A little-noticed provision in the Republican budget could take a bite out of the sandwich generation - middle-aged people with elderly parents needing nursing-home care and kids heading off to college.
The GOP bill would allow states for the first time in 30 years to tap into the assets of adult children to pay for their parents’ nursing-home care - a cost that now runs about $36,000 a year. Currently, Medicaid pays for most nursing-home expenses.
Republicans say the provision is designed to shift Medicaid costs from taxpayers to well-off children.
“If my father required nursing-home care and I’m able to pay, it should be my responsibility to look after him,” said Rep. Thomas Bliley, R-Va., chairman of the House Commerce Committee.
But the proposal, which may be dropped in budget negotiations, would affect far more than just the wealthy. It would allow states to go after anyone making more than the state median income - a figure that ranges from about $25,000 to $42,000, depending on the state.
Under current law, elderly in nursing homes often “spend down” their life savings until they have only $2,000 in assets and a monthly income of about $45. Then they qualify for Medicaid. Under the Republican plan, just about every strapped middle-income family in the country could be liable to step in at that point.
“What this means is that families will be forced to choose between sending their kids to college or paying for their parents in nursing homes,” said Judy Feder, a health care policy professor at Georgetown University and a former Clinton administration health official. “Medicaid was based on the premise that nursing-home care should not impoverish families.”
Consumer and elderly groups are lobbying intensely for the provision to be removed in budget negotiating sessions between Republican leaders in Congress and Clinton.
“The message is, ‘We held the lottery and you lost,” said American Association for Retired People lobbyist John Rother. “This is not asking people to help out. This is asking people to sacrifice their own economic stability.”
Clinton has attacked the provision specifically, along with the larger Republican plan to turn over to the states much of the control of Medicaid, the federal-state health care program.
Even some Republicans are saying quietly that this so-called “filial responsibility” provision may not make it through negotiations.
“This is political suicide,” acknowledged one commerce committee aide.
But some states, as well as nursing-home organizations, are lobbying equally as hard that the provision stay in the budget bill.
“Right now, two out of three nursing-home residents rely on Medicaid to pay for long-term care,” said David Kyllo, spokesman for the American Healthcare Association, a nursing-home group. “Given the level of cuts being proposed by the Republicans - ($133 billion over seven years, according to the latest estimates) - states are going to have to have the flexibility to find finances in different ways.”
Kyllo hit upon the crux of the debate: money.
Right now, the federal and all 50 state governments spend $158 billion a year on Medicaid to cover health care for 37 million poor, disabled and elderly Americans.
But, as America has become older and grayer and medicine has advanced to keep sick and frail people alive for years, nursing-home care has become the biggest cost in the program. Just 8 percent of Medicaid beneficiaries - the elderly in nursing homes - account for nearly 35 percent of all the costs.
Of the 1.5 million people in nursing homes, Medicaid pays for 1 million of them. Indeed, Medicaid not only created the nursing-home industry - no other public or private insurance would pay for nursing-home stays 30 years ago - but supplies it with more than 50 percent of its revenue.
With the fastest growing segment of the population being those 85 years and older, and one in four of them going into nursing homes, costs will continue to rise. Faced with shrinking dollars at a time of increased demand, states want every revenue source on the table.
“Some of the staff feels Medicaid is really becoming a program that helps the middle and upper class,” said Lynda Crandall, deputy director of Michigan’s Family Services Administration. “That’s not what program was intended for originally.”
But critics and consumer groups alike say fully 90 percent of those who go into nursing homes use up all their own resources within the first two years.
Going after adult children may not be that easy. Idaho in 1983 tried to force children to pay for their parents’ nursing-home care. And while the state collected more money, the experiment was short-lived.
“We found that it’s real hard to go after adult children in that way,” said Stephen A. Moses, research director for LTC Inc., a Seattle-based private long-term care insurance company and a former federal health official who monitored the Idaho plan. “They’re resentful. They say, ‘I was abused when I was young, why should I pay?”’
Idaho also had difficulty collecting from children who lived out of state - an issue that the GOP bill does not address at all.