Amicus Curiae Brief — Atkins v. Rivera

No. 85-632

IN THE MAR

SUPREME COURT OF THE UNITED STATES...

OCTOBER TERM, 1985 —

CHARLES ATKINS, Commissioner

of the Massachusetts

Department of Public Welfare,

Petitioner,

Ve

SANTOS RIVERA, et al.,

Respondents.

ON WRIT OF CERTIORARI TO THE SUPREME

JUDICIAL COURT OF MASSACHUSETTS

BRIEF AMICI CURIAE

OF THE GRAY PANTHERS ADVOCACY COMMITTEE,

EVELYN ALLEN, AND KATHLEEN IGNOTZ

IN SUPPORT OF RESPONDENTS’ POSITION

Eugenie Mitchell Roger A. Schwartz

Gill Deford Judith G. Waxman

National Senior National Health

Citizens Law Center Law Praegram

1052 W. 6th Street 2025 M Street, N.W.,

7th Floor Suite 400

Los Angeles, CA 90017 Washington, D.C. 20036

(213) 482-3550 (202) 887-5310

Attorneys for Amici Curiae

EDITOR'S NOTE

THE FOLLOWING PAGES WERE POOR HARD COPY

AT THE TIME OF FILMING. IF AND WHEN A

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TABLE OF CONTENTS

TABLE OF CONTENTS ..-« -

TABLE OF AUTHORITIES .

BRIEF AMICI CURIAE .

Interests of Amici .

Summary of Argument...

ARGUMENT

I. A One-Month Spenddown Is

Administratively Simple In

States Now Employing It ... .

The Adverse Effect of a Six-

Month Spenddown on Medically

Needy Applicants/Recipients .

Impact on Specific

Individuals . 2. « « « « »

A Six-Month Spenddown Is

Not Responsive to the Neediest

Applicants/Recipients .... -

Cut backs in Government Health

Assistance Exacerbate the

Adverse Effect of a Six-Month

Spenddown . . « « « « #« « »

ii

TABLE OF AUTHORITIES

Cases: Page

Allen v. Petit,

Civ. No. 85-0025P

(D.Me. Jume 3, 1985) . 2. «© « « «© « « 3

Brogan v. Miller,

537 F. Supp. 139 (N.D. Ill. 1982) . 25

Coleman v. Miller,

No. 82-C-6259 (N.D.I11. 1984) ... 17

DeJesus V. Perales,

770 F.2d 316 (2d Cir. 1985),

petition for certiorari docketed

No. 85-6337 (U.S. Feb. 7, 1986). . 5,7

28,29

Hogan v. Heckler,

597 F. Supp. 1106 (D.Mass., 1984),

rev'd, 769 F.2d 886 (lst Cir., 1985),

petition for certiorari docketed

No. 85-6386 (U.S. Feb. 14, 1986) . .3,5

21,23,25

Schweiker v. Gray Panthers,

453 U.S. 34, 40 (1981) . . «© «© «© « » 2

Statutes:

42 U.S.C. §1396p(c) . ~. «© «© © © © © « © 34

iii

Page

Act of July 4, 1976, ch. 126, §11, 1976

Cal. Stats. (enacting Cal. Welf. & Inst.

Code §14005.9 (1976)); see also current

Cal. Welf. & Inst. Code §14005.9(a) ... 8

Act of June 28, 1981, ch. 102,

§100, 1981 Cal. Stats. (amending

Cal. Welf. & Inst. Code

€14005.9 (1981)) . «ee ceeceeceree ee F

Act of June 30, 1982, ch. 328,

1982 Cal. Stats.; Act of Sept. 30,

1982, ch. 1594, 1982 Cal. Stats. .... 9

Act of Sept. 30, 1982, ch. 1594,

§20, 1982 Cal. Stats. (amending

Cal. Welf. & Inst. Code §14005.9(a)) . .8,9

Cal. Welf. & Inst. Code §§14005.7 and

nn os « «= » «a6 © 6 € 8 6 6 oe 6 8

Regu’.ations:

42 C.F.R. §§433.135 et seg

(Third Party Liability), portions

of which are amended at 50 Fed. Reg.

