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It sounds outrageous: millionaires on Medicaid, the rich covered by the health insurance program that's supposed to be for the country's poorest people. Well, that is the claim, and it holds so much sway in Washington that Congress is about to make it harder for the wealthy and for just about anyone to get Medicaid nursing home coverage. As NPR's Joseph Shapiro reports, that could mean new burdens for the people the program is designed to help, the poor.
JOSEPH SHAPIRO reporting:
It's Stephen Moses who's done the most to argue that the well-to-do are ripping off Medicaid. He runs the Center for Long-term Care Reform in Seattle.
Mr. STEPHEN MOSES (Center for Long-term Care Reform): Yes, it's quite easy to get a millionaire onto Medicaid. You can give away $50 million three years before that time and you're eligible.
SHAPIRO: Moses says because that loophole exists, Medicaid wastes billions of dollars, partly on the rich but mainly on others.
Mr. MOSES: That's just the tip of the iceberg, Medicaid for millionaires. The great tragedy is that Medicaid is supposed to be a safety net for the poor, but it is being co-opted by the upper middle class.
SHAPIRO: The villains in all this, according to Moses, are attorneys who help older clients. He says they sell their ability to come up with clever strategies to help the rich and well-off give away their money, so they can make it look like they're poor when they're not and then collect state and federal payment for the $70,000 it costs each year to live in a nursing home. There's no hard and fast evidence that this happens, but Moses says he can tell Medicaid is being abused simply by looking at the lawyers' own advertising.
Mr. MOSES: All you have to do is go on the Internet, do a search for Medicaid planning, you'll find over six million hits. And you can look there and see the techniques that are being used, the ads for artificial impoverishment.
SHAPIRO: Elder law attorneys say it's a lot of nonsense that they do anything unethical to hide the money of the rich. They say what they routinely do is help older people and their families figure out complex tax law, often so that people can pay for their own long-term care. But Stephen Moses points to the words of some of these attorneys, like Dave Zumpano of New Hartford, New York. Moses, on his Web site, said Zumpano advertised Medicaid planning for millionaires and linked to Zumpano's own advertising brochure. But that ad says nothing about millionaires. When NPR pointed that out, Moses removed the claim from his Web site. It turns out Zumpano's advertising did talk about Medicaid planning for millionaires until a few years ago.
Mr. DAVE ZUMPANO (Attorney): It was there at one point. I think we may have removed it because it created so much havoc.
SHAPIRO: That's Dave Zumpano. He says the ad was worded to grab the attention of other lawyers. Zumpano sells them seminars and trademark legal strategies. But he says he advises his own rich clients against making such big transfers of their wealth.
Mr. ZUMPANO: Probably in thousands of clients I've seen, I probably have less than five millionaires who wanted to do the planning.
SHAPIRO: And besides, he says the rich don't want to go into nursing homes; they've got other options.
Mr. ZUMPANO: If you're a millionaire, what we're planning is how you stay home and how you never have to go in a nursing home and how you have care around the clock in your own living room and things of that nature.
SHAPIRO: People like Stephen Moses who say there's lots of abuse of Medicaid, often argue for a particular solution, that people need to purchase insurance that pays for nursing home care. Consumer groups question whether such insurance is worth the cost. Moses says his center is paid in part by the insurance industry. On the issue of long-term care insurance, it turns out that Stephen Moses and attorney Zumpano agree. Dave Zumpano.
Mr. ZUMPANO: We've got to get people behind long-term-care insurance, and we gotta give a little more tax incentives to people who get long-term-care insurance.
SHAPIRO: There've been few studies to see if the well-off do get on Medicaid. One was done last year by congressional investigators. They found that millions of elderly people do give away some of their money, but in small amounts, not the kind needed to hide family fortunes. Elder law attorneys say it's often to help a child buy a house or a grandchild pay for college. Catherine Allen ran the study for the Government Accountability Office.
Ms. CATHERINE ALLEN (Government Accountability Office): Almost all the transfers that they did make were to their children or their stepchildren, and the median cash transfer was $4,000. That amount of money is not even enough to pay for one month in a nursing home.
SHAPIRO: Despite the finding of her own investigators, members of Congress are about to add even tougher penalties designed to stop the well-off from trying to get onto Medicaid. The new law would count anything someone's given away going back five years from the time they become eligible for assistance. Charles Sabatino says it's the poor and middle class who'll get hurt. Sabatino runs the American Bar Association's Commission on Law and Aging.
Mr. CHARLES SABATINO (Commission on Law and Aging, American Bar Association): The concern here is that all the usual normal caring family transactions that people engage in without thinking of Medicaid will be scooped up by this penalty: giving money to your church, helping out a child who's dealing with illness or hard times. Anytime you give money away for whatever reason, it would be considered a transaction that you would get penalized for.
SHAPIRO: The new provision is in the congressional budget agreement. It's expected to be finalized soon. Next, Congress may take up something that could really help the rich elderly: a permanent repeal of the estate tax. Joseph Shapiro, NPR News, Washington.
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