We often hear conservatives speak of the poverty trap created by the myriad of regulations surrounding assistance to the poor. Here is a perfect – and tragic – example of such a trap.
I was tipped off to this particularly outrageous bit of government rulemaking by an article at the Patheos blog: “Medicaid Burn: Spend Down What?“
Disability is not a lot of money, there is no need for a savings account to hold excess income. Disability teaches humility and frugality. The Social Security Administration attorney put me on permanent disability and approved my Medicaid in the autumn of 2012. I received medical benefits for about 90 days. And then in January 2013 my world radically changed…the government changed the Medicaid rules.
I ran the numbers that the DHS indicated as my deductible amount: my Spend Down deductible for medical expenses must be 75% of my disability check (that’s right 75%) before I will be reimbursed. If it’s, say, 72%…oops, so sorry, you’re not getting any medical reimbursement and you’re out that amount to pay for your living expenses.
So, let’s imagine my SSA monthly income is on the higher end at $1000 a month. This must pay for mortgage, utilities, food, clothing, laundry soap, and, well, all other personal hygiene stuff. And now imagine my medical and prescription expenses are at the low end at $720 for the month. That is only 72%, three points below my required 75% Spend Down deductible. Do the numbers ($1000 SSA income – $720 un-reimbursable medical). That leaves me with $280 per month to pay my mortgage, utilities, and groceries. Oh, and DHS added to my income my qualifying amount of $20 a month in food assistance. $20 a month for food?!
Unsurprisingly, this rule change is yet another hidden easter egg in the massively complex new regulations that are part of the Affordable Care Act. In an earlier blog post, I discussed the rules that quantify “affordable” employee premium contributions to health insurance offered by their employers. It turns out that “affordable” is defined as 9% or less of total family income, meaning that for a family earning an average income of $52,000 a year, an “affordable” employee premium contribution could be as high as $390 a month. And that’s only for the employee’s insurance. Employers are not required to offer coverage for a spouse, and the coverage they offer for children is not required to be “affordable.” Further, if a family cannot afford employee-sponsored insurance and applies for insurance through an ACA insurance exchange, they are disqualified from receiving any type of Federal premium assistance because they declined to accept employer coverage – regardless of how much it would have cost.
The rules that cover the Medicaid spend-down requirements are just as senseless. I did a little online research and was stunned by what I found.
From West Virginia:
The WV Department of Health & Human Resources uses a chart of income amounts for family sizes. The DHHR chart sets a pre-determined amount of income for different family sizes. Any income you have above that chart amount will be your “spend down” amount. It doesn’t matter what your actual bills and living expenses may be. The DHHR chart is the only thing that matters.
For example, DHHR considers $200 per month as the “necessary” amount of income for a one-person household. Any income above $200/mo for one person will be the Spend Down amount.
Example: Joan lives by herself. She has income of $600 a month.
The DHHR chart for one person says that all income over $200 per month is the Spend Down amount. Joan has $400 a month over that limit.
Multiply this monthly amount over the six-month period. Joan will have a total “Spend Down Amount” of $2,400.
The $2,400 is Joan’s ‘target’ amount of medical bills she must have before Medicaid will kick in during that six months. If Joan does run up $2,400 in medical costs during the six-month period, Medicaid will cover all other medical needs during that six months.
But don’t worry, Joan doesn’t actually have to pay anything. She can just go deeper into debt every month!
WHAT IF I CANNOT AFFORD TO PAY MY SPEND-DOWN AMOUNTS?
You don’t have to pay the full amount of the spend-down, you just have to owe the amount. You will still be responsible for the old bills you owe. But you can make arrangements to pay the old bills off more slowly. In the meantime, your medical bills above the spend-down amount will be paid by Medicaid.
In most cases, individuals who meet the medical determination for disability, but who have income above the Federal Benefit Rate ($674 per month for an individual or $1011 per month for a married couple) may have a spend-down. This means that individuals will have to spend down their excess monthly income toward their medical expenses before they are eligible for Medicaid each month. If your monthly income is over the individual Federal Benefit Rate, Medicaid will disregard part of your income, including a $15.50 General Income Disregard (GID).
The only income exempted from the spend down calculation is Federal SSI, which by law must be spent on food, clothing, or shelter.
At some point you have to wonder where these dollar amounts came from. It’s doubtful that any of the legislators and lobbyists who wrote this bill would be happy if their families had to live on $1000 a month. I also doubt that any of them could get by on $200 a month living expenses as an individual.
But there is at least a partial solution to the spend down dilemma, and it’s found in the state Medicaid expansion plan (Adobe PDF) included in the Affordable Care Act. One of the major parts of this plan is the creation of assistance programs for the “medically needy,” those with too much income to qualify for traditional Medicaid assistance, but who cannot afford their current medical expenses (or the new spend-down rules).
Unfortunately, this part of the ACA has proven to be the most politically toxic. Proponents of Medicaid expansion point out the fact that Federal dollars will cover 100% of the added cost of the expansion starting in 2014. However, that amount will decrease to 90% after six years, and currently there is no way to project how much Federal funding will be available after that. Most fiscally conservative governors realize that a Federal government that adds a trillion dollars a year to its existing debt load can’t be trusted to keep these kinds of promises indefinitely. They also know that they will be required to pick up the tab left over after any Federal funding decreases. This amounts to nothing more than a massive cost-shifting plan by the Federal government – one that most states cannot afford.
Further, the Obama Administration originally tried to strong-arm all 50 states into accepting the Medicaid expansion plan by threatening to cut off all Federal Medicaid assistance to states that failed to implement the plan. The Supreme Court ruled these threats unconstitutional, but they left a strong, bitter taste in the mouths of many governors and state legislators.
Some means testing involving assets and income is reasonable in order to ensure that government aid goes to the people who really need it. But I can tell you from personal experience that the number of “welfare queens” is absolutely dwarfed by the number of people who literally would not be able to afford food, housing, or proper medical care without public assistance.
As I look at the politics surrounding the Medicaid expansion and the new Medicaid spend down rules, I don’t see a sincere effort on the part of the Obama Administration to bring down medical costs and expand medical coverage for needy people, or to address Medicare/Medicaid fraud, which is now hovering in the range of $50 billion per year just at the Federal level. Instead, I see a plan to grow Federal power and force states to comply with Administration directives by holding the poorest among us hostage, squeezing them with new Federal regulations and forcing states to either let them suffer, or buy into the ACA’s Medicaid expansion scheme.
Welcome to “The Chicago Way.”`