Beginning in January, the nation’s most populous state will put to the test the idea that Medicaid is reserved for the needy, as determined by income and asset thresholds reflecting our earnings and wealth. It may create a burden that robs America’s poor to pay rich Californians.
As a partly federally funded, state-run form of health insurance, Medicaid is in many respects 50 unique programs. Each state has different limits on resources, and no two local populations of poor and disabled recipients look the same. However, the federal government sets guidelines for income and asset thresholds, above which individuals cannot qualify. It’s both imperfect and necessary to some degree. But what happens when one state eliminates an eligibility threshold altogether?
California legislation signed back in 2021 will soon take effect, eliminating all asset eligibilities for certain populations, particularly those needing long-term care the most. This opens the program for individuals with hundreds of thousands, or even millions, of dollars in net worth. Such a change will especially harm poor people who need long-term services and supports. With California facing a massive budget deficit, this is not the time to expand government services to individuals who could otherwise pay themselves.
As a neurosurgeon (AMD) and a hospitalist (ANM) working in a California safety-net hospital, we see many patients who survive their injuries or illness but require long-term care. If they have Medicaid, these patients can linger in the hospital for months, even after they are medically stable, because there are so few facilities that accept Medicaid payment. Allowing wealthy people access to Medicaid will further strain an already strained health system, further depriving the truly needy of vital health care services.
The intent behind California’s move—to protect long-term patients’ assets from being depleted to pay for expensive long-term care—is understandable. But in effect, it ensures generational wealth is perpetuated while the state government foots the bill. Not only that, but because Medicaid is jointly funded by the federal government, federal taxpayers are funding California’s excess.
Nationally, the Centers for Medicare and Medicaid Services (CMS) should be doing more to ensure the wealthy don’t take advantage of the system. Some are diverting billions of dollars meant for the poor through various loopholes, and that’s without California turning these loopholes into statutes. There are already countless ways for the wealthy to pass their savings to their children; abusing Medicaid for long-term care should not be one of them.
The move also has ramifications far beyond long-term care. Most Medicaid spending already goes toward this category, diverting funds needed to pay for physicians, hospitals, therapists, and pharmaceuticals for other Medicaid recipients. And when Medicaid reduces reimbursement for regular health care services, access to care worsens. Allowing more people who could otherwise afford to pay for their own care to use a system meant for the poor will only perpetuate the program’s disparities.
For these and many other reasons, CMS should ensure that Medicaid is reserved for those who have no other means to fund their own health care. Changes to state Medicaid programs, including eligibility requirements, must be approved at the state and federal level. The change to California’s Medicaid eligibility was approved by CMS. It’s notable that this waiver was approved without CMS making it available for public comment. Ironically, the Biden administration rescinded a Texas waiver for a different reform because of a lack of public comment.
That leaves Congress to intervene, ensure asset limits remain in place, and reiterate Medicaid’s intent. Its greatest bargaining chip is threatening to withhold federal matching funds for states that are out of compliance.
This is an issue that crosses partisan lines. There is no free lunch – the greater the expansion of the program in one area, the fewer dollars and services available in others. Expanding the program to the wealthy jeopardizes access and care for those less fortunate. The federal government must step in to stop California from exacerbating health care disparities with a shortsighted policy.
Anthony DiGiorgio is an assistant professor of neurosurgery at the University of California, San Francisco (UCSF) and a senior affiliated scholar with the Mercatus Center at George Mason University. Anil Makam is an academic hospital medicine physician and an associate professor of medicine at UCSF. Both are on the faculty at the Philip R Lee Institute for Health Policy Studies at UCSF.
