Medicaid woes, aging population have insurers thinking long-term

By Laura Benko
• September 19, 2005

The aging population and shrinking public coffers are prompting some health plans to go where many have traditionally feared to tread — the precarious market for long-term-care insurance.

Even after two decades on the market, long-term-care coverage has remained a tough sell. Only 10 percent of Americans over 65 own policies, with many holdouts deterred by the product’s high cost and complexity.

Most states now have provisions that prevent people from qualifying for Medicaid within three years of “voluntarily impoverishing” themselves through bequests to relatives. Florida, Massachusetts and Minnesota are moving to extend the period to five years, and other states are likely to follow suit.

In Michigan, officials are drafting a plan that would allow the state to seize the personal estates of Medicaid nursing-home residents who die with substantial assets, in an attempt to recover the cost of their care. Michigan is the only state that doesn’t yet have an estate-recovery plan, and it faces penalties under the federal Omnibus Budget Reconciliation Act of 1993, which requires every state to create one.

T.J. Bucholz, public information officer for the Michigan Department of Community Health, said the department needs legislation to enact an estate-recovery plan, but so far, it doesn’t have a bill sponsor. Bucholz said Community Health will continue to work with the Legislature and hopes to see the issue addressed yet this year.