46664-46666 (Nov. 12, 1985) . ... +. 33

42 C.F.R. §435.831(c)(1). « - « «© © - 33

22 Cal. Admin. Code §50189(a) ..... ell

22 Cal. Admin. Code §5019l(a) .... =. ll

22 Cal. A@min. Coge 830633 «© -«eee ee 8

22 Cal. Admin. Code §§50653.5

ee ee a ll

22 Cal. Admin. Code §50657(2){A) .... 10

22 Cal. Admin. Code §50658(a) . ... . 10

22 Cal. Admin. Code §50658(c)(3)(d).. 10

Hawaii Administrative Rules 17-744-71,

Cost Sharing of Medical Care Costs ... 12

Mass. Dept of Public Welf.,

106 CMR, §505.110 (Rev. 11/85) . .... 32

Mass. Dept. of Public Welfare,

BOG Cie $9053.220 se csc eeveeeeeee

Mass. Dept. of Public Welfare,

So ~ © ee Pee ee ee ee ee eee eee

Miscellaneous

Annas, George J., "Your Money or Your

Life: ‘Dumpirg' Uninsured Patients from

Hospital Emergency Wards," American

Journal of Public Health,"

Vol. 76, No. 1, January, 1986 ..... 45

Page

Bernard, “Patient Dumping:

A Resident's Firsthand View"

34 The New Physician, 323

(October, 1985) . « «© «© © © «© © © © © * 44

Engel, M., “Hospitals Refusing

to Admit Poor: Patients Transferred

to D.C. General,” Washington Post

(October 15, 1984) .«. « «© «© © © © © © # » 44

Feder, Judith et al., “Falling

Through the Cracks: Poverty,

Insurance Coverage & Hospital Care

for the Poor 1980 & 1982. Milbank

Memorial Fund Quarterly Health & Societ =x

62(4): 544-566, Fall 1984. . ..-«. ~43

""“ealth and Welfare; Medi-Cal Reform,"

14 Pacific Law Journal 645 (1982). ... -9

Howell, Corder, and Dobson,

"Out of Pocket Health Expenses For

Medicaid Recipients & Low Income Persons

1980." National Medical Care

Utilization & Expenditure Survey.

Series B Descriptive Report #4.

DHHS Pub. #85-20204. Office of

Research & Demonstration, HCFA.

Washington, D.C., U.S. Government

Printing Office, August 1985. .. »« «+ « +» 42

vi

Page

Illinois Dept. of Public Aid Bureau

of Management and Budget, "Medical

Assistance Expenditures by Recipient

Category FY 83 - FY 85" (as cited in Resp.

Opp. to Pet. for Writ of Cert.,

—m— Ome s - gece ee aeneeeesvue

Illinois Department of Public

Aid, Official Memorandum,

issued May 15, 1984. .« «© «© + «+ © «+ «© « * 14

Social Statistics, Monthly Summary,

NYS Dept. of Social Services

(9/11/85), p. 5, Table 5. . « «© «+ «© « » mS

Statement of Ray Newman, Executive

Vice President. and Chief Operating

Officer, Dallas County Hospital District

before the Subcommittee on Health,

Committee on Finance, U.S. Senate,

Sept. 28, 1984, p. 22. «© « «© © © © © © 44

Unpublished data from Health Care

Financing Administration, Office of

Management and Budget, Institute for

Research on Poverty, and the Brookings

Seeeeeeem. Jc pce snee sees 0 « 688

Urban Systems Research and

Engineeting, Evaluation of Medicaid

Spend Down at 63-64 and 157 (1976). . . 39

vii

U.S. Bureau of the Census,

1984 Current Population Survey. ..s. -

U.S. Department of Commerce,

Bureau of the Census, Characteristics

of the Population Below Poverty.

Current Population Reports.

Series P-60, No. 138, March 1983.

Money Income and Poverty Status of

Families and Persons in the United

States, 1983. Current Population

Reports. Series P-60, No. 145,

August 1984. . .«. «© «© «© «© © © © © © © # *

U.S. Department of H.H.S., P.H.S.,

N.C.H.S.R., Health Characteristics.

According to Family & Personal Income,

United States Data from the National

Health Survey Series, 10, No. 147,

January, 1985. 2. « « «© «© «© © © © © © « »

Updated Report on Access to

Health Care for American People,

Special Report, No. One Princeton,

N.J.: The Robert Wood Johnson

Foundation, 1983. . « « « « « « « « « 40,

41

41

No. 85-632

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1985

CHARLES ATKINS, Commissioner

of the Massachusetts

Department of Public Welfare,

Petitioner,

Vv.

SANTOS RIVERA, Madeline McKenna,

and all others similarly situated,

Respondents.

BRIEF AMICI CURIAE ON BEHALF

OF THE GRAY PANTHERS ADVOCACY COMMITTEE,

EVELYN ALLEN, AND KATHLEEN IGNOTZ

INTERESTS OF AMICI CURIAE

The Gray Panthers Advocacy Committee,

Evelyn Allen and Kathleen Ignotz are

amici curiae in support of respondents

1

Rivera and McKenna and the class of

Medicaid recipients they represent in

this case.

The Gray Panthers Advocacy Committee

is a committee of the Gray Panthers, a

national organization comprised of 40,000

individuals who reside throughout the

United States. “[DJedicated to helping

the Nation's elderly," Schweiker v. Gray

Panthers, 453 U.S. 34, 40 (1981), its

members seek to reform and improve

various laws and institutions which

affect the lives of America's elderly,

many of whom are Medicaid recipients.

