Medicaid Estate Recovery: Is there value to keeping it "in house"?

• In Event: Public Health Insurance Programs: Cost Containment, Equity, and Care Burden Among Aging and Disabled Populations

Abstract

To address the aging population and increased demand for highly skilled care, the Medicaid estate recovery policy was enacted in 1993. Because Medicaid operates as both a state and federal program, states must share in the financing of the program and balance their budgets annually. Estate recovery was designed to constrain state spending by requiring states to seek repayment for debts often accrued through the usage of long-term services and supports and prevent Medicaid recipients from transferring assets to heirs while also benefiting from taxpayer funds. However, states were granted some latitude in designing their policies in terms of cost-effectiveness standards, benefits pursued for recovery, liens, and who administers the program. Using 2021-2025 public records data from 20 states (AK, AZ, CO, CT, GA, IA, ID, IL, MA, MI, MS, MO, NV, OH, PA, RI, TX, UT, WI, WY), this research makes two key contributions. First, to understand the prevalence of estate recovery in the largest known study to capture Medicaid estate recovery. Secondly, we assess what role program administration plays in the number of estates pursued and amounts recovered. We use descriptive methods to examine the scope of estate recovery by analyzing the number of estates pursued, estates recovered, and monetary amounts recovered, both overall and stratified by program administration. We identify trends in prevalence of estate recovery over time and assess the relationship between program administration (in-house versus a contracted vendor) with the monetary amounts recovered. With small amounts recovered on average, estate recovery makes a seemingly insignificant impact on state Medicaid budgets but may have a lasting effect on the lives of families targeted by estate recovery. Recently, states like North Carolina, Massachusetts, and Georgia have instituted policy changes, opting for improved cost-effectiveness, home value minimums, and income caps. Medicaid estate recovery may not be recovering enough to offset the administrative costs associated with carrying out the program, especially considering the cost of vendor contracts and legal fees. Changes to Medicaid estate recovery would allow states to ease up on a policy that disproportionately targets those of modest means and few assets, recovering little relative to the high cost of long-term care.

Author

• Amanda Spishak-Thomas, Rutgers University
  Presenting Author