Obamacare makes millionaires Medicaid-eligible

WASHINGTON—A loophole in federal healthcare law makes millionaires eligible for Medicaid benefits—a problem both federal and state lawmakers want to correct.

“I have reason to believe it’s true, where you can have someone with $200,000 in their bank account, but they have no income and they have a paid-for car—a very expensive car—and they qualify for Medicaid,” Arkansas Gov. Asa Hutchinson, a Republican, told me at a reporters briefing in Washington, D.C., on Friday.

Hutchinson said there is no asset test for Medicaid beneficiaries. That allows someone worth more than $1 million to qualify for Medicaid benefits under the Affordable Care Act, based on a low annual income. Someone can have lots of money spread out in real estate, a 401(k), and land—and still be able to take advantage of federally run healthcare programs designed for impoverished Americans.

It’s unclear how many take advantage of the loophole because, according to Hutchinson, there is no asset information available on Medicaid beneficiaries.

But members of Congress seem to believe the problem is wide-spread enough to warrant an investigation.

At the monthly Capitol Hill event Conversations with Conservatives, Rep. Marsha Blackburn, R-Tenn., said Congress should investigate how many millionaires are enrolling in government-sponsored health insurance programs.

“Is it an issue? Yes. It was an issue for TennCare, it will be an issue for Obamacare,” Blackburn told reporters at the event last week. “You don’t know who is coming into the program, and yes, you’re going to see a program like this balloon and get out of control quickly.”

At the beginning of 2014, Obamacare’s expansion broadened Medicaid eligibility for low-income, non-elderly adults without looking into their assets. The Affordable Care Act eliminated the asset test to simplify the Medicaid application process. That made the litmus test for beneficiaries exclusively about yearly income. To qualify, a person must be below 133 percent of the federal poverty line, which amounts to about $16,000 in annual income.

Last month, CNBC profiled individuals worth between $1 million and $3 million who were able to enroll in Obamacare health plans because of their low taxable incomes. Beneficiaries saw savings of more than $8,000 in yearly premium costs due to the subsidies.

Medicaid became law in 1965 to provide healthcare for low-income individuals and families. According to healthcare experts, wealthy persons using the program is nothing new. And, it’s perfectly legal.

Mark Warshawsky, a senior research fellow at George Mason University’s Mercatus Center, wrote about millionaires on Medicaid in The Wall Street Journal more than two years ago. He warned about the budgetary threat to expanding Medicaid coverage under Obamacare. Wealthy retirees could receive long-term healthcare paid for by federal programs.

“Right now they can have an $800,000 house and a million dollars in their retirement fund and they can still be eligible for Medicaid,” Warshawsky told me on Thursday. “There is no reason—if they are not impoverished, if they are not poor—that they should be eligible.”

Hutchinson said Obamacare’s federal restrictions make creating any form of Medicaid asset test doubtful because it would require a change in federal policy. And that depends on who wins November’s presidential election.

Between now and then, Darin Miller, a spokesman for Rep. Jim Jordan, R-Ohio, said Congress is ready to review Medicaid benefits for the wealthy.

“Rep. Jordan would be open to investigating the expansions that allow this sort of thing to happen,” he said. “This is just another reason why Obamacare needs to be repealed.”