When a bill the size and scope of Obamacare is dropped onto the desk of the average member of Congress, it’s safe to assume that they haven’t read it cover-to-cover before casting their vote. Had they done so with the Patient Protection and Affordable Care Act of 2010, however, they would have found something quite disturbing buried within its 11,000 pages of complex regulations.
Specifically, the risk that millions of Americans could see their estates compromised by the long arm of the federal government.
Is the risk of asset forfeiture real, and if so, who might someday face the loss of their homes?
The Theory Behind Obamacare
The United States government enacted the Affordable Care Act on the premise that the rapid growth in the cost of the entitlement health care system in the United States was unsustainable, and could eventually risk the viability of the U.S. economy. Over the past half century, the percentage of the federal budget spent on health care had more than tripled, from 5.3% in 1960 to 17.3% in 2010.
About 48 million Americans were uninsured in 2012, a slight drop from 2011 but still roughly 15% of the population. For those who had insurance, premiums were often increasing at double-digit percentages, well above the average rate of inflation.
The ACA is the government’s sweeping attempt to solve two of these three pressing issues in one fell swoop. According to the Congressional Budget Office analysis on the effects of the ACA, approximately 30 million fewer people will be uninsured by the end of 2016 than the number would have been prior to the law.
With a greater number of people in the risk pools, premiums would be more effectively contained for both consumers and businesses. As for government spending, federal expenditures were certain to rise at least in the short term; the hope was that the rate of increase would slow over time due to improved efficiencies, investments in new technologies, and other factors. Some of these additional ‘factors’, alas, may put many Americans at serious economic risk.
Medicaid Expansion and the Law of Unintended Consequences
One of the provisions of the ACA was to give states the option of expanding Medicaid to cover more individuals, thereby reducing the number that rely upon other programs. Designed to insure the nation’s poorest individuals, Medicaid is a means-tested federal program funded jointly by the federal government and the states. With the advent of the ACA, eligibility has been increased (for the states that chose not to opt-out) to 138% of the federal poverty line in the hopes that more individuals would be covered under cooperative funding mechanisms, thereby reducing the net amount of subsidies paid under ACA.
In 2014, that figure amounts to an income of $23,550 for a family of four.
Medicaid Expansion and Cost Recovery
The problem exists in the power the federal government has to recover costs incurred under the program and the relaxed standards of Medicaid expansion. Up until the enactment of ACA, individuals covered under Medicaid were truly the poorest of the poor — means testing ensured it — and thus, although the government had the right to attempt to recover costs it incurred on behalf of the insured by making a claim against their estate after death, there were very few cases where there was anything to recover. The risk of the government spending the resources to recover minimal assets was, in effect, a paper tiger.