Podcast: Medicaid’s Dark Secret
For many participants, Medicaid — the program that provides health care to millions of low-income Americans — isn’t free. It’s a loan. And the government expects to be repaid. Are you surprised to hear that? So was today’s guest. Rachel Corbett recently wrote an article explaining in what circumstances you could be at risk. Join us to find out if this could happen to you, how you can protect yourself and what is next for the healthcare program.
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Guest information for ‘Rachel Corbett Medicaid’ Podcast Episode
Rachel Corbett is the author of You Must Change Your Life: The Story of Rainer Maria Rilke and Auguste Rodin, which won the 2016 Marfield Prize, the National Award for Arts Writing. She has written for the New Yorker, the New York Times Magazine, The Atlantic, and other publications. She lives in Brooklyn.
About The Psych Central Podcast Host
Gabe Howard is an award-winning writer and speaker who lives with bipolar disorder. He is the author of the popular book, Mental Illness is an Asshole and other Observations, available from Amazon; signed copies are also available directly from the author. To learn more about Gabe, please visit his website, gabehoward.com.
Computer Generated Transcript for ‘Rachel Corbett Medicaid’ Episode
Editor’s Note: Please be mindful that this transcript has been computer generated and therefore may contain inaccuracies and grammar errors. Thank you.
Announcer: You’re listening to the Psych Central Podcast, where guest experts in the field of psychology and mental health share thought-provoking information using plain, everyday language. Here’s your host, Gabe Howard.
Gabe Howard: Welcome to this week’s episode of the Psych Central Podcast. Calling into the show today we have Rachel Corbett, who has written for The New Yorker, The New York Times Magazine, The Atlantic and other distinguished publications. Rachel, welcome to the show.
Rachel Corbett: Thank you for having me.
Gabe Howard: We are very, very pleased to have you because you wrote an article, Medicaid’s Dark Secret in the October 2019 issue of The Atlantic and your research turned up some frightening information. So before we dive into the questions, can you give us a quick summary of that article?
Rachel Corbett: Yeah. So it’s about Medicaid, which is maybe I should define it, it’s a little bit different from Medicare. Medicaid is the government program that is mostly free for low-income and disabled Americans. About 75 million Americans are on Medicaid. But what we don’t know and what I what I wrote about in this piece is that Medicaid actually in many cases is not free. It’s actually a loan and it’s a loan that people pay back once they die. And their estate, whatever their children were going to inherit, are actually collected by the government in order to pay back the costs of whatever health coverage they use. And this is a program that is not very well known about. It’s been on the books for decades. But people don’t know until somebody dies, a loved one, a parent dies and then they suddenly get a bill. And so this article looks at this whole program, how it was implemented, who it affects and what it really means for people who might have a family member on Medicaid.
Gabe Howard: I think that many people believe that Medicaid is a safety net. It’s designed to help people who are essentially in harm’s way, they can’t help themselves. But it seems like you’re saying it’s not a safety net, it’s a no interest loan where the government then comes in and just takes everything. Is that exactly what you’re saying?
Rachel Corbett: Well, not exactly. So in some cases, if you are a low-income person who is under the age of 55, it is a safety net. It’s free. If you’re over 55, which is, you know, most people who are sick and going to need the most health care, it is not. It is actually a no-interest loan. The program that I write about is called Medicaid Estate Recovery. And that’s the law that says anyone over 55, any coverage you receive from Medicaid is eligible to be recovered by the government after you die. So in a way, it’s a safety net because at least you can get health care. You know, at least you’re not going to be denied your cancer treatment or something when you’re still alive. But at the same time, it’s not what you think. It’s not free. Your children will be paying back through your home or whatever assets you own after you die. And I should point out, too, that it’s not every it varies by state. So some states, any prescription drug you get, any operation, anything, don’t ever cover the costs of other states. Only long-term care like nursing homes.
Gabe Howard: Let’s put this in terms of mental health, because the majority of our audience is interested in how this impacts people who are mentally ill. Let’s say that you’re 25 years old, you are desperate, you’re severely mentally ill, you’re homeless, you’re sick and you’re able to get Medicaid to support you. What’s the negative implications of that? What’s the potential bad that could happen? You know, the good is, like you said, you get the health insurance. But what’s the negative?
Rachel Corbett: Well, if you’re twenty five, you’re OK really. I mean, there’s no recovery from the government if you’re under 55. So you’re in good shape basically for that age.
Gabe Howard: I guess then my question so. So you’re twenty five. Yeah. But we want you to live to be fifty five. Sixty five, seventy five.
