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Medicaid Commission Submits Propodals for
Commission Submits Proposals for Program Cuts
Charged with the task
of finding ways to trim $10 billion from the Medicaid program over five
years, the federal Medicaid commission has submitted a report to
Congress that it says will reduce Medicaid spending by $11 billion.
To no one's surprise, among the commission's recommendations are
proposals to delay Medicaid eligibility for individuals who transfer
assets for less than fair market value. Taken together, the transfer
rule changes would allegedly save about $1.5 billion over five years.
The commission would save $1.4 billion of this by "moving the start date
of penalty period from the date of the transfer to the date of
application for Medicaid or the nursing home admission date, whichever
is later." The panel also recommends increasing the "lookback" period
for all transfers from 36 months to 5 years. This would save "less than
$100 million" over five years, according to the commission.
The lion's share of Medicaid savings -- $4.3 billion over five years ?
would come from changing the way state programs buy drugs and how
pharmaceutical companies report data. Also, Medicaid beneficiaries above
the federal poverty level would be required to contribute more to the
cost of prescription drugs not on a state's preferred list, a change
anticipated to save another $2 billion.
The Medicaid cuts
were called for in the 2006 budget resolution agreed to by the House and
Senate earlier this year. In addition to the Medicaid spending reduction
the first sustained by the program since 1997 the budget resolution
called for the creation of a study commission to recommend where the
cuts should be made and offer advice on longer-term changes to the
The commission, appointed by Health and
Human Services Secretary Michael Leavitt, took a little more than a
month to study the Medicaid program and issue its recommendations. The
commission held two meetings over three days and heard presentations
from a total of five individuals, according to the Centers for Medicare
& Medicaid Services' Web site. A second commission report, focusing on
recommendations for stabilizing Medicaid over the long term, is due Dec.
Senate Finance Committee Chair Chuck Grassley
(R-Iowa) called the commission's recommendations "constructive" and said
his committee would consider them as it explores ways to reduce
Medicaid's growth by $10 billion over five years. As previously
reported, Republican members of the Senate Finance Committee appear
headed for a fight over whether to spare the Medicaid program drastic
cuts by trimming the growth of Medicare.
GOP Senators Split on Whether to Cut Medicaid By $10 Billion.
For the full commission report,
Two days before the commission issued its
recommendations, The National Governors Association (NGA) weighed in
with its own guidance for Congress on how to secure the $10 billion in
Medicaid savings. The NGA recommendations include the following:
"Asset Transfer. States should have increased ability to prevent
inappropriate transfer of assets by seniors to qualify for Medicaid. To
that end, 1) the look-back period should be increased from 3 to 5 years;
2) penalty periods should begin at the time of application; and 3) the
sheltering of excess resources in annuities, trusts or promissory notes
must be prevented."
The report goes on to state that "Home
equity should be considered a countable asset in order to require
individuals to use home equity to off-set long-term and other medical
expenses that would otherwise be paid by Medicaid." It also calls for
reforms to facilitate the use of reverse mortgages to convert home
equity into cash, as well as the expansion of Long-Term Care Insurance
For the NGA's recommendations,
Property Not Specifically Devised in Will Passes To Residuary Devisees
Last Updated: 10/16/2005
The Florida Supreme Court
rules that if a decedent does not have a surviving spouse or child,
homestead property that is not specifically devised passes to the
residuary devisees, not the general estate. McKean v. Warburton (Fl.,
No. SC04-1243, September 8, 2005).
Henry Pratt McKean II had
a will leaving a specific cash bequest of $150,000 to Peter Warburton
and the remainder to his brothers. When he died, he had only a homestead
property valued at $140,000 and nominal assets. Without the homestead
property, the estate's assets did not satisfy creditor's claims and the
Mr. Warburton argued that the homestead
property should be used to fund his specific bequest. Mr. McKean's
brothers argued that it should pass to them through the residuary
The court of appeals ruled that Mr. Warburton was
entitled to the property (Warburton v. McKean, January 19, 2004). It
held that because a homestead can be freely devised if there is no
surviving spouse or minor child, the homestead becomes property of the
estate and is subject to division in accordance with the established
classifications giving some gifts priority over others.
The Supreme Court of Florida reverses, holding that if a decedent is not
survived by a spouse or minor child, the decedent's homestead property
passes to the residuary devisees, unless the testator specifically
orders the property to be sold and the proceeds made a part of the
general estate. According to the court, "while it is true that a
decedent may devise protected homestead property in his or her will if
there is no surviving spouse or minor child, the property may only pass
as a general asset of the estate by a specific devise."
download the full text of this decision in PDF format, go to:
click on "Opinions." (If you do not have the free PDF reader installed
on your computer, download it here.)
Katrina Now Affecting Medicaid, Medicare and Social Security Legislation
Last Updated: 10/17/2005
Senate Majority Leader, Bill Frist
(R-Tenn.), says that $10 billion in cuts to Medicaid requested by the
Bush administration will have to be weighed against the need to provide
health care to victims of Hurricane Katrina. Thousands of people have
lost health insurance through their employer, so the demand on Medicaid
may grow, according to an article in the
Palm Beach Post. In May, the House and Senate passed a
budget resolution to reduce Medicaid spending by $10 billion over
five years. Frist said that Congress should still look at reducing
Medicaid costs by considering changes that would eliminate waste, fraud,
and abuse, but not by cutting back on care.
