A troubling characteristics of how the U.S. economy operates is that the need for medical care leads to the financial ruin of far too many Americans.  Elderly people are particularly vulnerable to financial collapse. Let’s take a look at one requirement to receive Medicaid benefits, for example. For those who find themselves in the hospital for any length of time and diagnosed with a serious or chronic illness, Medicaid quickly becomes the only viable financial option to continue treatment. In order to be eligible for Medicaid an applicant’s assets are examined. A disqualification for Medicaid is if you own a house valued at $500,000 or more. Homeowners who own houses worth less than $500,000 are eligible for Medicaid, but may lose their exemption if they move into an assisted living home.

States differ regarding this exemption. Some allow you to keep your home for six months provided you declare the “intent to return” to what is now being termed your former primary residence. Keep in mind that for many sick people, they are learning about these legal roadblocks at the same time they are facing a debilitating illness.

For patients who can go on Medicaid and keep their house, this can become a liability for whoever inherits it after their death. Read about Medicaid Estate Recovery in Wikipedia:

Medicaid Estate Recovery is the process initiated by U.S. state governments for recovering payments they made under the Medicaid program to program beneficiaries. The government recovers the sum of payments from the estate at the time of death of the program beneficiary. If the patient is deceased the children. The recovery is authorized and required by the Omnibus Budget Reconciliation Act of 1993.

In essence what this means is that Medicaid does not really cover medical care expenses free and clear as many imagine, but acts more like as an interest free loan during a health crisis. So for the children of a Medicaid recipient it is better from a financial perspective that the parent dies owning nothing.

Here is what an elder lawyer, Craig Reaves, writes about this subject in a New York Times interview:

Even if the house is exempt, it may not make much sense to try to hold on to it. Once the owner is on Medicaid, she will not have enough income to pay the taxes, insurance and upkeep.

There isn’t much incentive for children or others to pay those expenses, either, because when the owner dies, Medicaid will want to be reimbursed. That usually happens by using the proceeds from the sale of the house. And yes, many states do put a lien on a house when the owner becomes eligible for Medicaid. This protects the state’s ability to get reimbursed when the house sells. 

Will these sorts of eligibility requirements change with the Affordable Healthcare Act? In the meantime, it is worth pondering what the fear here is that we stand by while the elders of our families are treated so shabbily in this country. One could blame it on greed of the wealthy,  U.S. capitalism gone amok, but that would be giving in to the misguided premise that having money and power over others is a primary indicator of human success.  This indicator towering over others diminishes the value of  an array of important roles in society, for example: teacher, parent, friend, artist, plumber, physician, humorist, and student.

A workable approach for the non expert to confront potentially disastrous end of life economic outcomes would be to concede every individual is  responsible in part  for a  failure of imagination as a community.  To leave the burden to others the would be benefactors inside our heads turn sour and begin to bully us into compliance we are undeserving. It’s okay to start off flawed.

Thoughts on bullying by Christopher Boehm, PhD, who wrote Moral Origins, is quoted in Forbes:

“Any species that has a social dominance hierarchy, like apes or monkeys or wild dogs or lions, has bullies.” He adds that bullying is adaptive for many species (and even for us, in many ways), “because you get better food or mating opportunities… In primates, studies have shown that the top bullies have more offspring and therefore their genes proliferate.” So there’s a clear payoff to it, since the more you bully, the higher you’ll rise in social ranks, and the more offspring you’ll have. This may have worked for us in years (or eons) past, but nowadays, bullying is not so adaptive.

The problem with evolution is that doesn’t occur evenly. We develop extraordinary skills in some ways – abstract reasoning, language, and even social interaction – and in other ways, our behavior is breathtakingly outdated. Ancient parts of our brains still exist, and inform our behavior in lots of maladaptive ways. So bullying is a great example of our own evolution betraying us – or, in other contexts, it is at least an example of us acting on drives that are no longer relevant to our daily lives. After all, what’s the point of picking on a kid who’s smaller than you and who could not possibly present any kind of real threat? And the point of bullying an old lady on a bus is hardly obvious.”

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References:

K. Gabriel Heiser’s “Medicaid Might Make You Pay Them Back Mom’s Nursing Home Costs” :

http://www.agingcare.com/Articles/medicaid-repayment-of-nursing-home-estate-recovery-150497.htm

Craig Reaves in the New York Times on 11/24/10:

http://newoldage.blogs.nytimes.com/2010/11/24/ask-an-elder-law-attorney-medicaid-and-the-primary-residence/

“Bully Psychology: Where Evolution and Morality Collide” by Alice G. Walton in Forbes 7/5/12:

http://www.forbes.com/sites/alicegwalton/2012/07/05/bully-psychology-why-bullying-is-one-of-evolutions-big-snafus/