As Long As It's An Entitlement It Will Be A Ponzi Scheme

In a post yesterday I gave a couple of reasons why Medicare is a mathematical Ponzi scheme.  To get a deeper understanding of how this comes about, you need to follow the constant efforts of advocates to game more money out of the system, and the futility of government attempts to push back.  Indeed, one wonders if the bureaucrats who run the program have any interest in looking out for the taxpayers, when their short term interest is in seeing the program expand, and seeing themselves move up in a bigger and bigger organization.

The legal profession now has a specialty called "Elder Law," largely consisting of people who make a living out of figuring out how to get more money out of Medicare and Medicaid.  The American Bar Association has an entire Elder Law section.

Here is a completely mind-numbing article from today's New York Law Journal on one of the hot Elder Law topics of the day, the Medicare "improvement standard."  As you may have been unaware before now, Medicare pays for home health care aids for eligible people, but under HHS's Medicare Benefits Policy Manual there is an "improvement standard" to determine what is actual medical care -- the concept being, if care doesn't have the prospect of making you better, it isn't medical care that should be covered by Medicare. 

Lawyers challenged this criterion in a nationwide class action brought in Vermont.  They found a highly sympathetic plaintiff, Glenda Jimmo, 71 years old, with severe diabetes, legally blind, and with a leg partially amputated.  Medicare denied her claim for home health care aides, saying that the claim wasn't really for medical care because it had no prospect of improving her condition.

Result:  after losing one motion, the government gave up.  The case has been settled on a nationwide basis, to be approved by one judge in Vermont, under which Medicare will revise the Benefits Policy Manual to make it clear that "skilled nursing services" are covered whether or not improvement in condition is expected or hoped for.

There is no mention in the article of any estimates of the cost to the government of this settlement.  It is easily in the tens of billions of dollars, more likely hundreds of billions over a long enough time period.  Our only gatekeeper is a judge in Vermont, undoubtedly carefully selected by the plaintiffs, who in any event probably won't even be given any information about the financial consequences of the settlement to the government.

Now you are undoubtedly thinking, why does Ms. Jimmo care about getting this payment from Medicare?  If she's really as badly off as described, wouldn't Medicaid pay for the aides?  And now we get to what this case is really about, although not discussed anywhere in the article:  If a service is covered by Medicare, it is covered even if you are a billionaire. If it's Medicaid, you must use up your assets first, or at least most of them.  Ms. Jimmo therefore has some assets that she doesn't want to use up paying for her aides.  The most common such asset would be a house, which the elderly person would much prefer see passed on to her kids at her death rather than used to save the government from paying for the aides.  Also at issue could be  money or other investments, in some cases lots of them.

These issues never get discussed in these articles or the cases, which proceed as if the immense cost is not even a consideration in the outcome. Who could be so cold-hearted as to deprive the blind and amputated Glenda Jimmo of her healthcare aide? But if the government must pay for all  healthcare costs for  even millionaires and billionaires while they pass the wealth on to the children, what is the chance that Medicare costs will not spiral away until they swamp the entire economy?  Is the government's credit card really infinite?