“It’s nuts,” declared Frank.
A family friend—a—bartender, Frank told us, had borrowed his closing costs. His mortgage was $3,000 a month. It was a shocking amount to all of us.
Rachel and Frank witnessed this craze with reserved skepticism. They both sensed that something wasn’t right. They have that working-class working theory if you work and play by the rules, you’ll win. They don’t romanticize easy money. They recoil from it like it’s the beginning of a parable.
A few months later the bartender’s home was in foreclosure and Rachel and Frank’s house was suddenly worth a fraction of what it had been at the height of the boom. The country was hemorrhaging jobs (2.6 million in 2008). Rachel and Frank were okay, they assured us. Rachel still had her job. Frank had his. Their savings were safe. Their health insurance secure. Their suspicions about easy money, however, had never been more vindicated.
By 2010 Rachel had lost her job of 14 years. She was 56 at the time. Frank’s job was soon to follow. He’d been with his company for 21 years. The crash was instant and then the fallout was a slow motion ripple.
Being in their 50s, each with respective preexisting conditions (Rachel has high cholesterol; Frank has high blood pressure) they were uninsurable. Their only option was to pay for COBRA insurance. It quickly skyrocketed to $1,600. Last year Rachel and Frank forked out $18,000 for health care alone. Since their unemployment insurance was long gone, last year they collectively earned $400.
All of their retirement savings was going to cover premiums. We were afraid they were going to lose their house to pay for insurance. They qualified for the Medicaid expansion under ACA. It seemed they were saved just in the nick of time.
Then a week ago my in-laws got a letter in the mail. It was informed them of the Medi-Cal Estate Recovery Act. “When a Medi-Cal beneficiary is 55 years of age or older at the time of death, the state will collect from his/her estate the cost of Medi-Cal services received, including insurance premiums paid and payments made to managed care plans on or after his/her 55th birthday.”
In short: They are still going to lose their house.
The Medi-Cal Estate Recovery Act is not part of Obamacare or the ACA. It was a law passed in 1993 applying to Medicaid. At the time Congress was enraptured in the welfare queen paranoia of the Reagan era. This law was going to thwart alleged rich folks from getting Medicaid. Since 1993 California has reportedly recovered $978.5 million from Medi-Cal recipients. The state has spent $621 billion on the program. They’ve recovered not even close to one percent. Nationally it hovers around “0.13 percent of total Medicaid spending for the year.”
“It doesn’t seem fair,” said Frank. “Granted it’s my fault for being unemployed but still…I’m guessing they’re going to charge interest.”
Why hasn’t there been a bigger stink about this provision in Medicaid? Two problems: The left that’s supposed to advocate on behalf of the poor also has to defend Obamacare in its entirety. And the right that’s furious over personal property being seized by the government has cried wolf so many times they’re unable to sound any real alarms about heath care laws anymore. Death panels didn’t pan out—nor did the death spiral—so “Obama is going to take your mama’s house” has no chance.
Three million more Americans signed up for Medicaid under Obamacare.
“I wasn’t surprised because you don’t get something for nothing,” said Frank. When I asked Rachel how she felt she had a similar sentiment: “Nothing’s free in this world.”
But the fact is—they’ve already paid for their care. Frank has had a full-time job since he was 18 years old. Rachel since she was 19. Each have been paying taxes for over 40 years. This law is akin to the state taking your car when you die for the privilege of using roads you pay taxes to maintain.This is the very definition of a bad law: It’s ineffective at what it’s supposed to do while being malicious to a small minority of poor people. During the last five years of the national debate around health care reform, it’s been an all-or-nothing proposition. Either you hate Obamacare and cite it in your requiem for the republic. Or you defend it whole cloth with no caveats. This is indefensible. And it needs to be fixed.
Taking Eternal Vigilance Too Far