Remember when then House Speaker Nancy Pelosi (D –Calif.) said the public would have to wait for passage of President Barack Obama’s health care law before they would find out what was in it?
It turns out that Pelosi was right.
Only, what officials who make long-range estimates for the Health and Human Services Department (HHS) found out is highly embarrassing to the government and, in particular, to the president as he seeks re-election with the health reform bill as the signature issue of his first term in office.
According to the HHS officials, the health care law would let several million middle-class people get nearly free insurance meant for the poor. Yes, they said they discovered this after the complex bill was signed.
Reporting on the story, Associated Press said the change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid. That means that at a time when the government is struggling to balance the federal budget and states are burdened with ever higher Medicaid costs, up to 3 million more people could qualify for Medicaid as a result of this anomaly, never noticed before.
The reason for this is simple – in retrospect. It happens because the law, in a major change from current practice Social Security benefits would no longer be counted as income for determining eligibility. AP said this would be comparable to allowing middle-class people to qualify for food stamps.
AP said that Medicare chief actuary Richard Foster says the situation keeps him up at night.
“I don’t generally comment on the pros or cons of policy, but that just doesn’t make sense,” Foster said during a question-and-answer session at a recent professional society meeting. “This is a situation that got no attention at all. Even now, as I raise the issue with various policymakers, people are not rushing to say … we need to do something about this.”
Still Indeed, administration officials and senior Democratic lawmakers say it’s not a loophole but the result of a well-meaning effort to simplify rules for deciding who will get help with insurance costs under the new health care law. Instead of a hodgepodge of rules, there will be one national policy.
“This simplification will stop people from falling into coverage gaps and may cause some to be newly eligible for Medicaid and others to no longer qualify,” Brian Cook, spokesman for the Centers for Medicare and Medicaid Services told the AP.
But states have been clamoring for relief from Medicaid costs, complaining that just these sorts of federal rules drive up spending and limit state options. The program is now one of the top issues in budget negotiations between the White House and Congress. Republicans are pushing for a rollback of federal requirements that block states from limiting eligibility.
The actuary’s office said the 3 million early retirees who would become eligible for Medicaid are on top of an estimated 16 million to 20 million people that Obama’s law would already bring into the program, by opening it to childless adults with incomes near the poverty level. Federal taxpayers will cover all of the initial cost of the expansion.
Republicans already see a problem.
Former Utah governor Mike Leavitt said adding early retirees will “just add fuel to the fire,” bolstering the argument from Republican governors that some of Washington’s rules don’t make sense.
“The fact that this is being discovered now tells you, what else is baked into this law?” said Leavitt, who served as Health and Human Services secretary under President George H.W. Bush. “It clearly begins to reveal that the nature of the law was to put more and more people under eligibility for government insurance.”
According to AP the Medicare actuary’s office roughed out some examples to illustrate how the provision would work. A married couple retiring at 62 in 2014 and receiving the maximum Social Security benefit of $23,500 apiece could get $17,000 from other sources and still qualify for Medicaid with a total income of $64,000.
That $64,000 would put them at about four times the federal poverty level, which for a two-person household is $14,710 this year.