The 117th Congress should end Medicaid Estate Recovery for the ACA Medicaid expansion population

Subscribe to xpostfactoid 

n.b. 4/7/21: see update from 2021 MACPAC report at bottom

Democrats have big plans on the healthcare front, only some of which they're likely to push through Congress with a threadbare Senate majority. Look for some sweetening of ACA marketplace subsidies and meaningful action to contain prescription drug prices. 

First, though, some housekeeping. The first healthcare bill advanced in the 117th Congress will likely render moot Texas v. California,  the suit now before the Supreme Court seeking to have the ACA declared unconstitutional. A single sentence, either restoring an individual mandate penalty of $1 or repealing the mandate and declaring in severable from the rest of the ACA, should suffice.

For their second act, Democrats should take up a bill introduced just last month by Rep. Steve King (R). Yes, that Steve King, ex of Iowa's 4th District, the notorious racist who was defeated in a primary last June and is no longer in the House.

The bill  H.R. 8836 (the HAMLET Act, a rather tortured acronym), is three sentence long,* and it rectifies an egregious injustice that nullifies the ACA's core promise of affordable coverage for a substantial subset of beneficiaries (thanks to xpostfactoid commenter Norman Spier for pointing this out).  It has a simple purpose:

To amend title XIX of the Social Security Act to prohibit estate recovery from certain expansion individuals under the Medicaid program.

"Certain expansion individuals" refers to adults over age 55 who are rendered eligible for Medicaid by ACA expansion criteria -- that is, any adult with a household income under 138% of the Federal Poverty Level, or $1468 per month for an individual. 

At present, states can eventually seek recovery from the estate of any Medicaid enrollee over age 55, including ACA "expansion" enrollees. After the enrollee's death, or the death of her spouse, or until any surviving children pass age 21 (or upon their death if they are blind or disabled), the state may claim the estate's assets as reimbursement for the cost of Medicaid coverage. States that have expanded Medicaid and impose such estate recovery on Medicaid enrollees rendered eligible by the ACA expansion population include Idaho, Indiana, Iowa, Maine, Maryland, Massachusetts, Montana, Nebraska, Nevada, New Jersey, North Dakota, Ohio, Rhode Island, Utah and Virginia, along with Washington, D.C. 

The Medicaid expansion population in these states is approximately 3.7 million** at present. Perhaps a fifth of those enrollees are over age 55 (Avalere Health estimates that about 30% of a sample Medicaid expansion drawn from 9 states in 2014 was over age 50). There is a lot of churn in Medicaid; I would not venture to estimate how many individuals over age 55 have been enrolled via the ACA expansion since 2014. Also unclear is the percentage that would possess any estate subject to recovery once they or their spouses have passed.

Medicaid estate recovery was conceived for a different purpose. In 1993, the omnibus spending bill that kicked off the Clinton administration's legislative efforts  required states to recover assets from the estates of recipients of long-term services and supports (LTSS, i.e., nursing home or home-based nursing care) under Medicaid. 

States also retained the option of recovering for other Medicaid benefits obtained above age 55. But the ACA Medicaid expansion complicated the picture. Pre-ACA, Medicaid eligibility generally included an asset test -- as it still does for Aged, Blind and Disabled (ABD) Medicaid.  

ACA expansion eligibility has no such test -- and no implicit expectation that enrollment will entail nursing care. Under pain of financial penalty (zeroed out as of 2019), the ACA encouraged Americans to obtain "affordable" care. For those who lack access to employer-sponsored or other insurance who seek coverage on the ACA exchanges, Medicaid is the only option for those whose income is below the Medicaid eligibility threshold, 138% FPL.  To make the "affordable" coverage on offer essentially a long-term loan is an egregious violation of the ACA's purpose.

Since the ACA Medicaid expansion launched in 2014, several states that previously imposed estate recovery on Medicaid enrollees who were not receiving long-term care have stopped doing so, though some reserve the right to resume. The states that have ended or paused non-LTCC recovery include New York, Connecticut, Washington, Oregon, California, Minnesota and Colorado. Massachusetts has significantly hedged, forbearing if the estate is worth less than $25,000, or $50,000 if the heirs' income is below 400% FPL (the limit rises to $100,000 if there are multiple heirs).

