The Grim Repo: Medi-Cal Estate Recovery Act

It was 2007 and we were all gathered around the kitchen table. It was my husband; his parents, Frank and Rachel (not their real names); and me spending a Sunday afternoon catching up. Everyone, it seemed at that time, had just bought a house. Their modest three-bedroom tract home, they were a year from paying off, was now worth half-a-million dollars.

“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.

Tina Dupuy
Taking Eternal Vigilance Too Far

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  1. says

    Yes, Eryn Brown’s February 20, 2014 piece in the LA Times is far more informative on the issue. And I can find no record of something named “The Medi-Cal Estate Recovery Act.”

  2. Ryder says

    It’s disturbing that this piece twists and turns in order to get lost in the details, but fails to ask the most important question:

    How is that big-government-in-control-of-everything working out for you? I mean, really. That’s the lesson. The cobra payments that were threatening to bankrupt them in the first place? Yet another government program.

    Until we mature enough to see that government does not and can never “care” in any meaningful way (it is a machine), and is prepared do screw you if you do, and screw you if you don’t… we’re going to keep voting for the promises of sugar coated goodies… that come from… somewhere. Then we realize that the bill ALWAYS comes due, and it will absolutely screw us.

    Now with Obamacare, premiums that were going up before, have now sky-rocketed… and the “success” of sign-ups is a documented lie. You don’t get to force people’s insurance to be canceled, and then take credit for when they sign up for Obamacare… that’s like pushing your friend over a cliff, and pulling them back at the last moment then trying to claim credit for saving their life.

    And this article is a nasty bit of distortion in its own right… laying blame on Reagan many years after he left office… when this bill was signed, Congress and the Presidency were under the full control of the democrat party… they were *the* power of DC.

    When lies have to be told by us about the things we do to ourselves, simply in order to avoid the responsibility of our own choices, we’re on a wicked path to self destruction, growing from within.

    Only a fool would trust politicians with something so important as health… only a crazy, crazy fool…

    • says

      Big government ended slavery. Big government stopped Hitler. Big government stopped Jim Crow and lynchings. Big government ended polio. Big government has virtually wiped out illiteracy and hunger in the United States.

      If, as you say, government “is a machine,” perhaps it is ‘operator error’ that is the problem rather than the machine itself. Powerful wealthy usurpers have historically manipulated its levers to their own advantage and benefit, to the detriment of many others. It is incumbent of a freedom loving people to get their own hands on the machinery of government and to turn its power for the good of the people whenever possible. In many cases we, the people, have done that.

      Your cliff analogy is wrong. The Affordable Care Act did not force anyone to lose their insurance. It was insurance companies who decided on canceling, rather than adjusting the few policies that were not compliant with the new law. It is not a fact that 7.5 million people were forced to lose their insurance. It is a fact that 7.5 million people who couldn’t afford health insurance last year are now covered.

      Every honest unbiased source reports that premiums are not going up. That is a Fox News inspired fallacy. With the exception of the so-called “Cadillac Policies,” rates are going down to affordable levels for the first time ever for millions of working and underemployed people.

      The provision to the Omnibus Budget Reconciliation Act of 1993, making it mandatory for states to recover the cost of long-term care was slipped into the bill by ‘Reagan-turned-Gingrich Republicans’ threatening to block passage of the whole funding bill in the Senate unless it was included.

      I suppose it would be less “crazy” to allow only corporate executives receiving tens of millions of dollars in bonuses – based on how high they can raise the dividends to their share holders, by overcharging working people – to be trusted “with something so important as health.” At least politicians can be voted out or recalled. If we don’t trust any politician whatsoever at all, do you really honestly believe we’re better off trusting unnamed and unknown corporate executives?

      • Ryder says

        Even a clock that has stopped working, is right twice each day. Pointing to a hand full of things that government “got right”, does little to illuminate the *net* effects. Such a question is a valid one.

        Progressives used to complain that conservatives wanted to control what happens in the bedroom… which turned out to be a non issue. And while nobody was looking, progressives are in every other room and space in the house… in our refrigerators, in our garages, in our bathrooms… in every light fixture, water heater and attic…

        From what we are allowed to drive, to the light we read by, progressives have actually done what they claimed conservatives wanted to do…. control over our free choice, right where we live.

        Thinking that “the operator” is the problem with the machine, is a mistake of gargantuan historical proportions. Apart from disease, governments have killed more people… their OWN people, than anything else…. including war.

        Government is power, and power corrupts. We all know this. Pretending that “if we just elect someone with darker skin and female sex organs everything will run right” is a childish gambit… yet it is one we are in danger of actually doing.

