California Seizes Estates of Deceased Medicaid Patients

Published May 14, 2015

Some families of deceased Medicaid patients in California are receiving big bills from Medi-Cal, the state’s Medicaid insurance program for the poor.

Medi-Cal’s “estate recovery program” was established under a 1993 federal law granting states the option to seize assets of Medicaid beneficiaries after they die.

The law mandates states recover assets for nursing home care, and it also allows them to recover payment for medical services such as doctor visits, hospital stays, and other medical services for people 55 and over. Advocates say only 10 states engage in this optional recovery, and California is the most aggressive state taking advantage of the law.

SB33, a pending Senate bill introduced in 2014 by California state Sen. Ed Hernandez (D-West Covina), would abolish this practice of the California government.

Seen as Property Rights Violation

Gennady Stolyarov, editor-in-chief of The Rational Argumentator, says Confiscation of the estates of deceased Medicaid recipients is an unconscionable violation of private property rights, especially with Medicaid becoming the sole recourse for paying for health care for a growing segment of the population.

“For such Medicaid recipients, a modest home may be one of their only major assets and a significant source of economic stability and hope for a more prosperous future,” Stolyarov said. “If a deceased person’s home is confiscated by Medi-Cal or another state’s Medicaid program, then it cannot be passed to surviving family members, who might struggle to find an affordable shelter as a result.”

Stolyarov says the estate recovery program is an example of an extremely hardhearted government program that forces people to suffer because of family members’ prior debts or health care needs.

“A person should not lose the family home because one of his or her deceased parents had little or no income and took recourse to Medicaid to pay for treatments for terminal cancer or another terrible disease,” Stolyarov said. “This is especially true given the fact most Medicaid recipients have no easy way of knowing their estates are put in jeopardy when they sign up for the program.”

This situation also sends a cautionary message about socialized health care arrangements purporting to provide “free” medical care, Stolyarov says.

“There is always a cost, and there are always strings attached when any aspect of health care is centrally planned,” said Stolyarov.

Likened to Death Tax

Seton Motley, president of the public policy organization Less Government, says it’s unfair for Medi-Cal to engage in estate recovery when citizens have been paying into the program for years in the expectation it will cover them at the end of their life.

“The U.S. House of Representatives just passed a repeal of the death tax,” Motley said. “This is another death tax, and the Republicans’ message should be, ‘This is a death tax too, and we’re getting rid of the states’ option to come after you when you are already dead.'”

Sally Pipes, president of the Pacific Research Institute, agrees Medi-Cal’s asset recovery system is just a second death tax.

“California needs more revenue because people with money are leaving the state and people who [rely on] entitlements are coming into the state,” Pipes said.

The government and the people who are still in California can’t afford all the entitlement programs the state has, and for the government to take funds from people who are on Medi-Cal or from their estate is just wrong, Pipes says.

“I like to say the Department of Motor Vehicles doesn’t offer insurance to people, and it doesn’t sell cars,” Pipes said. “So why should the California health care system and Medi-Cal make decisions about what kind of care people can get and whether they have coverage or not? It’s completely wrong.

“But the state needs the money,” Pipes said. “And it’s the liberal mentality to take it.”

Kenneth Artz ([email protected]) is managing editor of Health Care News.

Internet Info:

Sen. Ed Hernandez, Senate Bill 33, Proposed in the California State Senate, December 1, 2014: