Op-Ed: ‘Affordable care’ should not be a loan

Andrew Sprung | June 24, 2021 | Opinion, Health Care
Medicaid premiums for enrollees older than 55 are subject to estate recovery by the state after their death
Andrew Sprung

The American Rescue Plan signed into law by President Biden in March moved the Affordable Care Act several steps closer to fulfilling the promise in its name: affordable health coverage for all. Federal subsidies for health plans obtained in the ACA marketplace have been boosted at every income level, and there is no income cap on eligibility for subsidies. While these subsidy increases are enacted only through 2022, President Biden has called on Congress to make them permanent.

New Jersey lawmakers and Gov. Phil Murphy have worked at the state level to make coverage more affordable, adding state subsidies to the federal subsidies in the ACA marketplace and allocating at least $20 million in 2022 to Cover All Kids — by smoothing the NJ FamilyCare enrollment process, investing in enrollment outreach, and (if lawmakers complete the job) enrolling undocumented children to make the legislation worthy of its name.

Unfortunately, in New Jersey — as in 19 other states and Washington, D.C. — efforts to make affordable coverage available to all come with a giant asterisk.

Applicants seeking health coverage on GetCoveredNJ, the state ACA exchange launched last fall, are routed either to the private plan marketplace or, if their family income is below 138% of the FPL (federal poverty level) — which is $1,482 for an individual, $3,048 for a family of four — to NJ FamilyCare, the state Medicaid program. If income qualifies an applicant for the latter, she must sign off on this disclosure:

“I acknowledge notice that the Division of Medical Assistance and Health Services (DMAHS) has the authority to file a claim and lien against the estate of a deceased Medicaid beneficiary, or former beneficiary, to recover all Medicaid payments for services received on or after age 55….” [More intimidating detail follows.]

Affordable care with a catch

What’s that? The premiums paid in part by the federal government and in part by the state for any enrollee over age 55 are essentially a loan that the state can recover from the enrollee’s estate. Those premiums are subject to Medicaid estate recovery. Upon the death of the enrollee and the enrollee’s spouse, and when any surviving children have passed age 21, the state can pursue the full value of the premiums paid to the managed care companies that now insure most of the state’s Medicaid enrollees.

As of February 2021, 170,000 enrollees in NJ FamilyCare were ages 55 to 64, and 9,200 of them were receiving long-term services and supports (LTSS). All, including some 160,000 current non-LTSS enrollees, are potentially subject to estate recovery. Also potentially exposed are hundreds of thousands of near-elderly adults not currently enrolled in NJ FamilyCare but who have been enrolled at some point since the ACA Medicaid expansion was launched in 2014.

While generating anxiety and potential grave financial harm for enrollees in NJ FamilyCare, estate recovery generates trivial revenue for the state. According to the 2021 report on Medicaid by MACPAC (Medicaid and CHIP Payment and Access Commission), a nonpartisan agency advising the federal government, Medicaid estate recovery totals in New Jersey in recent years have ranged from $12.2 million in the 2015 fiscal year to $18.3 million in 2018. The MACPAC report’s chapter on estate recovery also recommends curbs on recovery against LTSS recipients — making such recovery optional rather than mandatory for states, enabling states to pursue recovery for services actually received rather than for premiums paid to managed care companies, and setting minimum standards for hardship exemptions, which vary widely by state. The report points out that the burden of estate recovery falls disproportionately on poorer enrollees, while those with assets often obtain professional help to shield those assets, and “Pursuit of modest estates contributes to generational poverty and wealth inequity, placing particular burdens on people of color.”

How many NJ FamilyCare enrollees who have not received long-term care services have been subject to estate recovery? That data is well hidden. But the hard fact that all Medicaid payments for services received after age 55 are subject to estate recovery is stated on “the authorization/acknowledgement page of all NJ FamilyCare applications (both online and paper version),” according to a DHS memo. Enrollment assisters report that this “acknowledgement” undermines trust and causes a significant number of potential enrollees to walk away.

‘Egregious violation’

Medicaid estate recovery was originally targeted at recipients of long-term care services, such as nursing home or home-based nursing care, financed by Medicaid. In 1993, the omnibus spending bill that kicked off the Clinton administration’s legislative efforts required states to recover assets from the estates of recipients of long-term services and supports under Medicaid. States also retained the option of recovering for other Medicaid benefits obtained above age 55.

The ACA Medicaid expansion, which extends eligibility to all adults with incomes under the 138% FPL threshold in the 36 states that have enacted it to date, complicated the picture. The ACA encouraged and indeed required Americans to obtain “affordable” care — under pain of financial penalty for going uninsured; the so-called “individual mandate” penalty was zeroed out by Congress as of 2019, but New Jersey has enacted its own mandate and penalty. For those who lack access to employer-sponsored or other insurance and who seek coverage on the ACA exchanges, Medicaid is the only option if their income is below the Medicaid eligibility threshold. To make the “affordable” coverage on offer essentially a long-term loan is an egregious violation of the ACA’s mission.

Under President Obama, the federal Center for Medicare and Medicaid Services (CMS) recognized this. A 2014 letter to state Medicaid directors declared its intention to “explore options and to use any available authorities” to limit estate recovery to long-term care. In the interim, the letter declared, CMS encourages states not to pursue estate recoveries against Medicaid expansion populations and notes that there are special rules limiting recoveries.

Unfinished business

While CMS never followed through on this intention, some states that expanded Medicaid have acted on their own. In 2015, 24 states pursued estate recovery for non-LTSS care, and only seven did not. Now, while 20 expansion states — including New Jersey — and Washington, D.C. do pursue estate recovery for the expansion population, 18 expansion states do not.

A bill (A-1023/S-885) introduced in the state Legislature in early 2020 by Assemblywoman Joann Downey (D-Monmouth) and Sen. Joe Cryan (D-Union) would end estate recovery for non-LTSS enrollees in NJ FamilyCare, as well as shielding some types of assets from recovery for those subject to it.

Versions of this bill have languished for some years without moving out of committee. That inaction should end now, as the state and nation end years of stasis in a drive to make the ACA fulfill its promise of affordable care to all. While reaching out to vulnerable communities to enroll their children in NJ FamilyCare, the state cannot continue to booby-trap coverage for their grandparents.

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