Rachel Corbett: Right.
Gabe Howard: So from twenty five to fifty five you’re good. But then you turn 55, and all of a sudden, the government starts looking at you funny and you’ve been in some cases disabled, in the example that I used, for 30 years and now all of a sudden it sort of switches up on you. Is that correct?
Rachel Corbett: That’s true. If you’re someone who’s going to be on Medicaid long term, then you may actually be the worst because you may not know that once you turn 55, the policy changes and, you know, to you, there’s no difference in the kind of coverage you’re getting or in your need or whatever. But I don’t know how they will necessarily notify you in that case if you’re just signing up for Medicaid. There is a notice in the fine print that the government will come after you once you die. If you’re already on it, it might even be harder to actually find out because you probably are so used to getting the coverage and benefits. You don’t necessarily think about it. But yeah, once you turn 55 and suddenly the prescriptions you’ve been taking your whole life could be under scrutiny. If you know, if you have like a home care worker or you’re in a facility of any kind. Costs are really going to come back and suddenly it’s no longer free. Suddenly the tab starts the moment you turn 55.
Gabe Howard: In my research for this show, which is not nearly as in-depth as your research, I asked some folks, I was like, hey, were you aware of this? And people said, no. And they just said, flat out no. And that was it. This was all kinds of different people as well. Some people had caregivers and I asked their caregiver if they knew that this was a concern for their loved one. And they were like, well, but my loved one’s been on it for, quote, years. So I understand what you’re saying there by if you’ve done something every day, for again, in our example, 30 years, you don’t expect the rules to suddenly change. And as much as I hate to say, buried in the fine print is not reasonable. It’s really not reasonable. You’re talking about somebody who is sick and needs government assistance and you sent them, what, essentially is fine print and said, hey, we think that you can understand this even though you’re sick and you can’t work. So it seems like it sets people up to fail. Would that be your opinion of this?
Rachel Corbett: Yeah, I mean, you know, it’s hard to know the motives of the people who wrote the log in, the people who enforce it, but I think that it certainly has that effect because imagine, you know, if you’re in a desperate state, urgently need medical care, you’re not reading the fine print.
Gabe Howard: Right.
Rachel Corbett: And even if you are, you’re probably not a lawyer and you may not understand what it means. You know, I spoke to lawyers who said that they have clients come in all the time and they just have no clue what this is talking about. You know, it’s literally on page 20 of a 34-page application in some states. So, I mean, I don’t know anyone who reads 34 pages of fine print. And you know, if you’re lucky, you might have a good caseworker who explained this to you. But in the vast majority of cases, I don’t think people have any idea. And I don’t think that a lot of doctors and people in the health care industry even know, because that’s a lot of the feedback I’ve gotten since the article has come out. I’ve seen people who work in the industry who are completely shocked to know that this is going to affect their own patients, their own colleagues. So that’s, I think, the reason it works. Because the other thing is that, you know, it’s going to happen to you if everybody knew this policy existed, you could move your assets around. You know, people who do estate planning were usually wealthy or people do that, they go to a lawyer to do their estate planning. The lawyer can tell them, oh, you might want to put your home in a trust so that you can avoid Medicaid estate recovery later in case you have to go on Medicaid. But, you know, most people don’t do estate planning. They don’t have a lot of assets to begin with. So this really does, I think, work most effectively on people who don’t know that it exists.
Gabe Howard: There’s so much to unpack there, the first thing that I want to say is I think that the average person doesn’t read the end user license agreement when they install software on their computer and they’re not sick, they’re not desperate, they’re not worried that they’re going to die. They just want to use Microsoft Word.
Rachel Corbett: Right.
Gabe Howard: So you can really see how maybe contract law or contracts or fine print is not your primary concern, because I think that some people listening to this would think, well, if it’s written down, that’s on you. I think we need to do maybe a better job of explaining look at asking an individual to compete with the Department of Justice with the government is maybe not a fair fight. And I understand what you said, that you don’t know the motivations of the government or of the people who enforce the law or why the law is the way that it is. But you do know the history of the policy. Can you explain that a little bit? Like, how did we get here?
