If You Like Your House, You Can Keep Your House

President Obama recently help up a sign that said, "Get Covered: Because Nobody Should Go Broke Just Because They Get Sick." He wouldn't be smiling if he read DailyKos.

On October 17, Beverly Woods asked a disturbing question on the DailyKos.com website. What happens to the assets of people who now meet the expanded criteria for Medicaid?  Medicaid was designed to ensure healthcare for the truly destitute, and existing state and federal laws, regulations, policies, and procedures are based on the assumption that people on Medicaid have essentially no disposable assets. The Act Formerly Known as Obamacare changes that.

In "Medicaid Estate Recovery+ACA: Unintended Consequences," Ms. Woods explains the problem:

We haven't had lots of people younger than 65 on Medicaid, because in most states simply earning less than the Federal Poverty Level did not qualify one for Medicaid.

And we haven't had many people with lots of assets on Medicaid, because in most places you have to have less than around $2400 to your name before Medicaid will cover you. You can keep your house and your car, but Medicaid reserves the right to put liens on them and take them when you die.

But now we have the Affordable Care Act, and its expectation that everyone in the lower tier of income will end up in the Medicaid system. To accomplish this, they have dropped  the asset test. So now we will have lots of people ages 55-64, who have assets but not a lot of income right now, for whatever reason, on Medicaid.

The kicker of it is, if you make the right amount to qualify for a subsidized health insurance plan, your costs are going to be shared and subsidized by the government. But if you go on Medicaid, you owe the entire amount that Medicaid spends on you from the day you turn 55.

As she ended her October 17 entry, Ms. Woods noted, "The fact that practically no one is talking about this makes me uneasy." Four days later, she was back, with "Estate Recovery: It's Worse Than You Thought." The bottom line: Medicaid is not insurance, it's a loan.

If you buy insurance, you pay a certain amount each month to protect yourself from bills too big to pay. If you don't have insurance but wind up in the hospital, you are stuck with the bills. If you can't pay them off before you die, your heirs are stuck. The executor of your will (if you have one) must sell off your assets (if you have any) to pay off your bills before anybody gets anything from your estate. Medicaid does not insure Americans against medical expenses--it loans them the money to pay expenses, and takes it all back when they die.

You could call it a "death tax," if that term hadn't been taken. Next year, Americans who die with more than five million dollars in assets will pay 40% in taxes. Americans who die on Medicaid will pay 100% of their Medicaid expenses before their heirs get one penny.

Family farm? Gone. Mom and Pop shop? Gone. Nana's house, with her snow-white picket fence around her prize-winning garden? Gone, gone, gone.

Is there a way around this problem? There is not supposed to be, for long-term care expenses. The system is designed to loan money to people who have no assets, and to recover as much government money as possible from people who do have assets. Lots of people have tried to hide their assets from the government, with limited success. In particular, parents may not deed their houses over to their children to evade their debts--if they do, and incur medical expenses any time during the next 60 months, the children will be required to pay Medicaid back.

Federal law requires states to recover the costs of long-term care and related Medicaid expenses, but left it up the states to implement that recovery. No state legislation was written with today's situation in mind, and every state that has expanded Medicaid must now review its laws and policies to protect seniors from unintended consequences. Oregon has taken the first step to assure its citizens that it only intends to collect money for "long-term care" and not for ordinary medical expenses.

The problem with Oregon's response to date is that "long-term care" does not just mean "putting granny in the nursing home." Any Medicaid patient who is in a hospital for three days becomes eligible for "long term care" in a "skilled nursing facility," and "long term care" is any stay over 30 days. Thus, a bad case of pneumonia could send a 60-year-old into the hospital, on to "skilled nursing," and into "long-term care."

The Act Formerly Known as Obamacare has just turned into a full-employment act for attorneys who specialize in "elder law" in the states that have expanded Medicaid. Citizens of limited means who are over 49 should run, not walk, to an expert who can help them shield their homes from the unintended consequences of this law.

Healthcare D-Day or Dunkirk

Reading over my last few posts, one would think I hated our President. I apologize for giving that impression. I don't. I donated money to his primary campaign, wept at the thought of Martin Luther King, Jr's dream come true, and receive his daily emails. He and I went to law school together (for one brief year--we never met). I pray for him as sincerely as I have ever prayed for any president, and that's a lot.

But I have been pretty hard on him lately, for a reason. He turned something as big as D-Day into the Bay of Pigs. When General Eisenhower gave the orders to invade Europe, he wrote a speech to give if things went badly. President Obama didn't write that speech. He borrowed one from Sergeant Schultz:

"I was not informed directly that the website would not be working the way it was supposed to. I’m accused of a lot of things. I don’t think I’m stupid enough to go around saying this is going to be like shopping on Amazon or Travelocity a week before the website opens if I thought that it wasn’t going to work," Mr. Obama said during a press conference at the White House. "Clearly we, and I, did not have enough awareness about the problems with the website."

Two weeks before the new year, there is every reason to believe that the net result of all this will leave millions of previously insured Americans exposed to physical and financial ruin. Instead of D-Day, where the forces of freedom pushed tyranny back across a continent, we are re-enacting the Battle of Dunkirk, where the Allied armies lay trapped between Hitler's devils and the deep blue sea.

The soldiers trapped at Dunkirk were not saved by the invincible British Navy (because big ships couldn't get close enough to the beach), but by the astounding courage, ingenuity and sacrifice of ordinary Britons along the southern coast of England. If you don't know the story, I cannot do it justice here. Read "The Snow Goose," by Paul Gallico--a lovely little story that moves me to tears as I type.

There are millions of Americans "trapped on the beach" right now, and tens of millions more to come. As of this moment, there is no realistic hope that Republicans and Democrats will decide to paper over their differences to stop the suffering--the political war that got us into this situation is raging hotter than ever, and there is no reason to think it will be over before January, 2017, when a new President takes office. Between now and then, the best hope our suffering neighbors has will come from us.

That's why I'm promoting the Federal Health Union Act of 2014--a bill that does not replace or repeal the Act Formerly Known as Obamacare. It doesn't promise affordable care for all Americans--but it does offer affordable care for more Americans. It's a bill that lets neighbors help out neighbors until big business and big government can get their act together.

For more information on the FHUA, click here.  There's one man in Washington who could sponsor this bill and make it happen. If he agrees to take a look at it, I'll let you know. Until then, may God help those who can't help themselves tonight.

Obama's Science of Change

It wasn't supposed to be work like this. Obama "scientific approach" to change was glowingly featured in Time Magazine in 2009. (No access to Time's premium-content? Try "Obama's efforts to change us carry a clear political risk.") Here's his "science of change" in a nutshell:

1. make it clear, 
2. make it easy, 
3. make it popular, 
4. make it mandatory.

The "clear" part was,"If you like your plan, you can keep your plan. Period." As Albert Einstein famously noted, "Make everything as simple as possible, but no simpler." Obama is no Einstein--his oversimplification of the Act Formerly Known as Obamacare won him Politifact's "Lie of the Year."

The "easy" part was, "Just visit healthcare.gov, and there you can compare insurance plans, side by side, the same way you’d shop for a plane ticket on Kayak or a TV on Amazon." (Barack Obama, Oct. 1, 2013.) Six weeks later, the same man admitted that "what we're also discovering is that insurance is complicated to buy." (Barack Obama, Nov. 14, 2013.)

The "popular" part was taken for granted. The assumption that the Act Formerly Known as Obamacare would be popular was why it was formerly known as Obamacare. All Obama needed to do was hold up a sign that says, "Get Covered Because Nobody Should Go Broke Just Because They Get Sick."

But "Obama holding a sign" was a punchline just waiting for its joke. Within ten minutes, the Senate's most outspoken Obamacare opponent "cruz-ified" the President's tweet:


The "mandatory" part was written into the law--and then written out of it by the same Supreme Court Justice who declared Obamacare constitutional. Military service in Vietnam was mandatory, and burning a draft card could send a healthy young man to jail... or Canada. Health insurance, by contrast, is no more mandatory than a solar hot water heater, for the consumer.  The government can "nudge" you to buy the one or buy the other, and raise (or lower) your taxes according to your choice, but it cannot put you in jail or drive you to Canada if you don't buy insurance.

Whether you agree with Obama or not, he had a four-point plan to "nudge" Americans into his new system. And whether you agree with Obama or not, that plan has now failed on all four points.  This has big implications for all Americans, especially Democrats. While Republicans may embrace "the fierce urgency of shutting up" for now, too many of our neighbors are in real distress for us to wait for a new President to offer us something different in January, 2017.

That's why I think we need the  Federal Health Union Act of 2014, and need it now!

Affordable Care for More Americans

This blog has explored how Obamacare affects Americans with serious illnesses such as multiple sclerosis, end-stage kidney disease, and AIDS, and earlier discussed its effect on Medicaid recipients. I'm tired of complaining about what doesn't work. How about a post on what would?

We've tried meeting America's health care needs through big business (any company that can insure millions against a risk as expensive as cancer is "big" by any definition). Now we're trying to meet America's needs through a loveless marriage between big business and big government--but the honeymoon is over and the bride is talking to her lawyer. Progressives who held their noses to support Obamacare are now pushing for big government to do the job alone, through a single-payer system. While that makes sense (to them) in theory, the latest polls suggest that putting it into practice could be impossible for the time being.

Those polls suggest that neither the Republicans nor Democrats will have a commanding majority before 2016, leaving Obamacare the law of the land no matter how many "glitches" affect how many Americans. Big goals (repeal and replace! Switch to single payer!) will fire up the base on the left and right, but that won't help middle-of-the-road, middle-class folks for the next three years. We aren't going to get anything that can guarantee affordable care for all Americans--so how about finding something that would provide affordable care for more Americans? Especially if all we have to do is find something that works and make it work better?

There is already something that works. Obamacare provides an explicit exemption for healthcare sharing ministries ("healthshares"). Senator Max Baucus of Montana included a provision that recognizes not-for-profit healthshares as a valid way to comply with the Patient Protection and Affordable Care Act. That provision, which can be found at 26 USC 5000A(d)(2)(b), allows certain tax-deductible charities to share the costs of medical care among people with shared religious or ethical beliefs. More than 170,000 families currently participate in the three groups that were intentionally grandfathered in (Medi-Share, Samaritan Ministries, and Christian Healthcare Ministries) and membership seems to be rising since the new law took effect.

Healthshares aren't big business or big government, but they have been successful at meeting needs for more than thirty years. Between what members share and donors give, they have paid the bills for hundreds of thousands of patients--despite the fact that they are prohibited by law from paying salesmen, setting specific underwriting amounts, or using many of the other tools that the insurance industry has developed to serve their customers. Healthshares have succeeded with no direct government assistance and without the tools that insurance companies use--because members helping members is a better way to pay.

The Secular Coalition for America opposed Senator Baucus' plan to include healthshares in the law--but not because they disagree with healthshares. They wrote:

For centuries, numerous mutual aid societies in the United States have sponsored insurance and social services organized around a shared ethnic background, occupation, geographical region or religion. For example, in 1787 African Americans released from slavery organized a nondenominational benefit society called the "Free African Society of Philadelphia." By stating that only people belonging to religious mutual aid societies can be exempt from mandated health insurance this provision privileges Christian Americans over non-Christian Americans.

I couldn't agree more. That's why we need a Federal Health Union Act, which would amend the language of 26 USC 5000A(d)(2)(b) to include any not-for-profit organization united by any shared interests with an objective effect on health. Under such a law, Vegans as well as Hindus could share the health savings of a meat-free diet, while smokers could band together to cover their care without paying the 50% penalty Obamacare imposes.

Expanding healthshares to Vegans and smokers would make the law more just, but to make it more effective we need two additional changes. First, healthshares need to be able to use the same tools that health insurance companies need without apologizing for it or dancing around state regulations. Healthshares need to be expressly exempt from state insurance regulations in the same way that federal credit unions are exempt from state banking regulations.

That is why the Federal Health Union Act would be directly modeled on the Federal Credit Union Act of 1934, which created federally-chartered not-for-profit credit unions during the banking crisis of the Great Depression. The National Credit Union Association has been able to keep credit unions serving customers for many years--and a National HealthShare Association could ensure financial stability and consumer protection for not-for-profit health cooperatives.

The problem with allowing healthshares to compete directly with for-profit plans is that insurance companies are now required to accept all comers, even those with pre-existing conditions. This drives up the cost of healthcare, but low-income Americans are offered subsidies to help them cover the cost of these "free-market plans." If healthshares don't have to pay for pre-existing conditions, they won't be competing with for-profit plans--they'll be taking advantage of them. On the other hand, if plans sold on the exchange get subsidies and healthshares don't, it's the insurance companies that are taking the advantage.

The Federal Health Union Act funds pre-existing conditions and low-income insurance without forcing anybody to buy anything they don't want or pay for anything they detest. It does so through a "matching-funds" approach to fund-raising. Taxpayers who donate money to a federally-chartered healthshare will be eligible for a 50% tax credit for their gift. This saves taxpayers money (it costs taxpayers 50 cents to subsidize the poor and sick) and takes the politics out of healthcare. The Susan G. Komen Foundation could raise a lot more money for breast cancer in a very short time--and so could patients with less politically-prominent diseases, like Lyme Disease and multiple sclerosis.

Changing the tax law is not a simple matter--but in this case, it would be worth it. Medicare is a financial time bomb, and Medicaid has even more problems. Among other things, changes to Medicaid are raising the demand for healthcare while cutting the supply. Tax credits for healthshares could move millions of people off Medicaid onto non-profit plans, especially if not-for-profit hospitals can operate their own healthshare. A hospital healthshare could dramatically reduce the number of uninsured patients in a service area, reducing the amount that other patients pay. With a 50-cent-on-the-dollar tax credit, local businesses would have every reason to build good will by helping out their neighbors.

That's all it takes to provide affordable care for more Americans, including the poor, sick, and elderly. All we have to do is (a) expand healthshares, (b) allow them to compete directly with for-profit insurers, and (c) save 50 cents on donated dollars. It's a plan that Americans can understand, politicians can support, and the President can sign.

I hope to share this with my Senator (Joe Manchin of West Virginia) and Congresswoman (Shelley Moore Capito) at the earliest opportunity. If you think your representative might be interested in co-sponsoring such legislation, leave a comment explaining why. If we all work hard and work together, we can help millions of our neighbors in distress.