The Advocacy Committee itself has 30 to

40 low-income members who, from time to

time, need Medicaid benefits and who

suffer variously from lengthy spenddown

periods in their different states.

Evelyn Allen is a sixty-one-year~

old disabled woman residing in Bridgton,

Maine, who lives on very modest Social

Security and alimony payments. MSs. Allen

is sometimes forced to forego needed

medical attention for her emphysema

during the period when she must reach a

$900 spenddown which Maine requires fOr

her to be eligible for Medicaid. Ms.

Allen successfully challenged Maine's

six-month Medicaid spenddown rule (Allen

vi. Petit, Civ. No. 85-0025P (D.Me. June

3, 1985)), only to have her victory

crumble when the First Circuit ruled in

Hogan v. Heckler, 769 F.2d 886 (lst Cir.,

1985), petition for certiorari docketed

No. 85-6386 (U.S. Feb. 14, 1986). If the

Court in this case holds in respondents’

favor, Ms. Allen stands to gain the

reinstatement of her earlier success and,

more importantly, to achieve much-needed

access to necessary medical care for her

respiratory illness.

Kathleen Ignotz, a resident of

Wheeling, West Virginia, suffers from

chronic asthma and depends on consistent

administration of steroids for successful

treatment. Despite Ms. Ignotz' meager

income of Social Security benefits and

part-time wages, West Virginia's use of a

six-month spenddown has resulted in her

having to spend down amounts up to $876

before she could qualify for Medicaid.

Because of the State's six-month

spenddown period, Ms. Ignotz was left

with a hospital bill in excess of $700 in

1985 -- a bill which would have totaled

$133 if the State employed a one-month

spenddown. Because of these inequities,

Ms. Ignotz was prepared to sue West

Virginia to invalidate its six-month

spenddown rule. However, the advent of

the First and Second Circuit rulings in

Hogan v. Heckler, supra, and DeJesus Vv.

Perales, 770 F.2d 316 (2d Cir. 1985),

petition for certiorari docketed No.

85-6337 (U.S. Feb. 7, 1986) deterred her

from doing so. If the Court in this case

affirms the decision below invalidating a

six-month spenddown, Ms. Ignotz' ability

to receive Medicaid coverage in the

future will improve substantially.

SUMMARY OF ARGUMENT

Amici defer to Respondents' Brief for

full argument of the legal issues in this

case. Amici focus their Brief, instead,

on three directly relevant aspects of

this case:

1. The administrative rationality

and workability of a one-month

spenddown rule -- as demonstrated by

the states which employ such a

spenddown.

2. The adverse effect of a six-month

spenddown on medically needy

applicants and/or recipients -- as

demonstrated a.) by reviewing he

circumstances of several of the

individual plaintiffs in cases

similar to this action, anc b.) by

illustrating how the six month

spenddown fails to target many of the

neediest applicants.

3. The six-month spenddown's

exacerbation of the presently

increasing difficulty that the poor

have in getting access to health care.

ARGUMENT

I. A One-Month Spenddown Is

Administratively Simple

In States Now Employing It.

Amici believe that there are a total

of six states that either use a one-month

spenddown period or allow recipients to

choose a spenddown period varying in

length from one to six months. They

include large and populous states such as

California and Illinois, as well as less

‘populous states such as Hawaii, North

Dakota, Utah, and South Carolina. In

addition, New York allows a one month

spenddown for ambulatory services but

requires a six month spenddown for

hospital care. See DeJesus v. Perales,

770 F.2d 316 (2d Cir. 1985). A brief

description of the administration of the

one-month spenddown in several of these

states supports the conclusion that such

a rule is not administratively burdensome.

California. California has the

highest number of Medicaid recipients of

any state in the nation, yet, it has

almost exclusively used a one-month

spenddown rule since 1976.1 Only during

a brief period of about fifteen months in

1981-82, did California use a longer

three-month spenddown period.2

California changed its spenddown period

back to one month in 1982.3 California's

fiscal concerns with the one-month

spenddown period could not have

1 See, Act of July 4, 1976, ch. 126,

§ll, 1976 Cal. Stats. (enacting Cal.

Welf. & Inst. Code §14005.9 (1976)); see

also current Cal. Welf. & Inst. Code

§14005.9(a).

2 act of June 28, 1981, ch. 102, §100,

1981 Cal. Stats. (amending Cal. Welf. &

Inst. Code §14005.9 (1981)).

