Friday, January 08, 2021

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

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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, MaineMarylandMassachusetts, MontanaNebraskaNevada, New Jersey, North Dakota, Ohio, Rhode IslandUtah 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." 

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* 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.

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9 comments:

  1. Thank you for covering this, including that remedying "Hamlet Act", in your long and comprehensive post.

    (It has become my issue after finding out about it in 2019, because it is such a major flaw in our current insurance system with the current ACA, and it is so under-publicized by the press.)

    I actually knew about the Hamlet Act prior, because it was pointed out to me by Rick Rayburn, who is one of the people in Minnesota who got the estate recovery on expanded Medicaid (and I believe also other non-long-term-care Medicaids) stopped in 2017. (The guy here: https://web.archive.org/web/20190806154942/https:/www.mlstargazette.com/story/2017/05/18/news/minnesota-ma-estate-liens-put-to-final-rest/2269.html !)

    Technical: In trying to piece together the bill myself, a non-lawyer who doesn't know how the law is structured, I stumbled into trouble tracing myself the referenced: 1902(a)(10)(A)(i)(VIII).

    I took it to be in Title 42 and looking for 1902, I hit this:

    https://www.law.cornell.edu/uscode/text/42/1901

    and https://uscode.house.gov/browse/prelim@title42&edition=prelim

    indicating something was moved, so I got worried it wasn't constructed correctly.

    Remember, I don't know anything about reading these laws and the US Code!

    So, someone will have to tell me what the section is, if it is indeed the correct reference.
    )

    Other reference: This is the online text of the Hamlet Act:

    https://www.govtrack.us/congress/bills/116/hr8836/text

    So someone will have to tell me exactly what 1902(a)(10)(A)(i)(VIII) is for the bill to cohere for me!


    Ref: The Hamlet Act, online, is here:
    https://www.govtrack.us/congress/bills/116/hr8836/text

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    1. Norman, The section of the SSA with 1902(a)(10)(A)(i)(VIII) is here https://www.ssa.gov/OP_Home/ssact/title19/1902.htm. It defines the eligibility category created by the ACA:

      (VIII)[13] beginning January 1, 2014, who are under 65 years of age, not pregnant, not entitled to, or enrolled for, benefits under part A of title XVIII, or enrolled for benefits under part B of title XVIII, and are not described in a previous subclause of this clause, and whose income (as determined under subsection (e)(14)) does not exceed 133 percent of the poverty line (as defined in section 2110(c)(5)) applicable to a family of the size involved, subject to subsection

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  2. Pt 2:

    Thanks also for the info and link on the MA limited forbearance. Unfortunately, as I read it, it only excludes the first $25,000 or $50,000 of an estate.

    Unfortunately, I think the state is continuing to technically fail here in its logical analysis of the issue. They're trying to protect very small amounts of assets of very poor people only.

    They should stop all estate recovery on non-long-term-care Medicaids, as have CA, OR, WA, NY, CO, etc. post ACA (Only about 12 states, to my understanding, do any estate recovery on non-long-term-care-related expenses, and they do not have to. Federal law only requires they recover long-term-care-related expenses.

    This is the logical analysis: With the ACA in 2014 (and earlier with Romneycare in MA), the principle of the country is that everybody gets affordable health insurance. (Not just a loan until death. Especially not just a loan until death for uninsured medical expenses--there is no insurance at all! Note they don't give a loan until death in any of the other developed countries, either!)

    (Long term care is different. The country has no national long term care insurance system, and it has left it as a problem for another day, so that is estate recovered, and you have to be dirt-poor in both assets and income to get it.)

    But not ordinary non-long-term-care medical insurance. MA, and the other states need to be able to get to this technical understanding of what the country is trying to do, and they are goofing it up if they estate recovery non-long-term-care.

    Note that, besides very low asset people that the minor MA reforms seem to be giving a tiny bit of protection to (but still declaring: the health insurance you're going to get under the ACA in MA will let you pass on only $50,000 in assets if you get very sick, or we decide to do a capitation charge) also hits people with substantial assets to pass on.

    Note for a separate class of people: Our exchange switches people to expanded Medicaid off of real, not-a-loan on-exchange insurance, if their income drops, in the estimate of the MA authorities, to below 138% of the Federal Poverty Level (regardless of assets) for as little as a month!

    This is a financial bomb for many higher-asset people, who don't know about it.

