AP Exclusive: Medicaid for the middle class?
Wednesday, June 22, 2011
AP Exclusive: Medicaid for the middle class?
By: Ricardo Alonso-Zaldivar, Associated Press
WASHINGTON - President Barack Obama's health care law would let
several million middle-class people get nearly free insurance meant
for the poor, a twist government number crunchers say they
discovered only after the complex bill was signed.
The change would affect early retirees: A married couple could
have an annual income of about $64,000 and still get Medicaid, said
officials who make long-range cost estimates for the Health and
Human Services department.
After initially downplaying any concern, the Obama
administration said late Tuesday it would look for a fix.
Up to 3 million more people could qualify for Medicaid in 2014
as a result of the anomaly. That's because, in a major change from
today, most of their Social Security benefits would no longer be
counted as income for determining eligibility. It might be compared
to allowing middle-class people to qualify for food stamps.
Medicare chief actuary Richard Foster says the situation keeps
him up at night.
"I don't generally comment on the pros or cons of policy, but
that just doesn't make sense," Foster said during a
question-and-answer session at a recent professional society
meeting.
"This is a situation that got no attention at all," added
Foster. "And even now, as I raise the issue with various
policymakers, people are not rushing to say ... we need to do
something about this."
Administration officials said Tuesday they now see the problem.
"We are concerned that, as a matter of law, some middle-income
Americans may be receiving coverage through Medicaid, which is
meant to serve only the neediest Americans," said Health and Human
Services spokesman Richard Sorian. "We are exploring options to
address this issue."
Administration officials and senior Democratic lawmakers
initially defended the change, saying it wasn't a loophole but the
result of a well-meaning effort to simplify the rules for deciding
who would get help under the new health care law. Instead of a
hodgepodge, there would be one national policy.
But Sen. Orrin Hatch of Utah, the ranking Republican on the
Senate Finance Committee, called the situation "unacceptable" and
said he intended to look into it.
Governors have been clamoring for relief from Medicaid costs,
complaining that federal rules drive up spending and limit state
options. The program is now one of the top issues in budget
negotiations between the White House and Congress. Republicans want
to roll back federal requirements that block states from limiting
eligibility.
Medicaid is a safety net program that serves more than 50
million vulnerable Americans, from low-income children and pregnant
women to Alzheimer's patients in nursing homes. It's designed as a
federal-state partnership, with Washington paying close to 60
percent of the total cost.
Early retirees would be a new group for Medicaid. While retirees
can now start collecting Social Security at age 62, they must wait
another three years to get Medicare, unless they're disabled.
Some early retirees who worked all their lives may not want to
join a program for the poor, but others might see it as a
relatively painless way to satisfy the new law's requirement that
most Americans carry health insurance starting in 2014. It would
help tide them over until they qualify for Medicare.
The actuary's office said the early retirees eligible for
Medicaid would be on top of an estimated 16 million to 20 million
new people that Obama's law already brings into the program, by
opening it to childless adults with incomes near the poverty
level.
It's unclear how much it would cost to cover the retirees.
Federal taxpayers will cover the entire initial cost of the
expansion.
Republicans already see a problem.
Former Utah governor Mike Leavitt said bringing early retirees
in will "just add fuel to the fire," bolstering the argument from
Republican governors that some of Washington's rules don't make
sense.
"The fact that this is being discovered now tells you, what else
is baked into this law?" said Leavitt, who served as Health and
Human Services secretary under President George H.W. Bush. "It
clearly begins to reveal that the nature of the law was to put more
and more people under eligibility for government insurance."
The Medicare actuary's office roughed out some examples to
illustrate how the provision would work. A married couple retiring
at 62 in 2014 and receiving the maximum Social Security benefit of
$23,500 apiece could get $17,000 from other sources and still
qualify for Medicaid with a total income of $64,000.
That $64,000 would put them at about four times the federal
poverty level, which for a two-person household is $14,710 this
year. The Medicaid expansion in the health care law was supposed to
benefit childless adults with incomes up to 133 percent of the
poverty level. A fudge factor built into the law bumps that up to
138 percent.
The actuary's office acknowledged its $64,000 example would
represent an unusual case, but nonetheless the hypothetical couple
would still qualify for Medicaid.