While cuts to
Medicaid may not be made, the costs associated with Hurricane Katrina
are having the opposite effect on efforts to reverse a scheduled 4.3
percent reduction in Medicare physician payments. According to the
Kaiser Daily Health Policy Report, several Senate staffers have
questioned whether Congress will be willing or able to reverse the
payment reduction because reversing the pay reduction would cost between
$153 billion and $183 billion over 10 years. However, many doctors have
said they will no longer treat Medicare recipients if the cuts go
Hurricane Katrina is also having an effect on
proposed reforms to Social Security. According to an article in the
Washington Post, Republican Congressional Committee Chairman, Thomas
Reynolds (R-N.Y.), will recommend that the party drop efforts to
restructure Social Security. He told a group of Republicans that now
that Congress had Hurricane Katrina legislation to deal with, it would
be difficult to mount an effective public relations campaign to
restructure Social Security.
Meanwhile, the Senate is moving
to provide Medicaid coverage to survivors of Hurricane Katrina. Senate
Finance Committee Chair Chuck Grassley (R-Iowa) and Senator Max Baucus
(D-Mont.) have introduced a bill to temporarily extend Medicaid coverage
to displaced residents of Louisiana, Mississippi, and parts of Alabama.
According to the
Kaiser Daily Health Policy Report, the bill would require the
federal government to pay 100 percent of Medicaid costs for five months,
with an option to extend coverage for an additional five months.
In addition, the federal government would pay through 2006 100 percent
of the costs for Medicaid beneficiaries in the affected states. Other
provisions in the bill would eliminate asset tests, establish a fund to
help survivors with private health insurance bills, and eliminate
penalties for missed application deadlines for survivors.
Calls for Full Federal Coverage of Long-Term Care
become a lifeline for millions of people who require nursing home care,"
and "simply cutting the program won't work," two professors write in a
Los Angeles Times opinion piece that has been widely reprinted around
Jacob Hacker, a professor of political science at
Yale University, and Harold Pollack, faculty chair of the University of
Chicago's Center for Health Administration Studies, write that the real
problem with Medicaid "isn't well-off senior citizens gaming the system"
but rather that "few Americans have reliable and effective private
alternatives that can protect them if they require long-term care." The
authors say that long-term care insurance, touted as an alternative to
Medicaid, "will never work for millions of Americans." Insurers
themselves cannot reliably price such insurance due to uncertainties
about the future costs of care, they contend.
pursuing the home equity of widows with Alzheimer's disease, "the
federal government should pay for long-term care through Medicare,
openly, for every American," Hacker and Pollack say. Doing so would give
the elderly and disabled through the front door what they are now
gaining through the backdoor under Medicaid, and would "protect everyone
from one of life's most frightening risks."
To read the full
Los Angeles Times article, "Health cuts are the real 'death tax',"
GOP Senators Split on Whether to Cut Medicaid
By $10 Billion
Split on Whether to Cut Medicaid By $10 Billion
10/3/2005 Topic: Medicaid
Republican members of the
Senate Finance Committee appear headed for a fight over whether to
trim the growth of Medicare in order to spare the Medicaid program from
drastic cuts. Congress's fiscal year 2006
budget resolution calls for cutting Medicaid by $10 billion over the
next five years, but the resolution left open where the reductions
should be made. Among the proposals is to
tighten restrictions on the ability of the elderly to qualify for
Medicaid coverage of nursing home care by transferring assets. The
Finance Committee must submit a final proposal by September 16.
Committee Chair Chuck Grassley (R-Iowa) favors a proposal that would
reduce Medicaid spending only, while Sens. Olympia Snowe (R-Maine) and
Gordon Smith (R-Ore.) "have been working on ways to reduce the Medicaid
cuts," such as finding ways to trim Medicare spending, according to
Demetrios Karoutsos, a spokesperson for Sen.
Smith, said, "We certainly think there is room to reduce Medicare,"
adding, "Smith's goal throughout this entire process is to find ways
that don't impact beneficiaries." A spokesperson for Sen. Snowe, Antonia
Ferrier, said, "Taking $10 billion from Medicaid would be a wrong-headed
approach. There are a lot of other things that we are open to exploring.
That could very well be savings from Medicare as well."
is urging lawmakers not to slash $10 billion from Medicaid, arguing that
seniors will have more difficulty qualifying for nursing home care if
the funds are cut. The organization suggests that savings can be
realized through more efficient prescription drug spending by Medicaid.
In a letter to Congress, AARP and close to 40 other members of the
Leadership Council of Aging Organizations (LCAO) opposed the proposals
to further restrict the ability of the elderly to transfer assets,
stating in part that the proposals "will create unacceptable new
obstacles to nursing home admission for vulnerable, frail elderly and
disabled persons" Other signatories to the letter included the National
Senior Citizens Law Center, Families USA, the National Academy of Elder
Law Attorneys, the AFL-CIO, AARP, and the National Citizens Coalition
for Nursing Home Reform.
New Hampshire Seeks to Restrict
Transfers on Its Own While Congress considers changing the asset
transfer rules for the entire country, New Hampshire will soon be asking
the federal Centers for Medicare and Medicaid Services for permission to
impose on its residents the same restrictions. The New Hampshire
Medicaid agencys proposal, among other things, increases the "lookback"
period for all transfers from 36 months to 60 months and begins the
Medicaid penalty period on the date on which an applicant applies for
coverage or meets all eligibility requirements, whichever is later.
(Currently, the penalty period begins on the first day of the month of
To review the New Hampshire draft waiver
request, go to: