Medicaid as Boomer Inheritance Program?
In 1993, the federal government made it mandatory for state Medicaid programs to recover the cost of benefits paid to older people with exempt (sheltered) assets out of their estates. In research I conducted for the Health Care Financing Administration in 1988, we found that Oregon, for example, recovered 5.2 percent of its Medicaid nursing-home expenditures from the estates of deceased recipients.
The comparable number for Rhode Island is only .67 percent. In other words, Rhode Island, which recovered only $2 million last year from estates, is leaving over $13 million on the table by not pursuing this non-tax resource more vigilantly.
Whoa! Wait a minute. Isn’t estate recovery like “picking the bones of the elderly”?
Not at all. With very generous income- and asset-eligibility rules, easy ways to self-impoverish and little estate recovery, Rhode Island’s Medicaid long-term care program has become, in effect, free inheritance insurance for Baby Boomer heirs. Is that really how Ocean Staters want to use their scarce public-welfare resources?
I remain in the starve-the-beast camp, but there are other sectors of the population that could make better use of this break.