• Authors: Heather Howard (Princeton University), Amanda Spishak-Thomas (Rutgers University), Emma Sandoe (Oregon Medicaid Division)
• Title: “Lots of Pain for Little Gain: Three Decades of Medicaid Estate Recovery”
• Journal: Health Politics, Policy and Law

“Medicaid is the joint federal-state program that provides health insurance to low-income people,” said Heather Howard, Professor of the Practice and Director of State Health and Value Strategies. “That includes poor seniors — people who are both over 65 and low-income, and thus are on both Medicare and Medicaid. Why is that important? Medicaid, not Medicare, is the primary payer for long-term care, or more commonly, nursing homes. Because long-term care is so expensive, people end up exhausting their savings and impoverish themselves, spending down many of their assets, to qualify for Medicaid to cover their nursing home and other long-term care costs. As the population ages, state costs for Medicaid — especially for nursing home care — have been increasing.”

In 1993, in response to the cost pressures created by these programs, Congress created Medicaid estate recovery — a process requiring states to recoup funds spent on long-term care through the beneficiaries’ estates after the individual passes away. The goal was to support the Medicaid program by requiring families to repay the costs of the care received.

“Essentially, the long-term care costs become the debt of the deceased’s estate – usually surviving children and grandchildren,” Howard said. “This results in states tracking down the assets of former Medicaid beneficiaries after their deaths and forcing their families to repay the ‘debt.’ While intended to inject fairness into Medicaid financing – why should the state pay for care that a person can afford? – the burden has fallen disproportionately on families of color, who already suffer from the Black-White wealth gap, and has exacerbated inequities because low-income families are less able to engage in estate planning that shields family wealth from recovery efforts.”

The research examined how states, including Georgia, Massachusetts, and North Carolina, have used the flexibility created by Medicaid estate recovery and the impact of the varying state policies to address these inequities.

“We find that often the recovered funding makes only a small dent in state budgets and is not cost-effective, considering the administrative costs states incur in identifying and recouping the funds,” Howard said. “Our findings also suggest that these types of reforms, if adopted by more states or by Congress, could help the surviving family members and enable intergenerational transfer of wealth.”

Despite the profound strain it can have on families’ finances, there has been little research on the impact of Medicaid estate recovery policies since its enactment more than 30 years ago.

“The perfect storm of the aging of our population, increasing health care costs, and deep cuts to health care funding in federal budget reconciliation mean we can expect added pressure on long-term care programs and state and federal budgets,” Howard said. “Our research demonstrates that the Medicaid estate recovery program may not be the answer to Medicaid’s fiscal challenges, and that reforms such as adopted by the states we studied can mitigate the harms associated with the program.”