Opinion: Medicaid to millionaires must stop

In a recent appearance at CSU, Sen. Michael Bennet denounced Congress’ attempt to revamp and improve the failed Affordable Care Act (ACA), better known as Obamacare. Bennet appeared most unhappy that fewer people would qualify for Medicaid coverage. Voters might be better served if Bennet would explain why he voted for a law that allows millionaires to get Medicaid.

When the ACA was passed, it ushered in a sweeping new definition of “poverty.” Obamacare did away with the long-standing practice of asking people about their financial assets when qualifying for expanded Medicaid. This major redefinition of poverty suddenly allowed wealthy individuals to qualify either for Medicaid or for taxpayer paid subsidies to purchase private health insurance on the state exchange, known as Connect for Health Colorado. Here are a few examples that I (and other health insurance agents) have witnessed while selling Obamacare plans:

•A real estate investor and his wife qualified for Medicaid even though they own around 20 rental properties.

•A restaurateur and his wife sold a chain of 10 fast food restaurants and retired. Despite pocketing millions from the sale, they qualified for Medicaid.

•A retired engineer who manages a large 401K portfolio qualified for a $400 per month subsidy from Uncle Sam to help pay for his family’s health insurance with a commercial insurer.

Medicaid is a vast, complex program containing many different programs.

• Original Medicaid: This is the Medicaid program we had prior to Obamacare. It serves aged and disabled individuals as well as children and pregnant mothers who have low income and low financial assets. Congressional proposed reforms do not cut back on reimbursements to original Medicaid, other than a small slow-down in how fast the program grows. Programs for people on original Medicaid, such as seniors in nursing homes, were never on the chopping block and will continue to be fully funded. Ignore fear mongers who conflate original Medicaid with expanded Medicaid.

•Expanded Medicaid: Obamacare expanded Medicaid to anyone under 65 whose income is below 138 percent of the Federal poverty level. Astonishingly, an Obamacare loophole allows wealthy individuals to get free health insurance from Medicaid by ignoring the amount of people’s financial assets. Republicans were planning some cutbacks here, before the Senate plan fell apart.

You might be asking, “How is it possible for a millionaire to qualify for Medicaid?” Medicaid determines eligibility based on a person’s Modified Adjusted Gross Income (MAGI). Many individuals who do not take a direct salary are able to structure their income in such a way as to look “poor” on paper. This can be accomplished through various accounting maneuvers, such as depreciation and deductions. It can also be done simply by withdrawing money from a Roth IRA or money market fund or by selling stock or a mutual fund. So long as the funds are not coming from a qualified account, such as a traditional IRA or a 401k, the withdrawn funds will not be counted as income by Medicaid. Sounds crazy, but that’s what Obamacare mandates.

Readers need to demand that our politicians — both Republicans and Democrats deal with this issue, either close the millionaire loophole nationwide or give states flexibility to make wise decisions on whether to continue funding free Medicaid for millionaires. By weeding out wealthy and middle-class individuals from taxpayer provided Medicaid, we’ll be able to save huge sums which can help insure there will be adequate funding for individuals who truly need help.

Closing the millionaire loophole may not fully close the Medicaid funding gap, but it will go a long ways toward solving the problem. Now is the time for politicians, in both parties, to get serious about this issue.

Peter Trozan is a Fort Collins health insurance agent who used to sell Obamacare plans. Now he just specializes in Medicare insurance plans.