Medicaid and the Middle Class
“The little secret of Medicaid is that it’s not just a poor-peoples’ program. A significant portion of its beneficiaries are members of the middle class.”
By Robert B. Reich
The House of Representatives passed a bill trimming $50 billion over five years from several federal programs serving the poor, including Medicaid, the giant health program. But the Medicaid cut is running into more political opposition than its backers had counted on, and it’s far from clear that the Senate will go along [with the slash].
It wasn’t supposed to be this way. The plan was to extend tax cuts for the wealthy and reduce the Alternative Minimum Tax for the upper middle class, and get the money to do these by cutting programs mainly for the poor who don’t have political clout in Washington. Yet in recent days Senate Republicans have announced that they’re not going to reduce the Alternative Minimum Tax. And they’re not going to make major cuts in Medicaid.
What happened? For one thing, some Republican lawmakers realized how bad it looks to give tax breaks to the wealthy while cutting programs for the poor. But another big factor is Medicaid itself. The program has more political heft behind it than a lot of House Republicans had assumed.
The little secret of Medicaid is that it’s not just a poor-peoples’ program. A significant portion of its beneficiaries are members of the middle class.
Consider, for example, the millions of seniors who own their homes and possess some savings but need nursing-home care. Nursing home bills typically run $60,000 to $90,000 a year. How can middle-class seniors and their middle-class children afford it? They turn to Medicaid.
Some middle-class seniors qualify for Medicaid by transferring their assets to their kids and becoming poor, at least on paper. But even if they pay for nursing-home care themselves, they often find that within a year or two they’ve used up all their assets. And then they turn to Medicaid.
This is a big relief to their middle-class adult children who would otherwise end up paying for their parents’ nursing-home care, and watch their own assets gradually shrink to nothing.
It shouldn’t be surprising, then, that Medicaid is now paying half the costs of all nursing-home care in the United States.
Other middle-class beneficiaries of Medicaid include people whose children or other close relatives suffer severe disabilities such as cerebral palsy, mental retardation, MS, Parkinsons, and HIV-AIDS. Medicaid pays for their personal care, physical therapy, drugs, and, where necessary, institutional care.
These are also costs that could otherwise bankrupt their middle-class families.
In other words, rather than it being just a poor people’s program, Medicaid is what keeps a significant portion of America’s middle class from becoming poor. Legislators who want to cut it are discovering that Middle America doesn’t want its last remaining safety net ripped apart.
(Reprinted from Marketplace, December 14, 2005)
Robert B. Reich was Secretary of Labor under President Bill Clinton
