A measure that would limit the grounds upon which California would be able to recover assets from the estates of deceased Medi-Cal beneficiaries faces another legislative test Tuesday when it comes before the Assembly health committee.
For more than two decades, federal law has required states to seek reimbursement for nursing home and assisted living care provided to Medicaid beneficiaries who are 55 and older. States do this only after a beneficiary dies, by placing a claim on his estate.
But the federal law gives states the option to go a step further. They can also seek reimbursement for doctor visits, hospital stays and other medical care.
Only ten states take this tougher approach; California is one of them.
The issue has taken on added importance since the Affordable Care Act expanded the Medi-Cal program to a larger group of people, a number of whom own their homes.
Worries about keeping a family home
Sandra, a 60-year-old Medi-Cal recipient from northern California, is worried about the state seeking to seize her modest assets after she's gone.
The Chico resident, who asked that her last name be omitted for privacy reasons, suffers from chronic illnesses that prevent her from working. She's concerned that the state will eventually come after the small house she’s owned for 35 years, which she had hoped to pass on to her children and grandchildren.
"It’s not much but I would like to leave it to them if I die," says Sandra, adding, "at the same time, because I know that they may seize it, I can’t justify keeping it in good shape because any money I put into it is only going to benefit the state."
"We really worry that [California's approach to asset recovery] sort of perpetuates the cycle of poverty," says Betsy Imholz, special projects director for Consumers Union.
Imholz and other consumer advocates also point out that the state's efforts are generating a negligible financial payoff.
The recovery effort captured a total of only about $30 million for California over the past decade, notes Pat McGinnis, executive director of California Advocates for Nursing Home Reform.
"We spend billions on the Medi-Cal program in California, so it's less than .1 percent of all of Medi-Cal," says McGinnis. " It's absolutely minimal compared to the grief and anxiety that it causes."
A question of fairness?
For Sandra, who is in an older, fee-for-service Medi-Cal plan, the amount she’ll ultimately owe to the state is tied to the amount of care she receives. But most Medi-Cal beneficiaries are now enrolled in managed care plans. That means the estates of those who are in the system at age 55 and beyond will face a reimbursement bill of about $500 for each month they're on Medi-Cal, notes McGinnis.
"All of those people, whether they ever go into a nursing home, whether they ever use medical services, they’re all going to be subject to recovery simply because they’re over 55," says McGinnis.
California Advocates for Nursing Home Reform is a co-sponsor of SB 33, the bill that would soften California’s Medi-Cal reimbursement practices. Authored by Sen. Ed Hernandez (D-West Covina), the measure would in part limit estate recovery to just the costs of nursing home or assisted living care. It has already been approved by the state Senate.
Imholz says such a change is especially needed now that the Affordable Care Act requires nearly every American to have insurance. What's more, she argues, fairness dictates that a change be made. The federal health law doesn’t require higher-income Americans who receive tax subsidies to face liens against their estates once they die. So, she says, Medi-Cal patients shouldn’t have to, either.
"It's not the jack-booted thug of government"
But Matt Salo, executive director of the National Association of Medicaid Directors, disagrees. He says estate recovery - even when it's minimal - is important.
"It's a recognition that Medicaid isn’t actually free and that public programs do have a cost," he says, adding that this year the program will cost the nation more then $500 billion.
Estate recovery, he says, helps to shift some of that burden from taxpayers to the estates of deceased recipients. What’s more, he points out, California’s law includes hardship protections for heirs and surviving spouses.
"So it’s not some grand boogey man," he says of asset recovery. "It’s not the jack-booted thug of government coming to take your house."
Gov. Jerry Brown has not yet indicated whether he would sign SB 33 if it reaches his desk. He vetoed a similar effort last year because of its cost, while acknowledging that allowing more estate protection "may be a reasonable policy goal."