Reform in Medicaid Might Force Children To Fund Parent Care

A LITTLE-KNOWN Republican initiative would allow states to go after the assets of children whose poor parents cannot afford their own nursing-home costs.

Not surprisingly, the provision, which is part of a GOP Medicaid reform plan, is generating a lot of crossfire in the budget battle between the White House and Congress.

President Clinton has already vetoed the proposal. But Republicans are pressing ahead with it as part of their goal of moving power to the states, transferring almost $800 billion in Medicaid payments over the next seven years along with the autonomy to establish their own health-care coverage for the poor.

Currently, the federal government pays 80 percent of Medicaid, and the states pick up the rest of the tab for the poverty safety net. Nursing-home care now accounts for almost one-fourth of total Medicaid expenditures for services, according to the Washington-based Urban Institute. And Medicaid is already the fastest growing portion of state budgets, absorbing about 30 percent of some state budgets. Republicans say neither the states nor the federal government can continue to bear such costs.

But Democrats and economists warn that the GOP bill could affect a wide swath of the American public. According to US Census Bureau data, 1 out of every 3 adults - or 76 million people - is a baby boomer.

Some two-thirds of them have children under the age of 16 and parents who are near or in retirement. Few are prepared to pay college tuition for their children and nursing-home costs for their parents, say critics of the plan.

Under current law, states cannot consider adult children's incomes when determining their parents' Medicaid eligibility.

"We don't think that children should have to impoverish themselves to pay for nursing-home stays," says Lawrence Haas, spokesman for the White House Office of Management and Budget. "Under the Medicaid program, we have protected the spouses and children who would be at risk. We oppose the idea that they should now be exposed."

One senior Republican congressional staff member faults Clinton for "demagoging the issue. We protect states from requiring median-income children of institutionalized parents from contributing to costs of Medicaid," he says. "States would have the flexibility to go after higher-end income earners."

"The governors have tremendous input on this," he says, referring to the GOP's constant inclusion of state leaders in setting budget priorities. "This is a plan that helps state leaders protect their constituents, not undercut them."

Supplementing their costs with private payers allows states to save money by lowering their daily rates, says Ann McDermott, vice president of government relations at Manor Health Care, one of the nation's top elder-care providers, based in Silver Spring, Md.

Roughly 35 percent of Manor Health Care's nursing-home occupants are Medicaid recipients, well-below the average nursing home's 60 percent Medicaid occupancy. If the GOP plan goes through, Ms. McDermott estimates, "it could potentially affect well over 2 million nursing-home residents currently receiving Medicaid."

But health-industry advocates are fighting to retain Uncle Sam's contribution, and they are combatting political efforts to turn the Medicaid program into a private-payer program, if only in part. "If anything, the Medicaid program needs to be expanded and made more affordable," says Sara Nichols, Washington director of Physicians for a National Health Program.

"Nursing home care is expensive, averaging $36,000 annually," says Judy Waxman, director of government affairs for Families USA, a nonpartisan consumer health-care advocacy group with 300,000 members.

Financing that would be difficult to do on the median household income of $32,000, she says. In 13 states and Washington, D.C., annual nursing-home medical costs exceed the annual household median income; in 23 states and D.C. those charges exceed 90 percent of the median household income.

"We have no idea how far states are going to go with this provision," Ms. Waxman says, because the language in the Medicaid reform bill is vague on the level of income-earner that would be assessed for parental nursing-home costs. She worries that a governor anxious to reduce state outlays could go too far.

GOP advocates counter that states will fashion their Medicaid plans according to constituents' needs. "Governors want to save money, but they also want to keep in touch with their voters," says the congressional staffer. "They're not going to jeopardize that."