I wished, we did end up talking about quality of life and how aggressive treatments wouldn't cure the cancer, but simply delay the end. I've come to realize that the conversation shouldn't change as much for people; we need to get better at weighing the costs and benefits of various treatments.

Gail said...

Another way to thin the herd.

I've been told a doctor can refuse to no longer treat you now and that's acceptable.

Scary as hell but not so much for me but for the young ones growing into this.

Judy said...

Here's another point to consider. They, bureaucrats/government, can go back three to five years and recover assets. So, no, you can not liquidate your assets after get such a diagnosis thinking you are going to beat the system.

Divemedic said...

@Judy: So I liquidate my assets, convert them into cash, convert that cash into gold coins, and give them to unknown parties. How will the Feds recover asses that they cannot locate?
For example:
Lets say that a man, John, is diagnosed with an incurable disease, and is told he has less than a year to live, but perhaps 2 years with aggressive treatment.

He takes out a reverse mortgage on his home, netting him $150,000. He spends the next year apparently living a lavish lifestyle. In reality, he has converted the lion's share of the money he "spent" into $100,000 in cash. He leaves this cash in the care of his family.

He is hospitalized six months later, lives in the ICU for another three weeks, then dies, two years after his diagnosis, penniless and with a significant amount of medical debt.

Just how is the government going to track down and recover $100K in small bills two years after the fact?

Anonymous said...

divemedic@ 1:23

You are forgetting the war on cash and the recent push to track gold sales. The family might escape a full on bend over IRS audit but if
the .gov really wanted the money, they would find it.


John Galt said...

I heard this some years back. If you seriously wish to leave assets you need to do estate planning way before you retire. I'm sure its all very complicated and way so more now than then. Back then the general idea was 3-4 years BEFORE retirement is anticipated you convert everything....sell family. ( Better have people you actually trust). IN turn they just let you use your stuff until you die. Yet they must have a bill of sale. Anyway, you get the idea. Its the big ticket items that can be the most trouble. I think there is a way of using trusts to get around part of it. Anyway, you have to get value for what you sell. Can't sell your home to your child for $5. Having said all of this...I am not a lawyer or a tax advisor....results may vary.

Anonymous said...

Well played Big Government.

Thank you for writing about this, I had never considered this before. Its almost like the government should advocate people overeat and smoke to shorten their lives and gain the deceased estates quicker. Plus the shortened life also increases the deceased SS 'contribution' to be kept by the government.

Ruth said...

To some degree this has always been true. It's just that previously by the time you actually qualified for Medicaid you had likely already sold all of that (due to the total value limits on Medicaid eligibility), and if you hadn't the Medicaid folks made sure you understood it, which they could do because they weren't so completely overwhelmed.

Now (because they no longer base eligibility on total value, now it's JUST total income), there are SO MANY people being funnelled through the Medicaid process. Most of whom had zero expectation of having to apply for Medicaid in the near future (remember that post a few back with the link to a friend who'd been pushed on Medicaid and then his plan didn't qualify for ACA?). That the actual knowledgeable Medicaid folks can't keep up, and the new folks they've hired are clueless.

Lunarman said...

You missed what the free market does when there is a shortage. It expands to meet it. I will concede that prices would temporarily spike, but as in all commodities or services, when there is demand, the supply in this case does as well. It is definitely not finite

Anonymous said...

Sorry People but really Obamacare is "communist" ? Look at Europe and Japan. Both areas with Free at Delivery Complete Health Care. Rich or Poor, Hispanic, white or mildly green you get treated the same way. Each provides that service in a slightly differant way, some like the NHS via General Taxation, Some like France through state insurance schemes but the underlying principle is Free Access to All Health Care for Every Citizen.
Then lets turn to the US. A relative cycled across the US from LA to Richmond. He met a guy with a big lump on his neck. When asked the Guy explained that it was a Cancerous Growth but Mdicare wouldn't treat him untill it was xxx inches big by which time it was fatal, if he'd had the couple of hundred thousand dollars needed he could have had it treated when it was a pimple he had a 80% chance of complete remission. Now that is just death selection by how rich you are. I do not and can not see how any society can just condemn a man to death because of the size of his bank account and call iteself civilised.
The lets look at costs. In the US you spent in 2014 by UN WHO figures USD8,713 per person in the US on healthcare. The UK USD3,235, France USD4,124 and Germany USD5,002, Norway USD6,177. Now both Germany and Norway have renowned healthcare services that us in the UK have experiance of as being so close to us with world beating Cancer, Critical Care and Heart Attack recovery records. So because you have the broker, insurer, health provider, drug companies etc etc trying to extract profit out of your system as a country you spend over twice as much as the UK but do not get twice as much result, you spend 50% more than Germany and Norway who lead the world in Health Care. (I think it also confirms my view that the UK gets a very good economical deal out of the NHS but we do need to spend more on it to raise standards to the German levels). How can you think you are getting such a good deal ?
Finally the old argument over "beurocrats" making life and death decisions. Well at the moment we in the UK are having that argument over Mennangitis B vacanation. At the moment a committee in the NHS went, it costs £40 to vacinate a child. We are one of the few "western" countries to instigate a universal vaccination programme for all under 1year olds. However there has been a spate of Children in the 2 to 5yr old who have died recently. (if your under 5 you are a lot more likely to die from the disease.) The NHS comittee worked out it would cost £177m to immunise every child below 5, but as there are only 139 cases in England on average who get the disease and only 15 to 20 die out of 800,000 Children it was seen as not "cost effective". Once this has come to light the outcry in the UK has been huge and by the middle of the year the policy will be changed, why ? Because we the people can change the policy, as it is Government controlled, in the US unless you have USD500 to get the shot for your kids then sorry no chance.
Do I think our system is perfect, no far from it, do I think the US is the dumbest yep, it costs you more, provides less healthcare and unless you are mega rich you will if you get seriouslty ill end up with a massive loan to repay even if you have health insurance. That just can not be right.

Peter said...

@Anonymous at 5:14 AM: You've clearly drunk the Kool-Aid.

1. The socialized medical systems you praise so highly are the same systems notorious for either leaving patients to die, or deliberately killing them by withholding care (even food and drink) or administering an overdose. There are so many news reports about it, from so many countries, that it's no longer in doubt. Even Britain's NHS has openly admitted to the "neglect-until-dead" approach.

2. Citizens of those countries pay the same medical costs as in the USA, or even higher. The difference is that their taxes are vastly higher, across the board, than ours, in order to pay for the "benefits" offered in those societies. Thus, whether or not you personally need hundreds of thousands of dollars of medical care, you end up paying for your share of it, year in, year out.

3. The other side of such socialized medicine and other state benefits is a loss of personal freedom. The state simply won't allow you to do certain things, own certain things or express certain opinions. "He who pays the piper calls the tune" - and if you allow the state to pay for everything, you find the state telling you what to do, think and say in corresponding measure.

Finally, whether or not you have socialized medicine, you're going to die someday. I have my doubts whether national health care is ever going to change that. Your anecdote of the man with the cancerous growth is one that's often heard . . . but no-one ever asks why he didn't seek help while it was still small. Medicare has NO physical restrictions on how big a tumor has to be before they'll treat it. That's flat-out not true. Furthermore, Medicare applies to people over 65 years old - it's not universal - so I have to ask whether this man even qualified.

Like I said, you've drunk the Kool-Aid.