COMMENTARY: Centennial Care is New Mexico’s name for Medicaid, the national means-tested public welfare program providing health benefits to the needy. Fully one-third of the state’s citizens rely on the program.
Courtesy photo
Stephen A. Moses
Expansion of Medicaid under ObamaCare has blown a big hole in the state’s budget. Governor Martinez recently called for a 5 percent, across-the-board cut. An even bigger problem is the demographic time bomb facing Centennial Care: long-term care (LTC) for the aged, blind and disabled.
Three-fourths of Medicaid recipients are poor women and children in need of acute care. But they account for only one-third of Medicaid’s cost. The aged, blind and disabled are barely one-fourth of total recipients, but they consume two-thirds of program costs, mostly for their long-term care.
LTC costs skyrocket after age 85. New Mexico’s 85-plus population is only 2 percent now (28th nationally), but it’ll be three percent (10th) by 2032, about when their trustees say Social Security and Medicare will become insolvent.
Already, Centennial Care pays too little to ensure quality care. The state reimburses nursing homes $25 per day less than the cost of providing the care (a $34 million annual shortfall). But New Mexico shuns nursing homes, relying more heavily on home and community-based care (73.6 percent of LTC expenditures, third in the nation). Home care workers are notoriously underpaid, especially by Medicaid, which is why quality caregivers are extremely difficult to hire and retain.
Given the staggering financial risks Centennial Care already faces, and the exponentially greater liabilities it will soon encounter, some of the state’s policies regarding eligibility for Medicaid long-term care boggle the mind.
For example, New Mexico exempts up to $828,000 of home equity from asset eligibility consideration, the maximum allowed by federal law. Why does a state with fiscal problems invite people with so much wealth to partake of its welfare program’s most expensive benefit?
Nor is income an obstacle to qualifying for long-term care benefits in New Mexico. Anyone with income over the monthly limit of $2,199 a month can shift the excess into a “Miller income diversion trust” and qualify quickly.
Even much wealthier people qualify without spending down their assets by consulting elder law attorneys. Try Googling “Medicaid planning in New Mexico” for advice like this: “Medicaid planning involves developing a strategy to protect your assets should you require long-term nursing home care. … We will help you maintain what you spent your life earning.”
Since 1993, the federal government has required state Medicaid programs to recover care costs from the estates of deceased recipients. Otherwise, the welfare program would become free inheritance insurance for boomer heirs. But New Mexico recovers only $1.7 million from estates annually, less than half of one percent of its LTC expenditures, and only one-fourth of Idaho’s, the best state’s, recoveries percentage-wise.
Medicaid was supposed to be a safety net for the poor, but it has become the dominant source of long-term care financing for nearly everyone.
Is it any wonder that only 3.8 percent of New Mexico’s age-40-plus population (33rd nationally) have planned ahead for long-term care by purchasing private insurance? They can ignore the risk, avoid the premiums, preserve their estates and get Centennial Care to pay if they ever need expensive extended care. So why worry?
What should New Mexico Medicaid do? Governor Martinez and the Human Services Department should work with the state Legislature and the federal Centers for Medicare and Medicaid Services to cut the home equity exemption to the federal minimum (currently $552,000), maximize estate recoveries to bring in an extra $5 million per year in non-tax revenues, curtail long-term care financial eligibility loopholes wherever possible, and educate the public that long-term care is a personal responsibility for which everyone one needs to plan, save, invest or insure.
It is probably too late for New Mexico to avoid a long-term care financing catastrophe, but those measures could reduce the damage and save Centennial Care $100 million per year.
Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Wash. and a Santa Fe homeowner. Reach him at smoses@centerltc.com.