“I donated two hours Friday to confirm a determination for and questions about a family, who used to be clients, but now qualify for Medicaid/Medical Assistance. [After the appointment,] I walked her out to her vehicle, passing my parked Honda CRV w/250K miles. She got into her Cadillac Escalade, and drove away. I thought to myself, “I pay $1,100.00/mo. for a $4000 deductible plan for my family. She pays nothing.” (A frustrated Central Minnesota licensed insurance agent wrote this report this past weekend.)
We call this new phenomenon “Millionaires on Medicaid.” The Affordable Care Act (ACA), in its zeal to provide free government health care to low-income people created a new category of freeloaders – “folks” with large estates who creatively limit their income to qualify for Medicaid at taxpayer expense.
I first learned of this crazed concept three years ago. A member of Minnesota Governor Tim Pawlenty’s cabinet called me, exasperated that the new federal law empowered the 1% to get health care at the expense of the 99%. It works like this:
The individual or couple park a large portion of their investments in liquid assets, such as low interest bearing savings accounts; or stick thousands of dollars in the bedroom wall-safe. Then they make sure to limit their reportable taxable income. The ACA allows individuals with less than about $16,100 or couples earning about $21,700 to enroll in Medicaid. Yet, the law ignores their assets.
Health insurance agents are reporting stories about these new enrollees in the government health insurance exchanges, the millionaires now eligible for free health care. Did the Democrats in Congress and President Obama intend to do this? No one can know their motives, but I explain why I believe it happened at the end of this article.
How could a wealthy person that reports income of less than $21,700 manage to survive on such a paltry sum? Easy enough. Each time there is a spending need, open the home safe and take out a wad of cash, or write a check from a low- or even no-interest bearing checking account. The plan is to keep enough of one’s assets liquid in a way to avoid earning income on it and be able to live the high life. Like so much else about the ACA, the incentive to reduce investment income makes no sense, except when you compare it to thousands of dollars saved by not paying health insurance premiums.
Minnesota millionaires get an extra chance to live off taxpayers because of MinnesotaCare, the state’s tax-subsidized program for low-income people earning between 138-200% of federal poverty guideline income. This true story demonstrates its lure for millionaires:
- The clients, a 62-year old attorney who had recently sold her practice, and her 59-year old self-employed husband, both decided to retire. They had amassed about $900,000 in their retirement accounts, and owned two homes free and clear, each valued at $600,000. And they had many other assets – some difficult to sell, and others quite liquid. They planned their retirement income so it did not exceed $31,000 and thereby qualified for MinnesotaCare – with a combined monthly premium of $100.
Why would the government create a program that would pay the health care cost of millionaires without first adding up assets to see if the millionaires can afford to pay their own way? Adding an asset test to determine eligibility for free health care would have sent the government computers on a digital journey from which they would never return. It would have created complications beyond imagination. Those government software programs would spin out of control. The abject failure of healthcare.gov would have been multiplied geometrically if it included an asset test.
Next time you think about all the good government is doing by paying for the health care of low-income people, watch for a Cadillac Escalade and wonder aloud: another millionaire on Medicaid?
Racer on Health Care 