Some state information pages about Medicaid estate recovery lie about the program. An Indiana government web page asserts "When a Medicaid recipient dies, the State of Indiana is required by federal and state law to seek recovery from their estate funds equal to the amount used to pay for their medical expenses, including capitation payments made to a managed care entity on behalf of a member of the Healthy Indiana Plan." In fact federal law only requires recovery for long-term care, not for Healthy Indiana, which is the Medicaid expansion program.  This fudging of what "federal and state law" require is ubiquitous on state information pages. 

A 2015 MACPAC overview of estate recovery under the ACA noted that "in 2014 CMS sent a letter to state Medicaid directors stating that the agency was exploring options to use its available authorities to eliminate recovery of Medicaid benefits consisting of items or services other than LTSS and related services for individuals in the new adult group (CMS 2014o)."  

No administrative action followed. And that highlights another point: under Biden, CMS can end estate recovery from ACA expansion enrollees by administrative rule. 

Medicaid is this country's de facto long-term care insurance (the private LTC market is dysfunctional, both unaffordable to most and unreliable in its premiums and benefits). You enter an LTC facility, you spend down your assets, Medicaid picks up the tab. Spousal impoverishment laws allow the spouse of a Medicaid LTSS enrollee to stay in the couple's home and maintain an income, but the state collects after death. That harsh bargain has been part of American life for some time.  Long-term care is expensive, and the government picks up the tab for more than 60% of recipients. 

But the ACA is about something different, and promised something different: affordable care. "Affordable" doesn't mean, if you own little, we'll take it all when you die. Or at least it shouldn't.

I wrote about Medicaid estate recovery once before, with particular reference to New Jersey. Thanks to attorney Lauren Marinaro, and to Norman Spier for bringing further attention to it. 

Update: Hannah Eichner of the National Health Law Program points out to me that MACPAC is in the process of drafting new policy recommendations regarding Medicaid Estate Recovery for LTSS services, which is currently mandatory. One draft recommendation is to make LTSS recovery optional for states; some that find the return on investment low might eschew it. Other draft recommendations include allowing states to base recovery only on the cost of care -- at times recovery can actually exceed that cost -- and to set minimum standards for state hardship waivers, which vary widely.

Update 2: good coverage of the cruelty wrought by LTSS estate recovery, the mindset that led the Clinton administration and Congressional Democrats to mandate it in 1993, and the varieties of state response from The Atlantic's Rachel Corbett here.

UPDATE 3 (4/7/21) Courtesy of frequent xpostfactoid commenter Bob Hertz: MACPAC's 2021 Report to Congress on Medicaid and CHIP was released in March, and it includes a chapter (3) on Medicaid Estate Recovery. While the report is focused almost exclusively on recovery for LTSS services, it also relays that 20 states and D.C. currently pursue estate recovery for the Medicaid expansion population. The map of each state's policy below is from pdf page 47 (report pg. 117) of the MACPAC report. It also reveals that estate recovery in all states yielded a grand total of $773 million in 2019. As Bob Hertz puts it, "This is barely a raised dimple in the overall Medicaid program and not worth the fear and torment that is caused." 

-----

* Here is the text body of Steve King's bill:

Section 1917 of the Social Security Act (42 U.S.C. 1396p) is amended by adding at the end the following new subsection:

“(i) Prohibition On Estate Recovery From Certain Expansion Individuals.—

“(1) IN GENERAL.—Notwithstanding any other provision of this section, no recovery or adjustment may be made with respect to the estate of an individual described in section 1902(a)(10)(A)(i)(VIII) for medical assistance furnished under a State plan (or waiver of such plan) under this title.

“(2) COMPENSATION FOR PAST RECOVERY.—A State shall provide for the repayment of any amounts recovered or adjusted during the period beginning on January 1, 2014, and ending on the date of the enactment of this subsection from the estate of an individual described in paragraph (1) for medical assistance furnished under the State plan of such State (or waiver of such plan).”.

The section of the SSA referred to in the bill defines eligibility for the ACA expansion group (deemed "Group VIII" in CMS parlance).

** In June 2019, according to CMS tallies, the expansion population enrollment total for these states -- excluding Idaho and Utah, which hadn't expanded yet -- was 3.0 million. Since this past February, the expansion population has likely increased by more than 20%. Enrollment in Utah and Idaho is currently about 168,000.

Subscribe to xpostfactoid