For older Californians distressed by the thought of nursing home bills devouring their savings, the words of a Los Angeles attorney may seem astonishing: "We can qualify even a millionaire for Medi-Cal benefits."
But as troubled as they may be by such an offer, officials at California's healthcare program for the poor admit it's possible.
At a tremendous cost to taxpayers, aging Americans in California and across the nation are transforming themselves, at least on paper, from affluent seniors to needy individuals eligible for state health benefits.
"It's a huge public health problem," said Thomas Scully, who ran the country's $269-billion Medicaid system for the Bush administration until December. Medi-Cal is California's version of that program.
"There is an entire industry around the country set up to coach people to transfer their assets to their children, so the state can pay for their care," Scully said. "Every time you pay for one of these people to go to a nursing home, you are taking money away from the people who are truly poor."
In financially squeezed California, the situation is especially poignant.
It's costing the state as much as $150 million a year, as estimated by the California Assn. of Homes and Services for the Aging. And an investigation by state Atty. Gen. Bill Lockyer's office backs up the math: It has found one Northern California attorney alone who has been able to get a thousand clients into the system, costing the state an estimated $50 million.
The state has tried to limit losses by putting liens on the homes of patients after they die, but Medi-Cal officials and elder-law experts say the process can be easily evaded. Lockyer said there was only so much he could do: Most of the time it is legal.
"If there are legal ways to legitimately pass assets to heirs, I can't fault people for having that desire," he said. "If somebody wants the system changed, that's up to policymakers."
Jack Christy, director of public policy for the California Assn. of Homes and Services for the Aging, said the policymakers need to do something.
"A lot of the things California is allowing just defy common sense," he said. "You end up with people paying taxes into the system -- like a gardener making $20,000 or $30,000 a year -- so some millionaire can get on Medi-Cal. It's not right."
Nursing home administrators see the asset transformation firsthand. At the Pilgrim Haven Retirement Community's nursing home in the affluent San Francisco suburb of Los Altos, the staff was baffled when a patient with a $2-million house, pricey commercial property in San Jose and considerable savings recently became eligible for the program.
"The sons went to an attorney, and she qualified," said administrator Tara McGinnis at a recent legislative hearing. She said four more patients at the home with substantial financial resources had also switched over to Medi-Cal recently.
Now, taxpayers pick up a monthly tab of about $3,500 each at Pilgrim Haven, and it's against state law for the nursing home to evict them.
Medicare, the federal healthcare program for the elderly, covers 100 days in a nursing home. If senior citizens can get on Medi-Cal, they are eligible for a semiprivate room in a nursing home, therapy and some prescription drugs for as long as is medically necessary.
A cottage industry of attorneys and estate planners is marketing Medi-Cal as a kind of inheritance insurance through which parents can give their money to relatives, declare poverty and get state assistance. Some of those attorneys say they can get just about anybody on the system.
"You can secure your children's inheritance!" says a pamphlet given out by Senior Care Advocates, a Northern California company that helps seniors qualify for Medi-Cal. "You can protect your assets
"Find out how to qualify for nursing home benefits and have Medi-Cal pay the expenses!" says a brochure from another firm. "If you are paying out of pocket, STOP!"
Los Angeles attorney Judd Matsunaga says in a videotaped presentation: "We can qualify even a millionaire for Medi-Cal benefits."
"It's a matter of knowing the law and working within the rules of the law to do what is legal," Matsunaga said in an interview. "My belief is these loopholes were put into the system because the people who wrote the laws knew the average American would never seek legal advice to try to preserve their assets."
Medi-Cal is reserved for single people with no more than $2,319 of assets. If a person is married and his or her spouse is not on Medi-Cal, the couple can have no more than $94,760. Simply giving cash away to family members can cause disqualification.
But estate planners have found ways to reconfigure people's assets to make the people eligible penalty-free. The planners first move the money into a place that is exempt from the restrictions, and then give it away.