LET'S begin with a little quiz. Let's say that you have just found out that your grandmother has Alzheimer's disease and will need to enter a nursing home.
Your first response should be (A) seek out another doctor for a second opinion, (B) call to commiserate with your loved ones, (C) find out what treatment options are available, (D) call a lawyer to begin the process of transferring her financial assets so she does not get stuck with the tab by the nursing home.
Most people are not so cold-hearted as to pick (D), but existing federal and state laws make that the right answer.
Older Americans now can divest their assets to escape the cost of a long stay in a nursing home or other long-term care facility. By using a number of legal maneuvers such as putting money in trusts for grandchildren, joint accounts and multiple divestments, they quickly can transform themselves from affluence to poverty.
The Medicare program, which provides access to health care to elderly persons, primarily covers the costs of hospital care. If you need long-term care in a nursing home, Medicare won't help. But Medicaid, the state-administered federal program created to provide health care to the poor and disabled and children, will pay for long-term care.
So older, wealthy Americans have every incentive to use all the gimmicks the law allows -- and there are a repulsively large number of them -- to transfer their assets to sneak into the Medicaid program. Existing laws allow the elderly to engage in a shell game in which resources intended for the poor are spent on themselves.
Gerald Whitburn, secretary of the Wisconsin Department of Health and Social Services, says, "As it becomes increasingly difficult for states to fund their Medicaid programs, it is imperative that we reserve services for those poor and destitute who truly need them."
About a third of all the money spent nationwide on Medicaid now goes for nursing home payments. Illinois, for example, spends $4.5 billion on 1.3 million Medicaid recipients. However, a third of the total, more than $1 billion, goes to pay the costs of 60,000 nursing home residents.
Laws that permit older people to hide their savings, shelter assets, transfer property and engage in other similar poverty-faking scams also hide the fact that there is no long-term care coverage in this nation.
By free-riding on a program intended for the poor, the elderly do not need to irritate politicians by demanding a decent system of long-term care for themselves.
A number of states including Wisconsin, Minnesota, Illinois and Michigan are considering legislation aimed at slowing the rate at which upper- and middle-class Americans shove the truly needy off the Medicaid roles.
Wisconsin wants to limit the amount of assets that can be sheltered. Michigan wants the right to nullify last-minute transactions aimed at hiding funds. Illinois wants to improve the reporting requirements on assets to permit an easier assessment of who moved money around prior to entering a nursing home.
It is not good for a retired worker to lose everything to pay bills that average $30,000 a year.
But there is nothing good about asking poor children to bear the burden of providing older Americans with decent nursing home care. And there is nothing right about protecting an asset transfer scam of loopholes, gobbledygook and tiny print that only a lawyer could love.
The time long since has passed when we should stop funding long-term care for the elderly through Medicaid. We need to create a new federal program for long-term care insurance that will protect every American against the costs of a prolonged stay in a nursing home.
Arthur Caplan is director of the Center for Biomedical Ethics at the University of Minnesota.