Rachel Corbett: Yeah, so Medicaid estate recovery has been on the books since the 1960s, I believe. But it was always just an option for states to enforce if they decided that they wanted to recoup some of the costs of their Medicaid programs. They could take the assets of some recipients. And I think only Oregon did it or it was very, very few states actually did this. And then in the 1990s, in 1993, actually, Bill Clinton signed his budget act and that made a state recovery mandatory in every state. So that was the real game changer. And this was you know, I talk in the piece about how this was coming at a time when we had this a lot of rhetoric about personal responsibility and the welfare state. And there was a lot of ideas that poor people were kind of con artists or just lazy. They just didn’t want to work and they wanted taxpayers to shoulder the burden for them, you know? And this really outraged people. And there was a rising debt, national debt. And there was a lot of like this is just as welfare as it was. A lot of Ronald Reagan had, you know, started talking about welfare being a spider’s web of dependency and all of this language. And Newt Gingrich was trying to gut Medicaid and Medicare at the time. So, anyway, Bill Clinton, I think, saw this as like a way to sort of appease that wing of government and also help balance the budget.
Gabe Howard: You mentioned that this was a way to help balance the budget. Has it been effective at recouping the cost of health care expenditures? Is it at least working?
Rachel Corbett: Well, that’s a great question, because the answer, interestingly, is no, resoundingly no. I would say that on average, it recovers about 1 percent, actually a little less than 1 percent of what we actually spend on Medicaid. So the last time they did it, an analysis by state, they found in some states like Kentucky, the average amount recovered from a family was ninety three dollars. So that means they took the last three dollars from someone out of their bank account. You know, you can imagine, if you only have $93, that’s going to put you into crisis. And $93 is absolutely nothing for the federal government.
Gabe Howard: Well, and it’s not even just about the $93, right? It’s also about this bureaucracy that was visited upon this family after the death of their loved one. Let’s not forget that it’s not just about taking the ninety three dollars, it’s also the federal government is contacting you after your child passed away or your mother passed away or. I don’t want anybody to call me when somebody I love died, let alone for my last ninety three dollars. Like, I think both things are kind of horrible. And you also pointed out that this is seems to be unfairly visited upon the poor more often than people who have the means to hire a lawyer and put their assets in a trust or do estate planning, etc.
Rachel Corbett: Yeah. I think you’re exactly right. Imagine you’re mourning the loss of your mother or father, a spouse, and then you get a bill and that is how it comes in the mail. It’s a bill. You don’t know what it is. They’re saying you owe three hundred thousand dollars. I mean, you can imagine how traumatizing that is in that moment. And then you have to call up, you know, the bureaucrats in the agency and have them explain and they might tell you, all right, well, you don’t have to pay all $300000, but we’re gonna take whatever they had and put it towards that $300000. And if there’s nothing left, then okay, we’ll cancel the rest of the debt, but we’re going to take everything. But the shock of seeing that bill for every expense, which could be a bill for a million dollars. You know, and it’s just they don’t really tell you what that means. It’s just this terrifying moment. I talked to dozens of people who had that moment where they just get a bill right after the funeral.
Gabe Howard: Wow.
Rachel Corbett: And then they call. And it’s just totally traumatic.
Gabe Howard: We’ll be right back after these messages.
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Gabe Howard: We’re back discussing the article Medicaid’s Dark Secret with author Rachel Corbett. It’s important to point out that they’re not just taking the cash that’s on hand. They’ll take your house. And I feel, and I think you agree, that this is particularly cruel to go after people’s houses.
Rachel Corbett: Yeah. So, you know, the house is often the largest asset that people own. So from the government’s perspective, this is the most lucrative way to get the debt that’s repaid. But there’s something really unsavory about taking people’s houses. This has been very politically unpopular. You know, when this bill has been debated in states, when it rarely does come up. Politicians have often said, like, I don’t want to going after people’s houses. That’s emotional. People have deep psychological attachments to their homes. You know, it’s not just money. It’s not just money in an IRA. People’s houses, people have family memories attached there. The children that they’re taking it from, probably grew up there. So, and maybe plan to pass it on to their children or, you know, as a way to sell and put their kids through college or who knows? You know, that it’s just more than an asset. You’re right.
Gabe Howard: It’s also possible that family members could be living there.
Rachel Corbett: Right. So this is where it gets a little tricky because there is an exemption in the law that if you are a child who took care of your parents or at least two years before they had to enter a facility, a nursing home say, then you’re exempt from estate recovery. But the problem is that a lot of people who do live with their parents do take care of them and actually saves the states hundreds of thousands of dollars by providing that care for free themselves don’t actually qualify because the exemption language is so specific. You can imagine a lot of people I talked to had a situation where their mother fell and then had to go into a nursing home right away because she needed immediate care. And they come in, they make arrangements, maybe they move in and they say, OK, we’re gonna take her out of the nursing home, I’ll take care of. I’m going to move in. But they didn’t technically live there for two years before she had that fall. So it doesn’t matter. It doesn’t matter that they may spend their next 10 years living there, providing that care. Oftentimes, you don’t know. It kind of requires you to be a bit psychic. Like, how do you know, two years before an emergency that you need to be moving in?
