CHAPTER III

THE MEANS TEST-LIMITATIONS AND CONDITIONS AFFECTING ELIGIBILITY FOR KERR-MILLS MAA

To secure whatever medical services may be provided, the applicant for MAA must shroud himself in the welfare cloak. He must present a case proving, in essence, that he cannot take care of himself. He must document the insufficiency of his resources by stating, precisely, the amount and source of his income, and the value of each asset. In many States, similar statements are demanded of his relatives. These statements are then, of course, subject to extensive investigation. These investigative and processing procedures take time, often creating a substantial delay between the onset of need and authorization of aid. Finally, his State may be one of those which ultimately recover the cost of the MAA services provided by means of liens, extending to his home and collectible after death.

From the inception of Kerr-Mills, the question as to whether the MAA program required submission to a "degrading means test" or taking of a "pauper's oath" has been one of great concern and dispute.

Unquestionably, Kerr-Mills MAA was conceived of as a liberalization of public assistance medical care, designed to reach beyond the group of those eligible under old-age assistance, so as to encompass those persons with sufficient resources for their usual needs but not enough for medical costs. Each State, may, however, establish its own tests of eligibility for use in identifying individuals "whose income and resources are insufficient to meet the costs of necessary medical services."

While Kerr-Mills MAA clearly sought to distinguish the "medically indigent" from the "indigent," the means test, nonetheless, is an element common to the determination of both classes of indigency. Undergoing a means test is basic to the determination of eligibility under any public assistance program. After a lifetime of independence and thrift, submission to the humiliation of a test of need is a painful experience for an aged person to accept-particularly when he is under the emotion and stress which accompany serious illness.

A report received on a prospective MAA applicant in Michigan illustrates the nature of the problem:

Mrs. A and her son called at the Bureau office on February 7, 1963 to apply for MAA for Mr. A who was a patient at a local hospital.

It was revealed that Mr. and Mrs. A owned their home free and clear and had bonds valued at $1,350. Their income consisted of $85.10 per month social security for Mr. A, and Mrs. A had part-time employment earning about $80 per month. Mr. and Mrs. A did not have hospital insurance.

A caseworker explained the MAA program. Mrs. A said that she would like to discuss the matter with her husband and would return to the Bureau later. The next day a phone call was received from Mr. A requesting that the MAA application be withdrawn, and he also stated that they would pay the doctor bill themselves.

Here is an individual who would have, based upon the above data, and assuming no relative would have been required to assist, qualified for MAA in Michigan. But, rather than accept public assistance, it would appear, Mr. A preferred to pay for the necessary care out of his limited assets and income. These assets, it should be noted, are irreplaceable.

The staff report of last year included excerpts from a speech delivered to the American Medical Association by Dr. C. H. Peters, councilor of the Sixth District Medical Society (inserted in the Congressional Record, Apr. 11, 1962, pp. A2777-A2778), which underline the major problems in the usage of means tests in MAA programs. These comments are equally pertinent now:

The "means test" is a second argument our opponents repeatedly throw at us. This is a more difficult, and politically a more formidable objection. It is said that this is one of the reasons that more individuals have not availed themselves of this program. The stigma of failure, of going on relief, often creates deeprooted emotional bias on the part of the conscientious old individual. We have attempted to counter this feeling and argument by logic of one type or another. But logic frequently fails to sway individuals as all of you know from daily application in the practice of medicine.

Before the public attitude can be changed, some members of the medical profession may have to change their own attitude.

If the doctor himself looks down on assistance medical care, and upon the people who receive it, the public cannot be expected to accept this as anything but lastditch aid.

The AMA survey shows that in many States MAA is being considered as "just another welfare program," an OAA medical care program for a slightly higher income level. The applicant must go through the same routines, the same type of tests, the same type of investigations, and he receives his care through the same channels as the OAA recipient.

Too stringent a means test can force the applicants to pauperize themselves past the chance of recovery before they can obtain aid. Rigid administrative methods developed to deal with the long-term needy can discourage applications for help. Lack of differentiation between the totally needy and the medically needy, and the way care is provided, can be so humiliating that many will not apply, except as a course of desperation, and again be unable to regain independence once the medical crisis has passed.

It should be noted that the applicant is not finished with means tests when he is initially judged eligible. Eligibility in continuing cases may be redetermined (at additional administrative cost) either within 1 year of the earlier certification of eligibility or each time care is required. And those States which apply more inflexible tests of eligibility under MAA than they do under OAA (see p. 31) have not achieved the purpose of the Kerr-Mills legislation.