3 Act of Sept. 30, 1982, ch. 1594, §20,

1982 Cal. Stats. (amending Cal. Welf. &

Inst. Code §14005.9(a)).

been great; it reenacted the one-month

limit at the same time as it thoroughly

revamped its entire Medicaid system to

include many severe cost-containment

measures.4

The one-month spendown is easily

administered in California. The

medically nedy income level (MNIL) is a

calculation based on an individual's or a

family's non-medical needs for one

month.2 Upon application, each

beneficiary's income is determined, and

the appropriate MNIL is subtracted. The

balance is his or her spenddown for that

month, ©

4act of June 30, 1982, ch. 328, 1982

Cal. Stats.; Act of Sept. 30, 1982, ch.

1594, 1982 Cal. Stats.; see also, "Health

and Welfare; Medi-Cal Reform," 14 Pacific

Law Journal 645 (1982).

5cal. Welf. & Inst. Code §§14005.7 and

14005.12.

61d.; 22 Cal. Admin. Code §50653.

The beneficiary receives a form shortly

before a new month begins indicating the

amount of the spenddown for the

succeeding month.’ The beneficiary

carries this form to his or her

physician, pharmacist or other medical

services provider for documentation of

bills paid or incurred up to the

spenddown amount. Id. Once the

spenddown amount is reached, the

beneficiary submits the form to the local

welfare office.8 A Medicaid

identification card is then mailed to the

beneficiary within a matter of days, or

if the beneficiary will need medical

services before the mailed card arrives,

he or she may obtain a temporary card

from the welfare office.? Provision is

722 Cal. Admin. Code §50657(2)(A).

822 Cal. Admin. Code §50658(a).

922 Cal. Admin. Code §50658(c)(3)(d).

easily made for increased or decreased

income and for over- or under-calculation

of spenddown.19 Beneficiaries are

required to complete and return status

reports concerning eligibility factors

every three months;11 but face-to-face

interviews for the overall

redetermination of eligibility only occur

annually.12

Hawaii. Hawaii has chosen to use a

one-month spenddown program since 1979,

when beneficiaries complained that

applicants with reoccurring monthly bills

were experiencing difficulty becoming

1022 cal. Admin. Code §§50653.5 and

50653.3.

1122 Cal. Admin. Code §5019l(a).

1222 cal. Admin. Code §50189(a).

eligible.13 Hawaii's system is quite

similar to tnat of California and is

equally simple.

The MNIL is calculated on a one month

basis.14 An initial determination is

made for each applicant as to his or her

income eligibility and spenddown aniount

for each month. Once the beneficiary is

notified of his or her spenddown amount,

the beneficiary must submit to the local

caseworker documentation of medical bills

which have been incurred, The caseworker

13 Telephone conversation, February 3,

1985, between Earl Motooka, Medicare Care

Administrator, Department of Social

Services & Housing, State of Hawaii, and

J. Waxman, counsel for amici. The

following description of the one-month

spenddown program in Hawaii is based on

this same conversation.

14 Hawaii Administrative Rules

17-744-71, Cost Sharing of Medical Care

Costs.

has the authority to determine if the

spenddown amount has been met for the

month and to issue a Medicaid coupon

which is valid for the remainder of the

month. Each month, the beneficiary must

accumulate documentation for incurred

medical expenses and mail or take it to

the caseworker who can issue coupons

validating eligibility. Redeterminations

of income and spenddown are made every

Six months for AFDC-related beneficiaries

and every year for SSI beneficiaries.

Applicants who receive an initial income

determination but do not utilize the

program for three consecutive months are

terminated from the Medicaid rolls after

proper notice. These individuals may

seek redeterminations. The state does

not view this system as administratively

burdensome,

Illinois. Tllinois also uses a MNIL

based on one month's income. Under this

plan,° applicants are given an initial

determination of their income eligibility

and monthly spenddown amount. The

beneficiary is enrolled in the Medicaid

program for a six-month period. The

beneficiary has the responsibility of

presenting documentation of incurred

medical bills to the local caseworker who

in turn determines eligibility. The

caseworker verifies the documentation to

determine if the bills equal the

spenddown amount for one month. If so,

the individual is granted eligibility for

the remainder of the month.

15 All elements of Illinois' plan

described herein can be found in Illinois

Nepartment of Public Aid, Official

Memorandum, issued May 15, 1984.

Additionally, if the beneficiary has

bills which are greater than one month's

spenddown, eligibility can be granted for

extra months up to a total of six

months. The number of months an

applicant will be eligible depends on how

many months of spenddown the documented

medical bills cover. This svstem allows

individuals the opportunity to obtain

Medicaid coverage for up to five

additional months beyond the initial

month of eligibility.

Also, a beneficiary whose medical

bills do not allow eligibility for all

Six months at the outset of the

enrollment period, can submit additional

bills within the six-month enrollment

period to establish eligibility for

additional months. At the end of the

enrollment period, the beneficiary must

reapply to have the income eligibility

and spenddown amount redetermincd.

