Stephen Moses, Health Care Policy Fellow for the Ocean State Policy Research Institute, brings to light an easy to miss loss of state dollars:

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.