Washington — Republican efforts in Congress to replace the Affordable Care Act include a Michigan-inspired policy that would let states across the nation remove from Medicaid rolls individuals who win big in the lottery.
Rep. Fred Upton, R-St. Joseph, has sponsored a bill — included in the House Republican health care overhaul plan — that he says, over a decade, could save the government hundreds of millions of dollars in payments for Medicaid, the health care program for low-income Americans.
But one budget expert says the change could end up being a hassle for states.
“Medicaid is all determined by income. To us, if you won a substantial amount of money, you shouldn’t qualify,” Upton said. “We’re not talking about the $2 or $4 or $5 winning ticket.”
He aims to close a loophole in Medicaid eligibility rules for non-disabled adults that count lottery winnings as income only in the month that they are received.
In cases of relatively large winnings of more than $80,000, the winners would be cut off from Medicaid for a number of months, depending on the amount of winnings.
The bill also covers other lump-sum income including one-time gifts and personal-injury awards.
The legislation has high-placed support in the U.S. House, as Republican leaders included the language cracking down on lotto winners in the health care overhaul legislation that failed last month to muster enough votes to receive a floor vote.
However, the White House and House leaders are continuing to negotiate revisions to the health care bill, and Upton’s proposal has remained part of the package.
Judith Solomon, vice president for health policy at the Center for Budget and Policy Priorities, said the effect of Upton’s bill would be relatively modest, but it could create hassles for states that endeavor to match lottery winners with Medicaid beneficiaries.
“It’s not really clear it’s going to pay off that much because it requires a lot of tracking and administrative costs to even decide who gets affected,” Solomon said.
“It’s probably pretty easy to track your own state’s lottery, but what about the people buying tickets in a neighboring state — which I think happens a lot in places that don’t have their own lottery. This really requires states to administer it.”
A Congressional Budget Office analysis of a similar bill by retired Rep. Joe Pitts of Pennsylvania in March 2016 considered data from the lottery industry and from Michigan about the state’s lottery winners.
Gov. Rick Snyder in 2012 signed a law requiring state agencies to cross-check lists of those who win more than $1,000 in the lottery with current recipients of state aid.
Given the low probability of winning big sums in the lottery, the CBO estimated the number of people who would lose Medicaid coverage would be relatively low — 9,000 to 10,000 during any given month.
Using the “typical” per-capita cost for Medicaid adults, CBO estimated the provision would reduce federal spending by $475 million over 10 years.
Pitts’ bill had a lower threshold for lottery winnings and a wider definition of lump sum income than Upton’s, so the savings would likely be less.
Democrats have objected to Upton’s bill, arguing that, while some Medicaid recipients may win the lottery or other lump sums, that money helps pays down outstanding debts and, alone, typically wouldn’t pull a family out of poverty.
“If someone is in a automobile accident and there is a settlement, then that makes them a millionaire or billionaire?” Rep. Anna Eshoo, D-California, said during a subcommittee hearing on the bill.
“I have to tell you that this is a bad rub when these things are thrown around that millionaires and billionaires are on Medicaid.”
At the same hearing, Avik Roy, president of the Foundation for Research on Equal Opportunity and former policy adviser to Republican presidential candidate Mitt Romney, said the point is that someone who can afford private insurance is not who Medicaid is designed to help.
“It just defies common sense why we would devote those scarce resources to subsidize those individuals as opposed to the individuals who need the help,” Roy told lawmakers.
Upton noted that the legislation includes a hardship provision, allowing a state to permit an individual to retain Medicaid coverage if losing it would cause “undue medical or financial hardship.” The federal secretary of Health and Human Services would craft criteria for the hardship determination.
In Michigan, officials last year closed or ended certain welfare benefits in 592 cases with total lottery winnings of nearly $4.9 million, according to the state Department of Health and Human Services. The action applies to benefits going forward and doesn’t garnish the lottery winnings of beneficiaries.
Those cases were among an estimated $23 million in lottery winnings across more than 5,015 cases in 2016 receiving some sort of food or cash assistance, Medicaid or other programs, department spokeswoman Angela Minicuci said.
Michigan’s Health and Human Services staff use a weekly file from the Lottery Bureau listing all individuals who received lottery winnings the previous week to check whether they are part of a household receiving any type of public assistance.
The state previously reported finding 18 winners of lottery jackpots valued at $100,000 or more who were receiving public assistance in 2013. The state also identified a winner of more than $4 million whose food assistance benefits were then shut down.