GAO Finds Gifting Older People Not The Problem Afterall

A particular target of Congress in the Budget Deficit Reduction Act of 2005 (DRA), which was signed by the President on February 8, 2006, was long-term care because of its high cost and subsequent drain on the overall Medicaid budget. By 2004 Medicaid paid nearly one-half of the nation’s total long-term care costs, using 32 percent of the total $296 billion Medicaid budget. It was further predicted that with the growth of the aging population, those expenditures for long-term care could be expected to nearly double in the next ten years.

Congress thought that the answer was to make it harder to transfer assets for less than fair market value prior to Medicaid application, forcing the elderly entering long-term care to use their assets rather than give them away.

The Government Accounting Office (GAO), the auditing, evaluating and investigative arm of Congress, now sheds doubt on the effectiveness of such policies in a report published March 2007 entitled Medicaid Long Term-Care...Few Transferred Assets before Applying for Nursing Home Coverage; Impact of Deficit Reduction Act on Eligibility Is Uncertain.

After seeing the title I am led to wonder two things:  Who names these reports and decides which letters to capitalize in these titles and why Congress did not conduct these types of studies prior to such a sweeping overhaul of Medicaid regulations, costing state and federal government untold dollars to impliment while causing serious confusion in the general public.  

The report examined financial characteristics of elderly nursing home residents nationwide to include the extent to which they transferred cash, to determine the possible effects of DRA. It found that 90 percent of Medicaid recipients, indeed, lacked the resources to pay for their care and that an overall low percentage of Medicaid applicants had transferred assets (ten percent), and that what was transferred was, on average, quite low ($15,152). If DRA had been in effect when these Medicaid applicants applied, the ten percent who transferred assets would have experienced only a three month delay in eligibility. These people were, on average, not rich, and the savings that DRA regulations would effect for the budget would hardly make a dent in the Medicaid spending problem.