savings and assets to relatives -- faking poverty and getting Medicaid and taxpayers to shoulder their long-term nursing-home costs. While this may be legal, it is surely not moral. It is also fiscally ruinous. President Bush's budgetary proposal to cut $60 billion out of Medicaid over the next decade is driven in part by the explosion in nursing-home costs. Tightening up Medicaid eligibility rules, as well as expanding the long-term-care insurance market, can save a portion of those cuts for those who deserve it: the truly poor.
Check out the numbers. Medicaid costs already absorb 22% of state budgets, twice the portion spent on higher education. Only about 9% of those enrolled in Medicaid are seniors, but they claimed 26% of the program's budget, almost all for nursing-home expenses. Medicaid already pays more than 60% of the country's bill for nursing homes. And this can only get worse as baby boomers start to retire.
It's time for state and federal governments to step up. Savings are supposed to pay for a person's old age, not be given to children leaving taxpayers to pick up the burden. Demand for asset-shifting is so great in retirement communities that lawyers provide ready assistance. Virginia plans to examine financial statements for the six years before people apply for Medicaid, up from the current three. Other states should follow suit.