Although the caseworker in this

system redetermines eligibility, he or

she does not have the authority to issue

a Medicaid card, as in Hawaii. Rather,

the card is mailed to the recipient. A

temporary card can be issued by the

caseworker in certain circumstances, if

requested. This system does not appeal

to create an unworkable administrative

burden on the State.

In addition to its administrative

viability, the use of a one-month

spenddown does not necessarily threaten

substantial increases in a state's

Medicaid costs. As noted in Respondents'

Opposition to Petition for Writ of

Certiorari in this case, the ITllinois

Medicaid budget for the AFDC-type

medically needy did not increase

significantly after the change from

six-month to one-month budgeting required

by the Court decision in Coleman v.

Miller, No. 82-C-6259 (N.D.I11. 1984).

For the AFDC-related medically needy, the

pre-Coleman Fiscal Year 1983 expenditures

totaled $35,610,000, while for Fiscal

Year 1985, the first full post-Coleman

year, they totaled $36,501,000 -- a 2.5%

increase.1®

New York State, in its Amicus Brief

in this case, estimates that

implementation of a one month spenddown

would result in an annual increase of

I®6 Tllinois Dept. of Public Aid Bureau

of Management and Budget, "Medical

Assistance Expenditures by Recipient

Category FY 83 - FY 85" (as cited in

Resp. Opp. to Pet. for Writ of Cert., at

6 n**,)

between $25 million and $30 million in

costs relating to the State's existing

case load. Amicus Brief of New York

State at 2-3. It also estimates that a

one-month spenddown wouid result in $78

million in additional expenditures FOL

those not presently receiving medical

assistance who would become

Medicaid-eligible. Id. at 3. It is not

clear whether this latter figure 1s an

annual estimate, but assuming it is, and

assuming the accuracy of these estimates,

the state's worst case scenario calls for

an annual increase of $108 million in

medical assistance. While Amici by no

means minimizes the importance of such an

increase in expenditures, it is also

important to put such increases in

merspective. New York State's monthly

meGical assistance expenditures between

January and April, 1985 averaged

$558,135,554 -- which implies a yearly

total of almost $6.7 billion.!’ New York

State's worst case predicted increase

($108 million) due to implementation of a

one month spenddown, therefore, would

constitute less than 1.7% of the State's

probable Medicaid expenditure for FY 1985.

II. The Adverse Effect of a Six-Month

Spenddown on Medically Needy

Applicants/Recipients

A. Impact on Specific Individuals

In briefing in the lower courts, as

well as briefing before this Court,

Petitioners and Respondents aptly describe

I7 Social Statistics, Mcnthly Summary,

NYS Dept. of Social Services (9/11/85),

-

p. 5, Table 5.

the workings of the Medicaid program and

particularly the six month medically needy

spenddown rule. In essence, the spenddown

functions as a large deductible which the

applicant must reach before he or she can

receive Medicaid coverage. Amici believe it

would be of value +O this Court to have

before it several varied examples of how the

six-month spenddown impacts on individual

Medicaid applicants -~ examples which are

readily available by reviewing the legal

papers filed or decisions issued in other

cases challenging the legality of a

multi-month spenddown. A brief review of

these cases, demonstrates that the six-month

spenddown rule is one that wreaks havoc on

medically needy individuals who frequently

are more destitute, in terms of income

available for health care, than their SSI

and AFDC counterparts.

1. DON CARTER

Don Carter, the original plaintiff in

Hogan V. Heckler, 597 F. SuUpP- 1106 (D.

Mass., 1984), rev'd 769 F.2d 886 (lst

Cir. 1985), petition for certiorari

docketed No. 85-6386 (U.S. Feb. 14,

1986), a case involving SSI-related

medically needy recipients, was injured

by a six month spenddown. As explained

by the District Court, at 597 F. Supp.

1109, Mr. Carter required the services of

a personal care attendant (P.C.A.). He

was a guadraplegic. Mr. Carter's income

at the time this suit was filed totalled

$743.76 per month. His P.C.A. services

cost $875.27. Massachusetts calculated

his "excess" income at $390.76 per month

which meant that he had to incur about

$2300 (six times his monthly excess)

before he would be eligible for

Medicaid. Ibid.

The District Court explained the

effect of the State's policy on Mr.

Carte:

The Department's policy

leaves Mr. Carter with two

options. He can go begging

for credit, trying to find a

P.C.A. who is willing to work

for months without getting

paid. Mr. Carter was

successful at this for

awhile, but on the evening of

November 1, 1982, his P.C.A.,

having gone unpaid for the

three previous weeks,

abandoned him. Mr. Carter's

second option is to obtain

higher medical care so that

his "excess" income is spent

down faster. This is what he

ended up doing, although not

by choice. After he was

abandoned by his P.C.A., Ml.

