Attorneys Now Risk Jail For Explaining Medicaid to Elders


Congress has taken its August recess, and members have gone home to brag about balancing the budget, fixing Medicare and Medicaid and improving the tax code. Of course, they have done none of the above.

While some parts of the deal struck between the White House and a Republican Congress may benefit at least some constituents, Congress has once again shown that it is incapable of addressing the health care financing system in any meaningful way. Almost everyone understands, for instance, that Medicare is in trouble, as the “baby boomers” approach eligibility with an inadequate base of working contributors behind them to fund an expensive system. Congress’ solution? Force hospitals (many of them non-profits, and all of them straining to hold their place in an economic whirlpool) to produce almost all the savings necessary to make Medicare look like it will stay afloat. To provide political cover, Congress has also staged the price reductions so that they won’t begin to really hurt an ailing industry until current congressional terms have expired.

But Congress saved its most cynical “fix” for the Medicaid system. Rather than undertake any thoughtful analysis of the burgeoning crisis in long-term care financing, legislators decided to mount a direct and devastating attack on lawyers.

Granny Almost Goes to Jail

Last year, in its first attempt to fix blame on someone else, Congress adopted an extraordinarily ill-advised law. Apparently, the cause of the long-term care crisis must be the wave of middle-class elders who intentionally impoverish themselves in order to qualify for Medicaid. At least, that is what insurance industry representatives (who just happen to benefit from policies which would make long-term care insurance more attractive to terrified elders) told Congress. The result was the ill-conceived “Granny Goes to Jail” law, which purported to make criminals out of people who follow the government’s own regulations on transfers of assets.

Congress and the White House quickly figured out that last year’s law was a policy (and public relations) disaster, and began moves to repeal it. Unfortunately, they needed another target to blame; who better than the lawyers who have the audacity to explain the intricacies of the system to clients?

Granny’s Lawyer Goes to Jail

Buried deep within the new budget bill is the result of Congress’ inability to deal with long-term care financing in an analytical way. Rather than limit the ability of applicants to make transfers of assets, or address state-to-state inequities in the application of the law, or shift the emphasis from high-cost medical care to in-home support, or simplify a breathtakingly complex system, Congress has decided to make criminals of anyone who explains the system to overwhelmed elders.

Under the new law, anyone who counsels or assists another person to make transfers of assets in order to qualify for Medicaid (if he charges a fee) has committed a crime. Forget that the transfer of assets itself is not a crime, and will not result in Medicaid eligibility for months or years. Forget that the adviser may only be explaining the system, and not advocating transfers. Forget that the “problem” of elders qualifying for Medicaid by transferring assets has not even been shown to exist, except in the imaginations of political columnists and insurance salesmen.

The good news, if there is any, is that the new law is probably unconstitutional and almost certainly unenforceable. The language of the new law shares many of the ambiguities of last year’s abortive effort. Expect, however, that elder law attorneys will be less willing to give casual advice, charge higher fees and require that they take full control of the application process, rather than risk the possibility of prosecution.

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