        To the extent that some governments are more corrupt than others… sure, we can agree on that… but they are all corrupt, and if you read these pages, you know that ours is controlled by powerful interests.

        Giving MORE power and authority to such actors is foolish beyond compare.

        • says

          I happen to think that the things I mentioned here are, as our illustrious vice-president would say, “a big f**king deal” and not just “a hand-full of things that government got right.”

          You may be interested in visiting a certain government-less society of utopian freedom in eastern Africa.

          We disagree. Fine. End of discussion.

          • Ryder says

            Well, you could think that three things are a big deal compared to the millions of other things… But that’s like deciding to marry a woman because she has a big rack. It’s stupid. It’s not entirely superficial… but it is.

            And of those three things you mentioned, are they really examples of “big government”?

            Wasn’t it largely American culture… American fighting spirit that defeated Hitler? Wasn’t it American private companies, innovating and rapidly producing the most powerful implements of war that the world had ever seen, that beat Hitler?

            And at the birth of this nation… wasn’t it the small government of the States… that beat the big government of England?

            And was it really “big government” that ended slavery? It was a much smaller government back then…

            And weren’t the literacy rates improving FASTER before the federal government took over education… and since that time, literacy rates have NOT improved, and in fact gotten worse?

            The USA today reported that 1 in 7 adults were unable to read their story about literacy. Doesn’t sound virtually wiped out to me.

            I think you are looking through rose colored glasses, my friend.

            So maybe all of those things ARE big deals… but they don’t appear to go the way you say they do.

            • says

              I told myself I wouldn’t engage in a pointless exchange with someone I’m pretty sure won’t see eye-to-eye with me. However, I have to respond to these latest points you make. That analogy of the woman with the “big rack” is itself silly and not germane.

              Actually, it was President Franklin Roosevelt (government employee) who organized and sent an enormous number of U.S. government forces which included the soldiers (agents of the government) who possessed that “American fighting spirit” to help defeat Hitler (along with the governments of the Soviet Union, England, France and other countries). These American soldiers were fed, trained, equipped, transported, and ordered to fight by the largest, most expensive big government program in world history, the U.S. Military.

              “American private companies” produced the armaments necessary to defeat Hitler. But they would not have been able nor motivated to innovate and rapidly produce them without the stratospherically unprecedented amount of taxpayer money the government poured into them.

              The “small governments of the states” were inadequate to the task of fighting the British Army and Navy in the American Revolution. It was not until the small colonial governments combined together to build a large enough amalgamated American government force to defeat England.

              Yes, it was the powerful big government of the United States that funded and waged the biggest and most expensive war in history up until then to defeat the Confederacy, thereby ending slavery.

              And the literacy rates were absolutely not “faster before the federal government took over education.” That is why the government built schools in the first place. As the industrial revolution took hold, employers needed masses of people who could read, write, do math and employ some degree of critical thinking skills to run their factories. It is an indisputable fact that before government built schools for the masses, only the wealthy were adequately educated.

              U.S. literacy rates have only decreased over the past 25 years, because of anti-government right-wing Republicans, who have at every opportunity, forced cuts to education funding, leading to over-crowded classrooms, programs being cut, and the loss of a great many discouraged potential teachers because of low pay. All this has resulted in the overall lower quality of instruction, which lowers the national literacy level. If indeed the USA Today story you mention is accurate, it reflects that national neglect of basic education.

              You have put me in the awkward position of defending a government that I have been highly critical of my whole life. But facts are facts and due credit must be given for the constructive works of government, as well due criticism.

              Those things I mentioned in the earlier comment above are indeed very big deals, for the millions upon millions of people’s lives they have improved and saved. Perhaps my glasses are rose colored. I believe government itself is neutral, kind of like a gun. It’s a tool, subject to carry out the will of who is in control of it at any given time. (“Guns and governments don’t themselves kill people. People use guns and governments to kill people.”)

              Yes, government itself is incapable of caring for people but I believe that whenever we can put government into the hands honorable and caring people, good things can and do happen. What is your viable alternative?

              • Ryder says

                If you want to avoid people that don’t see things the way you do (diversity of opinion), then its not surprising or unusual. Many people are more comfortable in an echo chamber.

                All you are doing, in a long-winded way, is saying that “government was involved” in some things that worked out ok.

                That falls far, far short of what is needed to rebut my original point, which was that continual growth of government has serious negative consequences, as the article illustrates.

                If you are happy with one thing going right, when a thousand things go wrong… then that would have to be a very questionable position.