Carter was admitted for

emergency care at the Western

Massachusetts Hospital, where

he remained for two months

while his expenses caught up

with the Department's

projection of his income.

The cost of the Department's

six-month spenddown policy is

measurable, therefore, both

in terms of its potentially

devastating impact on a human

being, as well as by

predictably higher

——————_

expenditures of tax dollars for

persons like Mr. Carter who are

forced into high-cost institutional

care.

597 F. Supp. at 1109.

Had the State employed a one-month

spenddown for MI. Carter, he couid have

remained home, retained the services of

his P.C.A. and cost the State less for

his coverage. Indeed, the District Court

in Hogan pointed out that the

Massachusetts' Department of Public

Welfare, the very Petitioner in the case

before this Court, recognized the

problems of people like Mr. Carter and

proposed a "targeted" one-month spenddown

for the chronically ill and disabled.

Ibid. The District Court noted that

Petitioner submitted a request for

Federal waiver to enable implementation

of such a project. In doing so,

Petitioner argued that a six month

spenddown policy:

oo

may well impose a hardship on

many chronically ill and

disabled individuals who

require medical services on a

daily, weekly or monthly

basis in order to remain in

the community. It may be

extremely difficult oF

impossible for many of these

individuals to both pay

medical expenses sufficient

to meet their six-month

spenddown and maintain funds

needed for food, shelter, and

family support. They may

instead find themselves

having to choose between:

foregoing necessary

non-institutional medical

care; submitting to costly

and inappropriate

hospitalization in order to

incur medical expenses in

excess of the six-month

spenddown liability; or

entering a nursing home in

order to receive Medicaid

coverage via a one-month

spenddown. All of these

options are ultimately more

costly, both socially and

economically. The individual

is forced by financial

imperatives either to

physically suffer or to

submit to unnecessarily

intensive or restrictive

inpatient care, the cost of

which will likely be borne by

Medicaid and Medicare.

Department of Public Welfare,

Preventing Unnecessary

Institutionalization of the

Chronically Iil and

Disabled: A One Month

Spenddown Program, iv-v (July

5, 1984).

597 F. Supp. at 1109, n. 7.

2. GLADYS ALLISON

The plight of individuals subjected

to the six-month spenddown provision also

was clear to the Federal District Court

in Brogan v. Miller, 537 F. Supp. 139

(N.D. Ill. 1982). In that case, the

Court stated:

There is no dispute that

such a policy imposes a real

and immediate hardship for

members of the plaintiff

class. The hardship arises

from the requirement that a

[medically needy] applicant

must anticipate six months'

worth of income to calculate

his or her spenddown

obligation but is not

permitted to anticipate six

months' worth of medical

expenses to offset that

income. A [medically needy]

applicant who has only one

month of income, for example,

will be required to incur

medical expenses to offset

six months' worth of "excess"

income before qualifying for

Medicaid benefits. Under

such a policy, individuals in

plaintiffs’ class will be

presented with a "Hobson's

choice" of delaying needed

medical care in order to pay

for other necessities as

reflected in the state income

eligibility standard or

delaying the purchase of

those necessities in order to

pay for medical care and

subsequently qualify for

Medicaid.

Id., at 142. The Brogan Court then

illustrated, in a footnote, the affect of

the spenddown on Gladys Allison, of the

plaintiffs in that action:

The human cost of such a

policy can be measured from

the experience of Gladys

Allison, a seventy-three year

old [medically needy]

recipient who suffers from

chronic Lupus Erythematosus.

Although Ms. Allison has

available monthly income of

only $312.20, [Illinois'] new

policy will deny her Medicaid

benefits until she has

incurred medical expenses

totalling $295.20. In light

of her present condition, her

foreseeable medical expenses

will total at least $175.00

per month. If she chooses to

obtain all the medical care

she requires, Ms. Allison

will incur medical expenses

totalling $175.00 in the

first month and at least

$120.20 in the second month

before qualifying for

Medicaid. Because of her

precarious financial

condition, Ms. Allison cannot

obtain such medical care on

credit. Accordingly, she

will have only $137.20 left

over to meet her living

expenses in the first month

and $192.00 in the second

month. The State of Illinois

has determined that at least

$238 is needed each month to

pay for the necessities of

life (excluding medical

care). Alternatively, if Ms.

Allison chocses to obtain the

necessities of life as

defined by the state, she

will have only $74.20 left

over to pay for needed

medical care in the first

month this policy takes

effect. This amount

represents less than half of

the total care she requires.

This result is

unconscionable. Lupus

Erythematosus is a chronic

disease which can be fatal

unless the patient is

carefully treated and

monitored. Affidavit of Dr.