Any program which makes eligibility for benefits contingent upon proof of nonexistent or limited income and assets uses a means test. If the objective of a public program designed to assist with the expenses accompanying illness is the preservation of the financial independence of older persons, then any program employing means testssuch as MAA-cannot achieve that goal. For, such programs afford some help only after the older individual has depleted his irreplaceable assets to the point of semidependency or total dependency. By comparison with this almost fatal flaw, the benefits of a social securityfinanced program, such as the King-Anderson proposal, would be immediately available to the older person without investigation of his financial status to determine whether his income or assets fell within specified limits. Thus, the older individual in need of hospital care would have that care paid for, irrespective of the fact that he

might have $5,000 in the bank. By protecting that "nest egg," the older citizen then has that money available to supplement his usually limited income in meeting his regular living expenses. Success in the preservation of that "nest egg" is very often the decisive factor in the ability of the older citizen to continue independent living. It is impossible to divorce consideration of how the aged person will manage after he is well from consideration of when and what benefits are available to him during illness.

FAMILY RESPONSIBILITY LAWS

An aspect of the means test which has been particularly subject to criticism, is the "family responsibility" provision. Such provisions are found in almost all OAA programs and, in one form or another, in the MAA programs of the following 12 States:

The aged applicant filing for MAA in a State which utilizes family responsibility provisions, thereby, in effect, may subject members of his family to a means test-apart from himself.

In all probability, no other condition attached to application for MAA is as upsetting as the requirement that relatives be investigated and interviewed to determine their ability to contribute toward the health expenses of the applicant for MAA. It is not that families are unwilling to take care of their own. Relatives of the applicant may have already been paying a substantial part of the living expenses of their older relative(s). In some instances, MAA help is requested because the applicant knows that the finances of his family are already under heavy strain. When the older person learns that additional financial aid may be demanded of his family, frequently at what he knows will mean severe hardship, he may well and very often does, withdraw or refuse to make application and let his health needs go unmet.

Some informed comments on the connotations and effects of means test medicine were contained in an article on New York's MAA plan written by State Senator George R. Metcalf, chairman of the State's joint legislative committee on health insurance plans:

Any attempt to explain the plan's shortcomings inevitably involves a number of criticisms. Frequently heard is the complaint that Kerr-Mills is a welfare program. Although no person is required to sell, mortgage, assign or otherwise lose his home and household furnishings in order to become eligible for medical care, each applicant has to be approved by a welfare investigator. For the sensitive person who resents being seen at the welfare office, this is a burden which he is unwilling to bear. Furthermore, he objects to the fact that a son or daughter can be asked to pay part of his medical bill as a condition of receiving aid. (A number of elderly persons in Buffalo, when informed of this provision, reportedly told the welfare commissioner, "Please kill my application. * * * I don't want my son questioned.") In addition, many people are too proud to let outsiders know that members of their family are receiving welfare help. As the welfare commissioner pointed out to a reporter for the Buffalo News, "No matter how 1 "New York's Medicare Plan," Hospital Topics, October 1962, p. 35.

badly many people need medical care, when it comes to applying for welfare, they would rather do without it."

The Metcalf committee held a series of hearings during the latter part of 1962 to consider suggested improvements in the State's MAA program. Strong testimony was presented indicating the negative impact of the family responsibility provision in New York's Kerr-Mills

program:

In receiving an application for medical assistance for the aged, the public welfare agency should be in a position to assure the aged applicant that full consideration will be given to all legitimate financial requirements of his children and their families. Otherwise the applicant is apt to withdraw his application and he will go without needed medical care when he is told that half of any surplus his children may have over and above their basic living needs, as well as all savings they may have must be applied toward financing his medical needs before he may be considered eligible for public assistance.

I refer particularly to long-planned and long-maintained savings programs by most present-day families to meet the education needs of their growing children. I have seen instances under the present application of the means test where heavy medical expenditures for grandparents have decimated such savings and have deprived grandchildren of full opportunity for a higher education.2

James R. Dumpson, commissioner of welfare for the city of New York, told the Metcalf committee:

We believe that this failure to broaden the base of care for the medically indigent aged is due to the restrictive nature and scope of the eligibility requirements of the MAA program; specifically, the requirement of relative responsi ility, and the unrealistic ceilings on allowed income and resources and the tying of aid to the existence of substantial medical need. The pursuit of legally responsible relatives has proven to be a financial mirage. In my opinion, the administrative cost exceeds the financial returns. A sample survey of MAA cases hospitalized in New York City during March and April 1962 revealed that in only about 10 percent of these cases were legally responsible relatives found to be eligible for billing; and of these cases only 25 percent of the hospital bill was collected. these figures are applied to our annual experience, then about 2.5 percent of the annual MAA hospital care costs of $40 million or about $1 million is collectible from relatives. To further pursue these relatives in court would be extremely costly.