                One could just as easily say that slavery was a good idea because at least slaves were guaranteed some food and shelter. To most people… that simply isn’t good enough.

                So, I’m sorry… pointing out a few good things that government happened to be a part of, is not nearly an adequate basis to say that ever increasing government is automatically a good thing… especially when your examples aren’t necessarily even examples of *big* government… they are just as easily seen to by small government.

                You decide to blame government failure on “republicans”… forgetting that they are a part of government.

                Government failure, is government failure.

                And no… government is never neutral. Ever.

                Governments, without exception, reserve for themselves the right to initiate force… whilst denying it to others.

                This can never be neutral, which is why governments kill their own citizens more than any other human activity… including war against neighbors.

                And when it is not killing… it is taking, backed by lethal force, the wealth of its citizens, as this article points out… the family in this article is royally screwed in a way that *no other entity can do it*. If they resist, they will be confronted, eventually by lethal force… all “legal”.

                When you realize that the government has claim to every ounce of your labor… and it can take it at will… you will finally realize that you are indeed no different from a slave… but freed from the plantation… because you have nowhere to escape TO. They have you bank account. They have your wages *before* you receive them. What you are allowed to have… is by their will alone.

                You rack up a medical bill? No problem. They own you enough to take what they want, when they want.

                And your argument is that this is good because we beat a guy called Hitler once? Sorry… I’m just not seeing that.

  3. ronwf says

    “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 is a California State law. It didn’t involve Congress or the President. And in any case President Reagan had been out of office for 4 years when this was passed. If any President had influence over this it was President Clinton, who had been in office for 4 years when this was passed. Of course, he’s a Democrat, so we can’t say anything bad about him, eh? Nothing can be his fault. What hypocrisy.

    • says

      I can find no record of something named “The Medi-Cal Estate Recovery Act.” The California State law enabling “The Medi-Cal Estate Recovery Program” was passed by the U.S. Congress in the Omnibus Budget Reconciliation Act of 1993, making it mandatory for states to recover the cost of long-term care (such as nursing home care or home health care). That law also reduced the age of deceased recipients whose estates are subject to the recovery from 65 or over to 55 or over.

  4. ronwf says

    “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.”

    The Left defends Obamacare in it’s entirety because it refuses to acknowledge that the right possibly could be right and that the thing has flaws. Better to defend a bad law than admit their hero was wrong.

    “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.”

    They haven’t cried wolf. They were right. But the left has spent so much time and effort lying about the right, seeking to demonize and discredit them rather than debate the issues on their merits (because they’d lose if they did) that the lie has overtaken the truth.

    “Death panels didn’t pan out—nor did the death spiral—so “Obama is going to take your mama’s house” has no chance.”

    Government panels in charge of rationing health care on the basis of the age, etc., of the recipient haven’t failed to “pan out” – their implementation has simply been delayed just like other provisions of the health care law have been delayed until after the election.

  5. Diane says

    Thank you, Tina. I was on the Blue Line last week when the man sitting next to me seemed so shocked by what he was reading, I couldn’t help myself from taking a sneaky peek. He was reading a sheet explaining how the State would recover, after his death, the money spent on the Medi-Cal for which he’d just been found eligible. I thought I had to be misreading and intended to investigate when I got home, but you have just done my job for me. Now the bigger job is, as you say, getting rid of this travesty.

    • Ryder says

      You can’t. It’s government… the law has been around for 20 years… and even if you get rid of it 10 years from now, it will already have done three decades of damage that can never be fixed… lives ruined by our OWN laws.

      You can protest and picket and boycott and bring suit against a business. Not government.

      This is why people said… don’t allow government anywhere near something so important as your medical care.

      You do know that if you have a loan, and go bankrupt… your debt is forgiven, yes?

      Except when the government is the lender. Student loans, written by government, have the unique and wonderful attribute of being the only loans in the galaxy that are not forgiven in bankruptcy.

      Government writes vastly different rules for itself.

      Somehow people believe that the government will never come after them… If a BUSINESS does… you *do* have options. But you don’t with government… city hall can always win if it wants.

      To move medicine FROM business (where you have options) into the hands of government (where you don’t), is a mistake of horrific proportions.

      And everyone was warned.

      And recall the tragedy of the income tax… politicians told us that if we only would give them the constitutional power to tax income, they promised that they would only go after the “fat cats”. A prime example of using our hatred of “those that have” against us.

      Can you imagine it? We give our government the power to take ALL INCOME FROM US… based on nothing more than our envy of “the rich”, and the thinnest of political promises. Gullible is not the word.

      We deserve the government we get, it seems.

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