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New Study Identifies Major Gaps in Medicaid Structure

Naples, FL – A new study has identified a major loophole in the structure of Medicaid that has led to massive cost overruns and a shortage in available funds for truly needy individuals. According to the study, eligibility expansions and loopholes have led to a perversion of Medicaid, creating an entitlement program for the middle-class.

The report, How to Fix Long-Term Care Financing, co-published by the Foundation for Government Accountability (FGA) and the Center for Long-Term Care Reform, found that the current structure of Medicaid has created a perverse incentive for middle-class and affluent seniors to plan their estates in order to qualify for the long-term care program.

“Federal law restricts long-term care eligibility to individuals with limited countable assets, but eligibility loopholes and home-equity exemptions provide a way for middle-class and affluent seniors to take advantage of the benefits program. These loopholes allow those with the means to plan for retirement and potential health-needs to take valuable funds away from needy individuals,” said Stephen Moses, Center for Long-Term Care Reform President.

“The current structure of Medicaid for long-term care is a blatant misuse of the public’s tax-dollars, and it’s ultimately hurting those it was designed to protect.”

According to the study, under current law, up to $560,000 in home equity is exempt from Medicaid’s asset limit on those applying for long-term care; in some states, the exemption is as high as $840,000. This exemption, which can be combined with other loopholes such as the rearranging of estates to hide funds, has led to the overuse and abuse of Medicaid, often at the expense of those who truly need the aid.

FGA President Tarren Bragdon noted that the study revealed just how damaging government benefits programs can be when misused and incorrectly structured.

“By creating an incentive to use Medicaid as a long-term care strategy for the middle class and allowing loopholes to be abused, the government is hurting entire populations in each state. Rather than allowing people to take advantage of the system, our elected-officials should promote work as a means to prosperity and promote personal responsibility. We must protect limited taxpayer resources for the truly needy,” said Bragdon.

The full text of How to Fix Long-Term Care Financing can be viewed here. For more information, please contact Stephen Moses at 425.891.3640.

The Foundation for Government Accountability is a non–profit, multi–state think tank that specializes in health care, welfare, and regulatory reform. To learn more, visit


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