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Medicaid Estate Recovery, Latest Obamacare Horror Story, Was Backed By ALEC

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WASHINGTON -- A new catalyst for angst over President Barack Obama's health care law is a provision that allows states to recoup the cost of long-term care for Medicaid patients after they die.

Conservative outlets in recent weeks have warned that under the Medicaid estate recovery program, a "state can seize your assets to pay for care after you're forced into Medicaid by Obamacare." The Washington Times called it a potential "cash cow for states to milk the poor and the middle class." RedState.com called it the "Medicaid asset-seizure bonanza."

But like most horror stories involving Obamacare, some history and nuance are getting lost. As noted by the Washington Post and Think Progress, the provision is actually decades old. It was established in 1965 and enhanced in 1993, when Congress required states to institute the provision for deceased Medicaid recipients 55 years or older.

In fact, the idea was so well established prior to Obamacare that prominent conservative policy group American Legislative Exchange Council has been a consistent supporter. In 2013, the group encouraged states to "conduct a study to examine the estate recovery program ... and determine options the state has to improve recovery under and increase the efficacy of the program." In September 2004, ALEC put out a report calling on states to enhance the enforcement of estate recovery programs. And in a press release that same month, the group suggested that states put in place "a strong estate recovery program to generate alternative nontax revenue and make Medicaid a loan, not a grant, for the middle class as intended by federal law."

Going as far back as 1995, ALEC was boosting the idea as a way to shore up the program's finances and ensure taxpayers weren't forced to cover the health care costs of Medicaid recipients who could afford it. According to a September 1995 National Journal article, the group drafted model legislation stating that assets transferred within eight years of application for Medicaid coverage constituted a debt to the state, and that in order for nursing-home care to kick in, recipients or their heirs would have to pay back the assets.

Currently, recovery programs vary from state to state, with some states taking back money from estates to cover the cost of all Medicaid services, while others recoup only money for long-term care and still others recouping costs for additional, specific items.

The provision has come under new scrutiny recently due to the fact that Obamacare has enlarged the impact of the estate recovery program. By expanding Medicaid eligibility to those who earn 133 percent of the federal poverty level, the law is expected to bring in millions more consumers. (The impact would be larger still if all the states went along with the Medicaid expansion.) Since those consumers will include individuals with more wealth than traditional Medicaid recipients, it stands to reason that they will have more valuable assets that state governments could raid to cover the costs of care.

And it's not just the conservative press that's raising concerns, but the progressive media as well. The Washington Post reported that a 54-year-old former lawyer from New York City said that she declined to enroll in Medicaid even though she was eligible "because she owns an $850,000 apartment she hopes to bequeath to a family member."

Concerns like these have been enough to get the attention of public officials. Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, told the Washington Post that more guidance on Medicaid recovery programs would be forthcoming.

"We recognize [the] importance of this issue and will provide states with additional guidance in this area soon."

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