Gabe Howard: Wow, that’s absolutely incredible. And I imagine. And I’m trying desperately not to be sarcastic, but I imagine that this language is on page 34 of the 50 page document, etc. I mean, you’re explaining it in layman’s terms and I’m having trouble understanding it. And I have to imagine that it’s just not that simple because nothing with the government ever is simple.
Rachel Corbett: Right. It makes sense if you think about it. OK. If you live with your parents and you give them care, you save the government. That money, you should be able to keep the house. That makes sense. And I think that’s how people who actually even understand the law say the children in this position may know that, hear that and think, OK, I’m going to do that. That seems fair, but they’re not figuring out the specifics. Actually, two years before or say they took them out of a nursing home and then they lived there and then they had to go back to nursing homes two years later. It doesn’t matter, because they already were in the nursing home once. It is made to be difficult to understand, I think. I mean, I don’t know, again that is me assigning motive. I don’t really know. But it feels that way, to a lot of people. A lot of people feel like they’ve been duped. That’s what I heard from families who went through this. There’s several women in the story I interview who are in exactly this position where they’re living at home and their mother has died. They’re still living in that house that they’ve been living there for, in some cases eight, 10 years, and now they’re about to be homeless because the government going to take their mother’s house.
Gabe Howard: And it’s important to point out, especially in the context of our show, there’s a lot of people who live with mental health conditions and mental illness, who do live at home and when their parents get older, etc. It’s certainly understandable if they need to go to a nursing home or they need to go to care, etc. And suddenly the parent that they relied on to make ends meet because, you know, listen. We like to talk about how people with mental illness can get disability, but disability is often not enough to live on your own. There’s family and support systems who are often helping and those people in the natural order of things will die first. And now all of the sudden, that house that mom and dad thought would take care of their child or whomever is now in serious jeopardy unless the person who is living with mental illness on disability can manage this system that you and I are having trouble understanding. It really just seems like it’s setting families up to fail in a situation where they shouldn’t have to. Like you said, at 1 percent. So we’re doing all of this to families to save 1 percent. And it sounds like these problems are going to continue. Is that true? Is does the end of your article state, hey, and they fixed it? It’s all over now?
Rachel Corbett: Unfortunately, no. I think this is a big problem that a lot of people are trying to talk about fixing I think in many ways. But to your first point, I just want to say there is a second exemption, a second exemption, which is for a disabled child. And I think it’s important to note that if you’re a disabled child of any age who is living with your parents at home, you’re also supposed to be exempt from recovery. But like you also said, that means you have to apply for the exemption and have the wherewithal to do that, because you’ll probably still get that bill saying they’re coming after the house. You have to know about that exemption and know that you qualify for it and be able to actually make those calls. File all the forms and potentially get a lawyer to do that. And so depending what kind of disability you have, that, you know, may or may not be feasible.
Gabe Howard: And these are monumental tasks, and one of the things that struck me when you said it is, listen, if you have enough money and resources, you can hire lawyers. These are lawyers. These aren’t your friends. These aren’t your family members. These are people who hold advanced degrees and specialized training in dealing with the laws surrounding this. And lawyers are expensive. They’re worth every penny, but they’re expensive. They’re also hard to come by, and especially in lower income families, there’s a lot of distrust surrounding the legal system because they’re so expensive and because it’s hard to understand what’s going on. It seems like we’re not taking into account who were serving with these laws. It just really sounds like it’s this knee jerk reaction to, hey, we’re gonna bother a whole bunch of people. We’re probably not going to get any money out of it, but it’s OK because wealthy people can afford it. So it’s really only going to hurt the poor. So we don’t need to do anything about it.
Rachel Corbett: Yeah.
Gabe Howard: Am I oversimplifying it? That seems to be what you’re saying.
