House Bill 6698, “Stop Unfair Medicaid Recoveries Act”, Needs to be Enacted Now
The Bill introduced by Representative Jan Shakowski, would repeal Medicaid Estate Recovery (MER). This is the part of the law that says the government must take – collect against – any property a Medicaid recipient of long term care services (e.g. nursing home) has at death. This means the family home and all possessions. MER conflicts with our need to be competitive in the global economy.
We MUST have a 21st Century Workforce
This is the digital age, and we are not the leaders. Remember the chip shortage of 2021-2022? Car companies could not make new cars because they could not get computer chips from Taiwan. Those are Not made here. We don’t have the factories or the workforce to make them. Everyday we hear that the American workforce must learn to be adaptable and learn new skills for the 21st Century Global economy. We must recognize the Existential Threat to the American economy that global economic competition presents. Our workforce must adapt to the realities of the 21st Century or we face becoming one of the “also-rans” to the new leaders of the global economy.
Medicaid Estate Recovery is a 20th Century Concept
Medicaid Estate Recovery (MER) is antithetical to our need. MER is an outdated concept based on a 20th Century economy. Medicaid began in 1965 when America was the world’s pre-eminent economy. Innovations happened here. Everything was made here. Now a half century later America finds itself in a global economy competing with super power economic centers as China, Southeast Asia and India. Competition is fierce. Each country is calling on their best and brightest to achieve supremacy. But we are not.
We must Adapt and Change to the 21st Century Economy
Good and Buford, members of the Better Employment and Training Strategies (BETS) task force wrote, wrote in The Hill 9/29/21. “As the futurist Alvin Toffler rightly predicted, “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” In other words employees must learn to seek off the job education to learn new skills to remain competitive in the new economy.
The 21st Century has brought enormous changes and challenges to our economy. In 1965 we were the global leader in innovation and production. Now we are in a global economy. We went from king of the industrial revolution to a contender in the digital revolution. Digital has digital has remade production replacing labor with robots. Digital has remade communication. An old telephone and a cellphone have very little in common, even voice is a secondary form of communication. Even money is becoming digital crypto currency. We are phasing out of the 20th century energy production by fossil fuels to “clean” solar, wind and other technologies. We need to rebuild our entire energy generation, distribution and use sectors. We must rebuild our economy and country to stay competitive in the 21st Century. Who will do this work? Workers today must gain new knowledge and skills to keep up with rapidly changing technologies, industries, and careers.
MER Denies Working Families the “Capital” They Need For Education
In a 2011 report the US Chamber of Commerce found “The results of a series of recent surveys indicate that education is clearly an important aspect of life in the 21st century workforce.” Life in the 21st Century Workforce: A National Perspective 2011. The report concluded Education is critical to ensuring workers have the skills necessary to advance. How can the employees gain this education? Employees in the Chamber of Commerce paper reported that time to attend and money to afford the tuition were their first needs. Education and training supports were part of President Biden’s Build Back Better agenda. But since that program has to date failed, how may employees gain the skills? Through individual effort.
It takes time and money for an employee to get education. Time and money are an employee’s “capital.” MER denies low income and middle class families the capital to gain education.
The arguments made to increase the federal estate tax deduction apply more forcefully to Elimination of MRE
Just As Family Businesses Needed Relief from the Estate Tax in 2003, Families Need Relief from MER
The arguments against the federal estate tax concluded that the estate tax generates costs to taxpayers, the economy that far exceeded any potential benefits that it might arguably produced. The same is true of MER.
In 2003 Congress was reviewing the federal estate tax and as a result “repealed” it for many people. In 2003 the federal estate tax was $1,000,000 per person. Instead of repealing it entirely Congress raised the exemption and by 2010 it was $5 million per person. It now stands at $12.06 million per person or $24.12 million per married couple before they will pay any estate tax.
The rationale of Congress is expressed in a paper published by the Joint Economic Committee, “The Economics of the Estate Tax: An Update.” The paper made the following points: the tax discouraged savings and investment; the tax penalized work, savings and thrift. In addition to the aggregate effect on capital accumulation and economic efficiency, the estate tax was a negative influence on entrepreneurial activity. The paper concluded that entrepreneurship infuses the economy with risk-takers willing to exploit new technologies and enables families to achieve upward income mobility. By hindering entry into self-employment and by breaking up family-run businesses, the estate tax inhibited economic efficiency and stifled innovation. It also observed that the tax created obstacles to passing on family capital to the next generation is “especially significant for minority groups.” (Pages 7-8).
In a point directly comparable to MER The paper concluded that as much as the estate taxes reduce or limit intergenerational transfers, they also reduce the amount of financing available for investment in small or family-run enterprises. Inheritances play an important role in alleviating the liquidity constraints that impede the formation and success of small businesses.” (Pages 8- 9)
These findings apply with equal force in the case middle class employees who are “job entrepreneurs,” the self-starters who seek to improve their performance. They need time and money (capital) to pursue the education of the 21st Century workforce. The passing on of intergenerational wealth is just such a vehicle to provide these families with the “capital.”
We Cannot Afford to Have MER Steal Opportunity from Our Best and Brightest
If responding to the 21st Century Global economy is an “all hands on deck” urgency, we need ALL of our best and brightest to be fully enabled. We need to bend every effort so that all working families have the chance to do their best to help us compete. MER stands in the way. We need to unshackle our working families so our best and brightest can afford the education to learn, unlearn and relearn. They must have the capital that MER steals from them.
