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Quirk benefits well-off retirees
Millions would get low-cost Medicaid coverage
Question of the Day
President Obama's health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist that government number-crunchers say they discovered only after the complex bill was signed.
The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services Department.
As many as 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That's because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.
Medicare chief actuary Richard Foster said 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," Mr. Foster said during a question-and-answer session at a recent professional society meeting.
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," said Brian Cook, spokesman for the Centers for Medicare and Medicaid Services.
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. Republicans in Congress are pushing for a rollback of federal requirements that block states from limiting eligibility.
Medicaid is a safety-net program that serves more than 50 million vulnerable Americans, from low-income children and pregnant women to Alzheimer's patients in nursing homes. It's designed as a federal-state partnership, with Washington paying close to 60 percent of the total cost.
Early retirees would be a new group for Medicaid. While retirees can now start collecting Social Security at age 62, they must wait another three years to get Medicare, unless they are disabled.
Some early retirees who worked all their lives may not want to be associated with a health care program for the poor, but others might see it as a relatively painless way to satisfy the new law's requirement that all Americans carry medical insurance starting in 2014. It would help tide them over until they turn 65 and qualify for Medicare.
The actuary's office said the 3 million early retirees who would become eligible for Medicaid are in addition to an estimated 16 million to 20 million people who Mr. Obama's law already would 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.
A spokeswoman for the Senate Finance Committee, which wrote much of the health care law, said if the situation does become a problem there is plenty of time to fix it later.
But Republicans already see a problem.
Former Utah Gov. Mike Leavitt said adding early retirees will "just add fuel to the fire," bolstering the argument from Republican governors that Washington's rules don't make sense.
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