WASHINGTON — Congress is considering a crackdown on financial planning strategies increasingly favored by middle-class families to shift the cost of nursing home care for elderly parents onto the federal government.
Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) denounced the practices Wednesday as "legal shenanigans" and vowed to help stop maneuvers he said were turning Medicaid into an asset protection program, instead of what it was supposed to be -- an insurer of last resort for elderly people too poor to afford care.
Under present law, Medicaid, the federal program providing healthcare benefits to the poor, covers nursing home costs if residents can show that they do not have sufficient assets to pay for their own care -- which experts say now averages $50,000 to $70,000 a year.
As costs have risen, it has become commonplace for families to transfer elderly relatives' assets to others -- often to adult children or to grandchildren -- through gifts or other legal devices, to keep the assets instead of letting them be used for nursing home care. So widespread is the practice that some estate planners hold seminars complete with video presentations, refreshments and spreadsheets.
Tightening the rules could save Medicaid $1 billion to $2 billion over five years, Grassley said, though Medicaid's long-term care bill is projected at $290 billion over the next five years.
But some policy experts say the answer is not to make it harder to get into Medicaid, but to recognize a need for a national long-term care program.
"Solutions that focus only on making Medicaid 'meaner' ... do our nation a disservice," said Judith Feder, dean of the Georgetown Public Policy Institute, who was a senior official at the Department of Health and Human Services during the Clinton administration.
"The nation lacks a policy that assures people access to quality long-term care, when they need it, without risk of impoverishment," Feder said.
On the second of two days of hearings on waste, fraud and abuse in Medicaid, Grassley's committee heard from an elderly woman who lived in a continuing care community and who complained that some of her neighbors had figured out how to shield hundreds of thousands of dollars while qualifying for Medicaid.
"Some have been persuaded by their greedy children," said 71-year-old Ruth Pundt, who lives at Oak Crest Village in Parkville, Md., in an interview.