Jerome Frankel, 43.

Id., at 142 n. 6.

3. GLORIA DEJESUS

The adverse impact of the six-month

spenddown is by no means limited to

SSI-related (elderly, blind, or disabled)

medically needy recipients. In addition

to the circumstances of the Respondents

in this action, this Court might look to

the appellee's circumstances in DeJesus

v. Perales 770 F.2d 316 (2d Cir. 1985),

petition for certiorari docketed No.

85-6337 (U.S. Feb. 7, 1986). In the

Brief for Appellees submitted to the U.S.

Court of Appeals for the Second Circuit,

Gloria DeJesus, her husband and children,

are described as having, in 1984, a total

monthly income of $729.77, consisting of

Social Security disability and worker's

compensation.18 Ms. DeJesus and her

children were calculated to have $151 per

month in excess income in 1984 and, $154

in 1985. However, the State of New York

requires a six month spenddown for

inpatient hospital bills, consequently

the DeJesus’ spenddown for medical

hospital coverage totaled $918 in January

i985.

This spenddown liability, nearly $200

more than their monthly income, posed a

Substantial barrier to health care access

for Ms. DeJesus and her 7 year old

daughter. Operations for both of these

18 the description of the DeJesus’

Circumstances is taken from the Brief for

Appellees submitted in DeJesus v.

Perales, supra.

individuals had to be cancelled at one

hospital in 1984 when the DeJesus' were

unable to pay a preadmission deposit of

$906 (their six-month spenddown liability

for inpatient hospital care in October

1984.) Similar cancellations occurred

the following month at a second

hospital. Only after Ms. DeJesus'

attorneys advised the hospital of

impending litigation on the six-month

spenddown provision, was Ms. DeJesus able

to have surgery performed in late

November, 1984, upon payment of a $15l

one-month spenddown.

B. A Six-Month Spenddown Is Not

Responsive to the Neediest

Applicants/Recipients

It 1s clear from the descriptions in

the previous subsection that a six month

spenddown results in a grave hardship co

medically needy applicants. Petitioner's

Brief and the Amicus Brief of the United

States both maintain, however, that

six-month spenddown more accurately

focuses scarce resources on those who

have the greatest need for assistance

because medical costs determined over a

six-month period are a more persuasive

indicia of hardship than medical costs

incurred in any one month period.

Petitioners Brief at 17, United States

Amicus Brief at 16-17. Indeed,

Petitioners take their argument to an

extreme by maintaining that a one-month

spenddown period will raise the flood

gates through which will flow thousands

of (presumably) middle income "medically

needy" who have cancelled their health

insurance, and timed all of their medical

ills to occur in the same month, and are

now poised to exploit the Medicaid

medically needy program.

This latter proposition by

Petitioners does not require extensive

rebuttal. Amici would only point out

that those who would attempt such an

exploitation will be both surprised and

chagrined when they learn of the resource

limitations that are also part of the

medically needy program, For example, in

Massachusetts an individual who would

make use of the medically needy spenddown

program is allowed $2,000 in nonexempt

assets ($3000 for a two person filing

unit, and $100 more for each additional

person beyond two).19 Countable assets

generally include cash, bank deposits,

IRAS, Keough Plans, Pension Funds,

stocks, bonds, money market funds,

promissory notes, other financial

19 Mass. Dept of Public Welf., 106 CMR,

§505.110 (Rev. 11/85).

instruments, all but one lenenet)

vehicle, cash surrender value of life

insurance policies, and real estate other

than principle place of residence. 29

It is difficult to believe that many

(if any) would cancel their health

insurance,?1 engage in financial

planning, and be prepared to dispose of

their excess resources in order to

gualify for the medically needy spenddown

program. Moreover, even if an individual

were bent on such a scheme he would risk

20 Mass. Dept. of Public Welfare, 106

CMR §505.160.

21 cancellation of health insurance

would appear to be a particularly foolish

action, since the cost of health care

premiums can be applied to the

spenddown. 42 C.F.R. §435.831(c)(1).

Such health insurance would then be

applied to cover the cost of medical

bills prior te Medicaid's covering these

costs. See, 42 C.F.R. §§433.135 et seg

(Third Party Liability), portions of

which are amended at 50 Fed. Reg.

46664-46666 (Nov. 12, 1985).

running afoul of Medicaid transfer of

asset prohibitions common in many states

which presume that certain assets

transferred (at less than fair market

value) by an individual prior to applying

for Medicaid, were transferred for the

purpose of qualifying for Medicaid. 22

Based on that presumption, these

provisions prohibit Medicaid eligibility

fcr extended periods of time. Indeed, if

an individual of means was prepared to

take such financiaily desperate steps to

become eligible for the medically needy

program, it is also possible that the

length of the spenddown period, were it

one month, three months, or six months,

would not dissuade him.

