I’ve been hearing about this problem for years, and it seems like a last gasp of the ugly old version of dependency-welfare that we mostly reformed a decade ago.
Because of the way Medicaid works, families have a huge economic incentive to literally abandon — at least financially — their loved ones. This from the New York Times:
Last year, more than 1,200 people in New York City officially turned their backs on their husbands and wives to qualify for Medicaid, triple the number of people five years ago.
The practice, known as “spousal refusal,” is becoming more common as the population ages and the cost of nursing care rises — and it is coming under increasing attack by government officials looking to curb ballooning Medicaid expenses.
The Times article — titled “Full Wallets, but Using Health Program for Poor” — profiles one man who cut ties to his wife financially while he still had half a million dollars in the bank.
Which left taxpayers to pick up the bill.
This then sets up an even more ugly situation where New York state sues people — often the elderly spouses of sick people — in an attempt to recoup some of that money.
This kind of dodge also happens regularly in estate planning. People gift away their assets to children, so that they appear penniless, leaving taxpayers to foot the bill for nursing home and medical care.
The Times articles notes that “many state and local governments do not openly acknowledge the spousal refusal option.”
But I’ve heard local officials in the North Country complain privately that too many people with means are choosing this path.
What do you think? Is it a reasonable way for people to avoid bankrupting themselves and their children? Or should people spend up their own assets on medical care, before turning to the state?