Instead, lawmakers should listen to the Government Accountability Office and better inform middle-class baby boomers of their probable need for LTC and the fact Medicare won’t cover it. This gives patients and caregivers time to plan ahead. Unfortunately, the Obama Administration refuses to improve its tax-payer funded efforts to increase Americans’ awareness of this problem, and has rejected calls to work with state governors to expand private LTC coverage. Liberal advocacy groups have long opposed this approach, preferring to force Americans to pay into a new federal program. Like CLASS, it would collapse under empty promises years before a shrinking group of American workers struggles to fund Medicare and service interest on the debt in 2040.
CLASS and the commission are distractions. We won’t solve our LTC problem without reforming Medicaid, our nation’s default LTC program. Medicaid LTC spending has grown at an annual rate of 6.5 percent since 1995. According to CBO, federal spending in this area will top $1.1 trillion annually in 2021.
States also struggle as increased Medicaid spending crowds out other budget priorities, and they blame federal rules, allowing individuals with substantial assets to enroll in this welfare program. In a letter to Congress, the State of Virginia writes “the federal government should give states greater flexibility to consider assets when determining eligibility for LTC coverage through the Medicaid program.” The State of Wisconsin agrees this will “help ensure the long-term sustainability of such programs for their residents in most need of government assistance.” Federal rules force states to disregard more than a half million dollars in home equity and the entire amount of other valuable assets during enrollment.
Making matters worse, the 2010 law prohibits states from tightening loopholes that allow welfare abuse. Virginia provides an example of a Medicaid applicant who purchased a $900,000 annuity, naming his wife the beneficiary of $89,000 per month. Obamacare forces Virginia to ignore this income when deciding eligibility.
Why should Medicaid allow middle and upper income Americans to have their LTC financed by taxpayers so they can pass inheritances along to their children? Since 2000, seniors’ home equity grew by 50 percent, reaching $3.2 trillion in 2013. Easy access to welfare is unsustainable, and it creates no incentive to protect assets with LTC insurance or to use a home-equity conversion for LTC needs. Tighter restrictions won’t force seniors out of their homes, and federal law helps them appropriately protect these assets from Medicaid estate recovery through a program Congress expanded in 2005.
To protect Medicaid for poor Americans, we recently introduced the Medicaid Program Integrity Act. The bill would give states the option to reduce the Medicaid home equity exemption as low as $50,000. It would also eliminate Obamacare’s Maintenance of Effort rules, preventing states from closing loopholes allowing Medicaid abuse.
Congress should reject CLASS 2.0, encourage personal responsibility, and protect Medicaid for those it was intended to protect. Ultimately, this will give middle-class Americans greater choice, independence and control over LTC services they need in a setting of their choice.
Dr. Charles W. Boustany, Jr. was first elected to Congress in December 2004 following a successful career as a cardio-thoracic surgeon. Currently serving his second term in office, Boustany represents Louisiana’s Seventh Congressional District, which covers the regions of Acadiana and Southwest Louisiana.