AUGUST 19, 1996 VOLUME 4, NUMBER 7
Congress has acted once again to make it more difficult for families to secure government assistance with the costs of long-term nursing care. This time, the changes from Washington add a much more punitive element.
In enacting the Health Reform Bill (usually referred to as the Kassebaum-Kennedy bill, after its original sponsors), Congress included a provision turning ordinary citizens in crisis into criminals. Under the new act, it becomes a crime to transfer assets (or to assist someone else to transfer assets) when the transfer causes a period of ineligibility for Medicaid long-term care.
Curiously, the criminal sanctions are imposed for actions which already cause a period of Medicaid disqualification. The new law does not extend that disqualification or change the method of calculation in any way. Apparently, Congress believes that the principal cause of the runaway cost of long-term health care is the occasional practice of giving one’s assets away to qualify for assistance. Increases in per-patient costs, and demographic shifts adding tens of thousands of older patients to nursing home beds have once again been ignored as causes of a difficult social, medical and tax problem.
The criminal sanction for making disqualifying gifts is chillingly severe. Although the new law is so poorly drafted that it is impossible to tell whether the offense is a misdemeanor or felony, the lower penalty is up to a $10,000 fine and one year in prison; sanctions might be as high as a $25,000 fine and five years in prison. Cynical observers have already noted that the new law actually provides for easier access to public support; those who make transfers causing periods of ineligibility will be disqualified from receiving Medicaid assistance for a period of months or years, but could spend the intervening period in penal institutions at public expense. The supposed new practice is being referred to, with black humor, as “penitentiary planning.”
Who is targeted by this new law? Two groups are at immediate risk: the middle class elderly and their lawyers. Poorer patients need not worry about transfers of assets–they will qualify for public benefits relatively easily. Wealthier patients will have sufficient resources to avoid any ineligibility problems associated with transfers. Congress apparently hopes to terrorize the rest into using every penny of their savings for nursing home care, without regard to how hard they may have worked to accumulate their modest wealth, or the needs of those relying on them (including spouses, disabled children or family members who may have contributed mightily to care before institutionalization).
But the real targets of the new law are elder law attorneys. While tax attorneys routinely counsel clients on how to avoid paying millions of dollars to the government in legal, ethical and financially sound ways, Congress wants to prevent elder law attorneys from giving similar kinds of information to their middle-class clients. Because the law makes criminals out of transferors and anyone who aids or abets them, lawyers, spouses, family members and care providers are all at risk of prosecution. Congress apparently hopes that by imposing this draconian penalty they can make the problem of health care for an aging population simply go away.
Who benefits from this new provision? Arguably, insurance companies (middle-aged consumers are now supposed to buy more long term care insurance policies) and nursing home operators (more patients paying higher private-pay rates means more revenues). Unfortunately, Congress has ignored root problems in both industries. Insurance is too difficult to obtain and too expensive for most prospective patients. And nursing homes will lose more to Medicaid cost cutting than they can hope to make up from higher private-pay rates.