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With Estate Recovery, States Recoup Long-term Care Costs from the Poor After They Die

The United States continues to pursue the cruel policy of estate recovery, which essentially forces states to raid the estates of the poorest people in America to help pay back some of their healthcare expenses after they die. Estate recovery was made mandatory for all states in 1993, and it attempts to recoup the cost of long-term care from Medicaid participants, if they hand down any assets, such as a home, to their loved ones. The practice disproportionately impacts the poor and minorities, and it does next to nothing to help pay for the cost of long-term care.

The United States continues to struggle to find ways to rein in the cost of healthcare for the poor and elderly, and estate recovery is one of the ways that politicians can pretend to provide solutions without offending the deep-pocketed lobbyists from health care and pharmaceutical companies. Essentially, when a Medicaid beneficiary dies, the value of their estate (such as a home, savings, or retirement accounts) goes back to the state to cover their health care costs before transferring to any heirs.

It might sound like a way to prevent the wealthy from taking advantage of a program for the poor, or a smart way for the government to control the skyrocketing cost of its health care obligations, but both assumptions are false. A person must have demonstrated need (no more than $2,000 in assets) to qualify for Medicaid, but some assets, such as your primary home, are excluded. Estate recovery helps the government seize those excluded assets after the person dies, including even jointly owned assets, depending on the state. As a result, the vast majority of the “estates” that are being recovered are the family homes and nest eggs of poor people, especially in minority communities.

Other than possibly scoring cheap political points, the policy does next to nothing to help the government pay for long-term care. According to U.S. News & World Report, who cited a Medicaid and CHIP Payment and Access Commission (MACPAC) report, the recouped estate value that was recovered represents less than 1% of the total cost of national long-term care. That same report recommended that Congress should make Medicaid estate recovery optional for states once again.

In most of the industrialized world, healthcare is considered a basic right, such as education and national defense. In the United States, healthcare is still a private industry, one with a powerful influence on U.S. elections. As a result, U.S. healthcare legislation and policy often represents the interests of healthcare and pharmaceutical corporations and their investors, and much of current legislation has been written by their lobbyists and rubber-stamped by Congress. As a result, Americans pay more than the citizens of any other country for healthcare, and the impact is felt by citizens, the employers who provide health benefits, and the government programs for the poor and elderly. As the cost of healthcare continues to rise beyond the rate of inflation, it puts an increased burden on those entities that can least afford the cost. There is a dire need for leadership and sound policy, but estate recovery is simply a way to shift a minuscule fraction of the cost to the most vulnerable people who can afford it the least.

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