Medicaid: Means-Testing & Public Policy

From: Paul Michael Brown <paulo@mirror.his.com>
Subject: Medicaid: Means-Testing & Public Policy
Date: Wed, 8 Jul 1998 16:19:39 -0400 (EDT)

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Nelson E. Timken, Esq. <netimken@erols.com> recently stated:

|Medicaid is a program to assist those who cannot afford medical care. In our
|paychecks, we are taxed for programs such as these, in the form of a social
|security tax. Welfare assists those who cannot work, and therefore do not
|pay into the system.

I respectfully disagree with Mr. Timken's attempt to distinguish
Medicaid from welfare.  Both Medicaid and welfare are what policy
wonks call "means-tested entitlements."  Means-testing is just a fancy
way to say that you are not "entitled" to these payments unless you
are "indigent" or "needy" as defined by the eligibility rules. As Mr. 
Timken concedes, the Medicaid program pays some of the medical
expenses for people who are indigent. And as Mr. Timken notes, the
Medicaid program is financed by taxes collected from people who
generally do not qualify for Medicaid payments. Other forms of what we
call "welfare" (AFDC, food stamps, Section 8, etc.) operate on exactly
the same principle. Taxes are collected from non-indigent folks and
payments are made to indigent people. Granted, there are minor
differences in the financial details (the use of trust funds, for
one). But in the end, Medicaid is a means-tested entitlement, just
like any other form of welfare.

|My mother worked for 50 years and paid into the system.
|If she and others like her do not wish to impoverish themselves in order to
|receive benefits from a system they paid into, then it is their right to
|transfer assets to their children to do so.

First, let's debunk the "I paid into the system argument" that's so
common in the debate over the intergenerational transfer of wealth via
Medicare, Social Security and Medicaid. The taxes that Mr. Timken's
mother paid during her working lifetime do not even begin to pay for
the benefits that she will collect from Medicaid. So it's a myth that
her Medicaid benefits represent some "return" of "what she paid in."
(Albeit a myth many folks cling to because it reduces the "welfare"
stigma that might otherwise attach to receiving payments from Social
Security, Medicare and Medicaid.)

The difference between the trivial amount of taxes she paid and the
money she collects from Medicaid comes from the rest of us. This is
where the public policy debate comes in. If Mr. Timken's mother is
*truly* indigent, most people would not mind paying taxes to fund her
Medicaid payments. On the other hand, most people would, I think, be
less willing to pay taxes which are then used to pay for Mrs. 
Timken's medical care when the net result is to increase the amount
inherited by Mrs. Timken's heirs. Put crudely, we don't like people
who scam the system and play us for suckers.

So I disagree with the statement that Mrs. Timken shouldn't have to
"impoverish" herself to collect Medicaid payments. On the contrary,
she should not collect a dime unless she's indigent as defined by the
eligibility rules. After all, Medicaid is a means-tested entitlement. 
If she can pay for her own medical care, she should not receive it at
the taxpayers' expense. During the past few years, we've seen
ever-tightening rules regarding Medicaid eligibility, especially in
those "lookback" cases where the person collecting the benefits at one
time had assets which got "transferred" and now claims to be
"indigent." IMHO, this represents a recognition by society that some
people who do not fit our conception of indigent are collecting
Medicaid. In my view, this is a positive trend. 




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