winchester mystery house social policy
Andrea Campbell has an article in Vox about the often perverse consequences of means testing in social policy. If you really need help, then means testing creates an incentive to completely spend all your assets so you can qualify. She uses the tragic case of her sister-in-law who was left paralyzed after an auto accident and now requires round the clock medical care:
Brian continued: Marcella qualified for Medi-Cal because she is disabled, but because Medi-Cal is for poor people, Dave and Marcella have to be poor to receive it-they have to “meet” the program’s “income test.” Counterintuitively, meeting the income test doesn’t mean having enough income (as in doing well on a test), but rather having low-enough income. The income test is actually an income limit.
Moreover, because Dave is employed, he and Marcella would be in a particular version of the program called “Share of Cost” Medi-Cal. It works this way: as a family of three with one disabled member, they are allowed to keep $2,100 of Dave’s $3,250 monthly earnings to live on. The rest of Dave’s earnings, $1,150, would go to Medi-Cal as the family’s share of cost. That is, any month in which Marcella incurred medical expenses, she and Dave must pay the first $1,150. To our surprise, if Dave earned more money, the extra amount would also go to Medi-Cal: the cost sharing is a 100 percent tax on Dave’s earnings. I figured out later that the $2,100 my brother and sister-in-law are to live on puts them at 133 percent of the federal poverty level for a family of three. Essentially, the way they meet the income test is for Medi-Cal to skim off Dave’s income until they are in fact poor. Brian noted that they are “lucky” that they are allowed to retain that much income; if Marcella weren’t disabled, the amount they’d be allowed to retain would be even lower than $2,100. And this is how things will be indefinitely. In order to get poor people’s health insurance, Dave and Marcella must stay poor, forever.
To make issues worse, California has an arcane system of means tested programs that make it hard to even understand what you might, or might not, be qualified for:
So much for helping my brother and sister-in-law navigate the system. Medi-Cal is a collection of more than 100 programs, each with its own income methodology and rules. A person familiar with Medi-Cal likened the program to the Winchester Mystery House, the San Jose mansion constructed continually over four decades by the odd widow of the Winchester rifle fortune: there is no master plan. “All the ‘rooms’ added on over the years makes it very difficult to see which rules apply to which groups and to follow them all the way through,” this observer told me. And even if Dave and Marcella could retain a bit more income to live on, they are still subject to the asset limit and all of Medi-Cal’s other strictures. They are still trapped in an eccentric’s mansion, where the stairways lead to ceilings and the doors open onto walls.
Campbell nails it on the head when she notes that social policy is a bizarre contraption of programs. Lesson: Make social policy simple and with wide coverage. Otherwise, don’t bother.