Rosenstein acknowledges that California has been "one of the least aggressive" states in closing the loopholes. The state tries to make up for that, he says, with one of the country's most ambitious programs of collecting money from patients after they die -- usually by placing a lien on their homes.
Yet enforcement efforts are uneven. Medi-Cal simply mails letters out to the estates of patients who owe money; but it hasn't bothered to track down those who didn't respond. That will change this month, said the Department of Health Services.
About 7,000 letters were going out a month, officials said. But half of them were not answered and not followed up on.
Most elder-law experts, however, say that if recipients fill out the paperwork properly before entering the system, they can keep the state from ever having a claim on their property.
"If somebody desires to avoid the estate-recovery process, there are ways to do that," Rosenstein said. "There are loopholes to take advantage of."
But although the system may be easy to exploit, he warns that doing so can have unintended consequences for seniors.
"It is very dangerous for someone to voluntarily impoverish themselves," he said. "If someone voluntarily goes into Medi-Cal, they may be able to retain only $35 per month for personal needs. Most people would think that is not much money to buy things for family or grandchildren or to do whatever you want to do."
Lockyer warns of "scam artists who rip off elderly people," hoping to cash in on big fees that asset-sheltering can bring, even when it's against the client's interest. "In these cases, no benefit is being conferred on seniors."
Betsy Hite, director of public affairs at the California Assn. of Health Facilities, has collected a stack of advertisements from lawyers marketing what is known in the industry as Medi-Cal Estate Planning.
"There has been an explosion of these attorneys and estate planners," Hite said, "and nobody is cracking down on them."
Rosenstein said the state was doing all it could. "The law is the law," he said, "until it's changed."
Times staff writer Tim Reiterman contributed to this report.