If

We also analyzed the contributions of relatives for the cost of care of MAA recipients in nursing homes and infirmaries of homes for the aged during the month of September 1962. Of the 7,400 such cases, 1,275 were receiving contributions from relatives of $763,000 annually toward an annual cost of $21 million. We therefore estimate that the total sums collected from relatives of MAA recipients represents slightly less than 3 percent of the expenditures made in behalf of such persons. I am convinced that the annual administrative cost of $4,105,000 of administering the MAA program could be cut in half if we eliminated the relative's responsibility and, most important, I believe that this requirement serves to bar uncounted, truly needy, older persons from seeking medical aid under this program. [Emphasis supplied.]

Commissioner Dumpson then stated: "I therefore strongly support the recommendation that the means test for MAA be limited to the recipient and/or spouse." Of more than incidental interest is the fact that the recommendation was also proposed to the Metcalf committee by the Medical Society of the State of New York-the largest State medical association in the country.

We feel, therefore, that all factors considered, a rather persuasive case has been made for congressional consideration of an amendment to the Kerr-Mills Act which would confine the application of family

Statement of Louis P. Kurtis, commissioner of public welfare, Westchester County, at hearing of Joint Legislative Committee on "Health Insurance Plans," Nov. 16, 1962.

Statement of James R. Dumpson, welfare commissioner, city of New York, at hearing of Joint Legislative Committee on "Health Insurance Plans," Nov. 16, 1962.

responsibility provisions, in those States using such provisions, to the applicant and/or his spouse.

"Liens" under Kerr-Mills MAA

Misunderstanding surrounds the question of whether the Kerr-Mills legislation prohibits States from applying liens as a means of recovering from the assets of MAA recipients, amounts expended for health care under MAA programs.

It has been stated that no liens can be taken on the property of people receiving help under MAA. However, these statements are only partially true.

The provision in the Kerr-Mills legislation relating to liens under MAA requires that the State plan must

* provide that no lien may be imposed against the property of any individual prior to his death on account of medical assistance for the aged paid or to be paid on his behalf under the plan (except pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual), and that there shall be no adjustment or recovery (except, after the death of such individual and his surviving spouse, if any, from such individual's estate) of any medical assistance for the aged correctly paid on behalf of such individual under the plan."

This means that States can-and 9 of them do-extract from the applicant the right to collect from his estate after death by use of post-mortem claims. The 9 States which have such provisions are Connecticut, Illinois, Massachusetts, Michigan, New Hampshire, New York, North Dakota, Oregon, and Utah.

An MAA recipient living in any of the 9 States mentioned, and possessing the type of property to which liens are applicable, in effect shares in part or all of the cost of the MAA assistance received. His share, however, is not due until after his death (or upon the death of his surviving spouse). Inasmuch as his assets were limited initially (in order for him to qualify for MAA), the effect of these post-mortem recovery provisions is to virtually preclude the possibility of the recipient of MAA leaving anything for his heirs. It may be contended that the cost of MAA care should be recovered from the estate of a recipient that there is no valid justification for an aged person in need of assistance with medical cost to leave anything for his family. Nonetheless, the prospect of a post-mortem claim on his assets can be another major reason for the deferral, or refusal of necessary health care. The principal consideration in such negative situations may be the desire to leave "a little something" for the education of a grandchild or some similar family need.

California, probably in recognition of these problems in usage of family responsibility provisions, recently dropped the requirement in its MAA plan which provided for relatives' responsibility.

OVERRIDING OBJECTION TO THE USE OF LIENS OR CLAIMS

Fifteen States have apparently recognized the basic problem in usage of recovery provisions and do not employ these devices. Nine States, however, do make use of recovery provisions.

4 Under old-age assistance, Federal law permits use of current liens and many States make use of such procisions. This should be understood in view of the fact that many MAA recipients are later forced to turn to OAA for help.