Medicaid and Nursing Homes

The Wall Street Journal describes what people will do in order to have Medicaid pay for nursing home care.

Anyone can give away most of his assets and three years later become eligible for Medicaid with no questions asked. Or, since a home, business and car of unlimited value are excluded from the calculation of assets, someone who wishes to qualify for Medicaid may shield his money by remodeling his house, investing in the family business, or purchasing expensive cars that he then gives away to family members (the notorious "two Mercedes rule"). Term life insurance -- also of unlimited value -- is excluded as well.

The editorial includes an interesting chart, based on data from the Centers for Medicare and Medicaid Services. The chart shows that nursing home spending rose from $2.9 billion in 1968 to almost $100 billion in 2001. The share paid for by Medicaid rose from 23.7 percent to 47.5 percent of spending.

For Discussion. What would be the impact of using Medicaid to subsidize the purchase of long-term care insurance rather than nursing home care?

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