Rachel Corbett: I mean, it can feel punitive, I think, to some people, because, you know, a lot of the people are people who worked their whole lives. You’ll say they did everything right. They got just enough money to buy a house to, you know, so that middle-class dream and leave a little something to pass on to their children. And these are the people who really like we’re living by the letter of the law, doing everything they supposed to do. And these are the people that it most affects. If you have absolutely nothing, you have no assets, nothing, then you’re not affected, because you don’t actually have to pay anything. And if you have a lot, you may have been doing estate planning and worked around this issue or never had to go on Medicaid in the first place. So really, I don’t know that this was the intent, but the effect is definitely that the people who are suffering the most and paying the price are those who are in a lower middle class and who scraped by just enough to leave something for their kids. And that is heartbreaking to me. You know that this is not necessarily helping us fix the costs of Medicaid, which is, you know, to be fair, a huge burden on the system. Medicaid isn’t working properly. It’s very expensive to maintain. But this isn’t the solution. It seems to me at least this isn’t one that’s working well.
Gabe Howard: I’m in the same boat as you, which is I don’t understand the government’s motive for doing this. This doesn’t seem to make families safer. It doesn’t seem to make families stronger. And it seems like the people who are most impacted by this are people, like you said, who are doing everything right. They’ve worked hard enough to get that little piece of the middle class American dream. And the effects I like the word that you use there. The effects of this seem to be very punitive. Is there a solution to any of this? Do you have any ideas on how we can get ourselves out of this? Because I can’t imagine anybody listening to this is like, well, this sounds like a good system. I think most people are going to be like, oh, yeah, this is not this is not okay.
Rachel Corbett: Yeah, I think it spiraled out of control even from what it was initially intended to do, I think states have gotten more and more aggressive in terms of what they collect, going after more and more. And I think we’ve lost touch with even what was originally intended to be. And even that I think that we wouldn’t agree with. But I wonder if the solution will be less about overturning this particular law and this policy and more about reforming the health care system overall. I’m not sure that some states have had success in reforming this law. For example, in 2016, California passed really important legislation that dramatically reduced what the government could recoup from families on Medicaid, and they can only recover a very limited set of assets now. So it can work state by state. Minnesota also had some legislation. Some people after the ACA was passed and Medicaid was expanded. Some states said that will no longer implement state recoveries for people who were on the expanded Medicaid. Many of them didn’t know when they were getting on it that this was a policy. But in terms of the future, I think, you know, Democrats aren’t really talking about this. Democrats are talking about expanding the ACA or instituting Medicare for all. I think Bernie Sanders is the only candidate who has explicitly said in his Medicare for all plan that he would abolish the state recovery as part of his plan. I know that Elizabeth Warren is also against the state recovery, although I don’t know if she mentioned it explicitly in her Medicare for all plan. I think that if there actually was Medicare for all, this would be rendered moot because we wouldn’t have Medicaid anymore. Short of that, if we go into more of an expanded ACA, or we, I don’t know, we just don’t know whether this would be. Someone would have to kind of abolish this mandate, and I’m not sure people are really talking about that on the federal level at this point.
Gabe Howard: It’s incredible. It’s just absolutely incredible. You have taught me so much and I’m positive that our listeners are going to get a lot out of it. One of the things I think they’re going to get out of it is that they need to talk to their elected officials and find out how this impacts them, how they can protect themselves and how we can get rid of this nonsense altogether. Because I think visiting this on on poor people, regardless of the intention, as you said, the effect is is not good. And the fact that it’s only recovering 1 percent just shows that it’s not even working.
Rachel Corbett: Yeah, what the government actually recoups compared to what they spend on Medicaid and compared to what they spend on a lot of other things, frankly, that benefit wealthier groups of individuals. So for the federal government, it’s really not a lot. For people, the families it affects, it can be life changing.
Gabe Howard: I couldn’t agree more. Thank you so much for agreeing to be on the show. Where can our listeners find you? What’s your Web site? I understand that you have a book out. Please tell us where to learn more about Rachel?
Rachel Corbett: Yes. Well, I have a book on a very different subject, it’s about the artist Rodin and the poet Rainer Maria Rilke. But if you have any listeners interested in art, they should definitely find that, it’s called You Must Change Your Life. And I have a Web site, it’s Rachel-Corbett.com.
Gabe Howard: Again, thank you so much for being here. It has been enlightening.
Rachel Corbett: Thank you.
Gabe Howard: You’re very welcome. And thank you to our listeners who are here. Remember, please like us on social media, share us everywhere, give us as many stars, hearts or bullets as you can and use your words and tell people why you like the show. And remember, you can get one week of free, convenient, affordable, private online counselling anytime, anywhere, simply by visiting BetterHelp.com/PsychCentral. We will see everyone next week.
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Central Podcast, T. (2019). Podcast: Medicaid’s Dark Secret. Psych Central. Retrieved on April 7, 2020, from https://psychcentral.com/blog/podcast-medicaids-dark-secret/