Canada’s Health Insurance

I am looking at a book published in the United States that would never be published, purchased or read in Canada. The book is titled “avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care” by Armond D. Budish (Henry Holt and Co. 1989).

In 232 pages of text, tables, charts, lists and forms, Budish proceeds to tell middle-class Americans at an elderly age how to impoverish themselves in order to qualify for Medicaid eligibility for nursing home care. That’s right, he shows how almost one million elderly a year can “protect their incomes, assets, and lifetime savings from the impoverishing effects of long-term custodial care.”

His advice, quite legal, is to middle-class citizens with assets under $200,000 who ordinarily must destitute themselves, often their spouses and sometimes their children before they are “poor enough” to receive Medicaid relief for nursing-home costs that average nearly $30,000 a year. Neither medicare (except in a few acute card situations) nor private insurance will credibly pay for nursing home bills.

In Canada, universal health insurance covers all Canadians from the crib to the nursing home. In Canada, around 8 percent of all health care dollars are spent on administrative expenses, while in the U.S. the administrative expense percentage is over 20%.

Budish is very pragmatic. He prints heartbreaking testimony by the next of kin to nursing home residents that shower shame on a political economy that has megabillions for bank bailouts, Pentagon procurement scandals, and massive taxpayer subsidies for corporations. Entire life savings and assets wiped out in a matter of months or a few short years formed the core of these sad stories.

The House Select Committee on Aging similarly described the picture: “Medicaid coverage comes with heavy price for persons needing long term care as well as their spouses… The bottom line is that elderly persons must essentially impoverish themselves, and probably their spouses, before they are protected by Medicaid.”

I quote this Committee to show that your members of Congress are flooded with letters from desperate Americans year after year, but these legislators are too busy shoveling out middle-class taxpayers dollars to insatiable corporate subsidies, bailouts, giveaways and scandals.

Under Medicaid law, there are both income and asset limitation tests which the elderly must meet. Under the income limitation test, most of an older person’s income will go to a nursing home, while under the assets limitation test, almost all of a person’s assets must be turned over to the nursing home before Medicaid will start paying.

Where Budish comes in is to show how to reduce one’s assets to qualify for Medicaid — before losing everything. He offers the following options: (1) placing money in exempt assets, (2) transferring assets directly to children tax-free well ahead of nursing home entry, (3) paying children for their help, (4) juggling assets between spouses, (5) passing assets to children through a spouse, (6) transferring a home while retaining a life estate, (7) changing wills and title to property, (8) setting up a Medicaid Trust, (9) getting a divorce.

Yes, couples have been known to get a divorce in the U.S.A. to qualify for nursing home medicaid. Admitting this approach is a “last resort,” the author then proceeds in sober, technical detail to explain how a divorce can shield your assets and some income.

Budish is not alone in his calling. Financial planners around the nation give such variety of advice. Just recently, the June 24th Wall St. Journal carried a long article under “Your Money Matters” column on Medicaid trusts (“you give away your money so you can keep it.”)

There is a growing momentum in our country to apply the Canadian way, with improvements, to the health care needs of Americans. With 70 million Americans without health insurance or grossly underinsured, with costs going out of control as physicians and drug companies prosper, and with many people afraid to change jobs for fear of not getting coverage for pre-existing conditions, among other impositions, isn’t it time for “we the people” to get organized for a change?

If you agree, write to Health Research Group, P. 0. Box 19404, Washington, D.C. 20036 for free action materials.