    The MA ACA application notice is obscure, hidden in the midst of benign-looking-items, as item (9) and (10) here:

    https://www.mass.gov/doc/massachusetts-application-for-health-and-dental-coverage-and-help-paying-costs-0/download

    on Adobe p.22. If people even notice it, it's the form of "to the extent permitted by law", and so people are supposed to go and pay an estate lawyer just to get the health insurance the ACA was supposed to provide affordably and easily to everyone.

    Note that for the Federal exchange, there is no notice at all.

    ( https://marketplace.cms.gov/applications-and-forms/marketplace-application-for-family.pdf The Medicaid conditions are on adobe p. 8. See? No notice of the estate recovery. )

    Thus, in addition to blocking transfer of modest amounts of wealth intergenerationally, the obscure notice is a real hidden financial bomb for people who even have substantial assets to pass on.

    (People eligible for any Medicaid, including expanded Medicaid, are not eligible for subsidized on-exchange coverage, but can get unsubsidized on exchange coverage. If they can afford it. Many affected cannot afford it--it blocks the passage of modest for them. For those who can afford, the obscure notice is a financial bomb.)

    The correct solution is to stop the estate recovery on all non-long-term care Medicaids. (The proposed law is a bit shy of that goal, only stopping recovery for the expansion population. It would seem to hit most people with assets to lose, but the better solution would be to go all the way to stopping all recovery on non-LTC, as, to my understanding, has been done in many states: say NY, CA, post ACA.)

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  3. Pt 3: One other reference:

    The Obama administration did attempt to stop all estate recovery on expanded Medicaid, but apparently lacked the authority.

    That is covered here:

    https://www.healthaffairs.org/do/10.1377/hblog20140224.037390/full/

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    1. Always good to get Timothy Jost's explication -- he is probably the country's leading health law expert.

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  4. Minor little supplemental notes:

    1)On your: "the HAMLET Act, a rather tortured acronym"

    Yes, indeed.

    Is the name from "a settlement that is smaller than a village" or "the smallest incorporated unit of municipal government"?

    I certainly was myself suspicious of the bill, thinking the name was some sort of political theatrics related to the Shakespeare character, from a known-wild legislator who lost re-election.

    Alas, Rick Rayburn informed me, it is the last name of Mrs. Hamlet, a citizen in Iowa who is trying to get the estate recovery on non-LTCC fixed!

    2)In your "states that have ended or paused non-LTCC recovery" it is worth noting that term "paused".

    Unfortunately, the nature of our system is that, without a million dollars per state for lawyers to research and discuss the issue for each state, and then perhaps also without the 10 or 20 years necessary to let the case play out in the state or federal courts, none of us knows exactly what "paused" means.

    And it may be that the pause can be, in the future, unpaused retroactively to expanded Medicaid and other non-LTCC Medicaid coverage that already has been issued, i.e. coverage from 2014 to 2021.

    In discussion today with Rick Rayburn, I had found out that he was explicitly told by the Minnesota estate recovery authorities that they're holding on to the right to, in the future, amend their procedure, and estate recover any expanded Medicaid, even from prior to their hypothetical future return to estate recovery.

    So this really means, in MN, you still don't have insurance with the expanded Medicaid if you are 55+. You have what may turn out to have been just a loan after all!

    (I had suspected as much from the current MN ACA application:

    https://edocs.dhs.state.mn.us/lfserver/Public/DHS-6696-ENG

    where it says, on adobe p. 21,

    "If anyone on this application is eligible for Medical Assistance, I have read and understand that the state may claim repayment for the cost of medical care, or the cost of the premiums paid for care, from my estate or my spouse’s estate."

    Note also, besides setting up to permit future estate recovery of current and prior non-LTCC Medicaids and expanded Medicaids in MN, it states "for the cost of medical care, or the cost of the premiums paid for care". They can do whatever they want. If they do the former, there is indeed no insurance at all -- whatever bills happen under this ACA coverage have to be paid back!

    (In general, across the states that do the recovery on this ACA coverage, it seems to be unclear what they will recover. They seem to have the option of recovering either all bills paid to providers, or a capitation, if that capitation was paid to an intermediary as the way of providing the Medicaid.

    Here in MA, they told me the bills for care are paid directly by the state to the provider, so my guess is that the MA version of the recovery is the "you had no insurance at all" version. (This is particularly Kafkaesque because MA is one of the states that still has its own penalty for people not having coverage. The penalty is there on the grounds of making insurance sound--avoidance of adverse selection and death spirals. But the people on expanded Medicaid and other non-LTCC Medicaids, though subject to the penalty if they don't carry it, get no insurance at all. They're going bare!)

    This kind of thing is part of why there is so little social trust -- you really can't trust our governments. (Whether it is from incompetence in reasoning to set up the law this way, or ill will, we see they cannot be trusted!)

    3)Yup, Tim Jost is really good.

    (Nowadays, the Health Affairs "Following the ACA" blog section

    https://www.healthaffairs.org/topic/bms010

    is done by Katie Keith, as Tim seems to have semi-retired.

    I assume she's very good, though I haven't had occasion to really test the info with any really hairy technical issue of special interest to me.)

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  5. It is so tragically typical of America, to convert a social benefit into a loan, with terrible long-term consequences.
    We have seen the same thing with student debt. Instead of expanding Pell Grants, over the last three decades, the government has expanded loans (both to students and parents). Student loans come due a long, long time before death also.

    It is a classic American non-solution. Conservatives want no social benefits at all. Liberals want to allow some social benefits, but they wrap the benefits with the trip wires and booby traps of debt. This lowers the cost, and includes enough pain to satisfy the conservatives.

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  6. Bob Hertz:

    Good to see you commenting here.

    As I recall, you are actually a neighbor of Rick Rayburn, the guy in MN who had a large roll in getting the estate recovery on non-long-term-care stopped. (I am in contact with him from time to time by email and phone to see the status of what's going on in MN and in general.)

    As you might have read or figured out, even the stopping of the recovery in MN for ordinary health insurance Medicaid (i.e. non-LTC) is not absolutely clear. Though the current state recovery policy prevents it, the ACA form for MN has people signing that they accept such recovery. Further, Rick tells me he was told by the MN estate recovery people that they can retroactively decide to recover non-LTC Medicaid expenses paid out for current and prior years. In other words, people in MN still don't have guaranteed insurance right now if they have have a Medicaid or expanded Medicaid and are 55+. (I believe Rick is trying to get all the Medicaid records for MN since 2014 completely destroyed to prevent them deciding to go after current and post-2014 policies.)

    Your point about loans instead of grants for education is well-taken.

    I suspect you, I, and Andrew all agree that the current system is way too complex, though we are all putting up with it, and trying to fix it, because a simpler system like Canada single payer is politically impossible.

    The byzantine complexity really makes failures that can bankrupt and kill people unavoidable. (Oh, I have I had trouble in MA! Separate from blasts of estate recovery exposure.)

    Also note that on the estate recovery, it's not just people with low incomes and assets who are affected (which is bad--it blocks intergenerational accumulation of wealth amongst lower-income, and in fact, recently there has been an African American focus on this, because they've had blockage on that accumulation from prior discrimination in housing lending).

    There's a real bomb, as well, for higher asset level people when they, due to inconspicuous or non-existent notice, wind up in the to 138% FPL (no asset cap; for as little as a month) expanded Medicaid eligibility fulfilled category. They get the expanded Medicaid unless they know to pay full price for on-exchange, to get real insurance. They are at that point generally going bare, with no insurance at all. Just that loan for whatever medical expenses occur.

    Note that to 138% FPL, no asset test, is a common income status of early retired people, who are not taking SS, pensions, or tapping IRAs.

    Otherwise, among those still working, if they take 2 months off as a break, or to retrain, they are supposed to notify the state immediately of the lowered income, which will give them the no-insurance loan. (As well, any picking up by the state government of an erroneous database indication of income <= 138% FPL--this is grounds to switch a person automatically onto expanded Medicaid.)

    (Once a person has had the Medicaid, if they do accumulate huge bills subject to estate recovery, my understanding for both MA and MN (MN prior to the stop) was they would not discuss the pending charges until the person was an estate -- yes, dead. To be resolved at the settlement of the estate.)

    Another problem from the Byzantine complexity is that it's so complex that I think many experts actually don't know about the estate recovery on expanded Medicaid.

    Because when I emailed about 10 prominent policy people about this about a year ago, three responded.

    One, prominent in the construction of the ACA actually indicated he didn't know about it.

    Another, prominent in the construction of a major Single Payer plan indicated he also didn't know about it.

    A third, prominent in Democratic policy circles, indicated he knew about it, but thought it had been fixed.

    (I don't think the 3 responders were lying. I think, as they said, they didn't know or thought it was fixed. Some of the 7 non-responders may have known, of course, and that may be why they chose not to respond.)

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