MADISON, Wis. (AP) — Gov. Scott Walker's administration got the green light Wednesday to move ahead with more aggressive tools aimed at recovering assets from the estates of former Medicaid recipients.
The Legislature's budget committee, on a divided 10-6 vote, scaled back some elements of the program it had earlier approved as part of the state budget, but allowed the majority of it to stand.
All four Democrats, along with two Republicans, voted against moving forward, saying the ramifications were serious and more time was needed to study the issue.
"This is simply too complex an issue that affects too many people in the state to be rushed through," said Sen. Bob Wirch, D-Pleasant Prairie.
Federal law requires every state to have an estate recovery program to reclaim Medicaid money spent on long-term care, but the Legislature in this year's budget greatly expanded what could be taken back in Wisconsin. But in the months since the budget passed this summer, elder law attorneys, bankers, those in the real estate industry and other critics said the changes could lead to some elderly people getting divorced or make it more difficult for children to inherit the family farm, business or property.
State health department officials have defended the changes, saying they create a more fair system where state taxpayers don't have to foot the bill for someone's long-term care only to have them pass their assets down to others upon their death.
The core issue is protecting Medicaid for those who truly need it and not allowing wealthier people to game the system, said budget committee co-chair Rep. John Nygren, R-Marinette. These changes close some loopholes, and more problems may be addressed later, he said.
"It comes down to that fairness issue," Nygren said.
The state has been mostly limited to going after property in a person's probate estate. But now all property the person had an interest in at death, including property held in trust, would be eligible to be reclaimed.
The new provisions also greatly expand what the state can reclaim after a surviving spouse of a Medicaid recipient dies. Under one change, the state can recover all property of the Medicaid recipient that is included in the estate of the surviving spouse upon that person's death.
The changes also limit the ability of surviving spouses to transfer assets, like a farm, business, automobile or other property, to their children at less than market value.
All of the changes were expected to save the state $4.3 million this year and $6.3 million next year. And, state health department officials warned that if the entire program were done away with the state would lose $11 million this year that it already recovers from Medicaid recipients who receive long-term care services.
The committee allowed the department to proceed despite concerns that some of the changes violate federal law. A memo distributed to the budget committee from the Legislative Fiscal Bureau and Legislative Council also cautioned that the changes might conflict with federal law in three ways, including broadening the definition of assets that the state could seek for repayment.
Sen. Mary Lazich, R-New Berlin, joined with Democrats in calling for putting all the changes on hold until the Legislature could consider a bill in October.
"This is very complex, complicated area of law that some of us understand somewhat but that I don't think anyone understands fully," she said.