2 See 42 U.S.C. §1396p(c). The

relevant regulations in Massachusetts can

be found at Mass. Dept. of Public

Welfare, 106 CMR §505.120.

In reality, of course, potential

candidates for the medically needy

program are not people of means but those

living in varying degrees of poverty.23

And within this framework, it is not at

all clear that a six-month spenddown more

precisely targets the poorest members of

this population. For example,

Petitioners argue that an applicant with

$100 in excess monthly income, and

medical expenses in excess of $600 over a

Six month period, is more needy than one

such as Ms. Rivera with $314 in medical

expenses over six months time even if the

entire $314 is incurred in one month.

Brief for the Petitioner at 17. This

very example, to some degree, undercuts

Petitioner's argument. The hypothetical

applicant, in Petitioner's example, as

23 See Section III, infra, .for further

discussion on this point.

with the actval individuals described in

the previous section of this Brief will

not receive Medicaid assistance until

$600 in medical bills has been incurred

even if that total is not reached until

the 4th, 5th or 6th month of the

spenddown period. Alternatively, an

individual with an unusually high medical

bill in the first month of a six-month

spenddown period will become eligible for

Medicaid during that first month and

remain on the program the remaining five

months although medical costs during that

period may be minimal. In other words,

the advantage of a one month spenddown,

is that it targets medically needy

coverage for the period of time during

which it is needed. In a month when

medical bills are high, the applicant

gets assistance in meeting those bills

for that month (but not for the remaining

months); if medical bills are low that

month, the spenddown is not reached, and

no assistance is provided; if an

individual has high medical bills each

month, he or she receives aid each month.

The real strength of a one-month

spenddown period in more effectively

targeting the neediest, however, relates

to the difficu).y low-income people have

in getting credit. An individual with a

$600 six month spenddown may need to

incur $600 in medical bills on credit

before reaching his or her spenddown.

That same individual with a $100

one-month spenddown need attain only $100

in credit before receiving medically

needy assistance. As discussed in more

detail in the following section, (and

noted in several of the individual cases

illustrated in the previous subsection),

the ability to get health care on credit

is difficult for the poor. Many with 4

large six-month spenddown simply will not

reach (and may eventually not even

attempt to reach) their spenddown because

of the amount of credit they would have

to have extended to them. As a result,

households that need to incur relatively

low medical costs in order to receive

preventative or ambulatory care, are less

likely to reach a six month spenddown and

are more apt to incur such a large

spenddown only as a result of more costly

hospital or emergency room treatment --

treatment that might have been avoided if

they had not had to forego more timely

preventative care due to their inability

to reach the spenddown. 24 Additionally,

the longer spenddown period obviously

presents a potentially life-threatening

problem for those with chronic medica]

needs or conditions -- such as epileptics

who need Dilantin, or diabetics who need

insulin -- who are unable to get Mediceid

because they cannot meet the large

spenddown period quickly enough.

III. Cut Backs in Government Health

Assistance Exacerbate the

Adverse Effect of a

Six-Month Spenddown.

Poor people always have had to

struggle to receive proper health care.

In the current atmosphere of cost

24 One study has shown that, on average,

10% of unsuccessful spend down applicants

are prevented from becoming eligible

because of the cash flow problem of a

six-month accounting period. Urban

Systems Research and Engineering,

Evaluation of Medicaid Spend Down at

63-64 and 157 (1976).

containment and competition, that

struggle has intensified. Thus, between

1979 and 1984 those without any kind of

health insurance have increased 22.3%

from 28.7 to 35.1 million Americans, 25

There is substantial evidence that many

of these people "fall through the cracks"

of the health care system, 26 Those who

are the most at risk are people who are

too poor to buy health insurance and do

not qualify for Medicaid and yet are

sick. Poor people are not only more

likely to not have insurance they are

also more likely to be sick. Studies

show that the poor are four times more

25 U.S. Bureau of the Census, 1984

Current Population Survey.

26 Updat.ed Report on Access to Health

Care for American People, Special Report,

No. One Princeton, N.J.: The Robert Wood

Johnson Foundation, 1983.

likely to be in fair or poor health than

non-poor people.2/?

Yet traditional sources of health

care coverage have been reduced,

According to a Robert Wood Johnson study

the proportion of the poor and near poor

covered by Medicaid has dropped from 63%

in 1975 to 46% in 1985.28 Indeed, only

27 U.S. Department of H.H.S., P.H.S.,

N.C.H.S.R., Health Characteristics.

According to Family & Personal Income,

United States Data from the National

Health Survey Series, 10, No. 147,

January, 1985.

28 Sources: Unpublished data fiom Health

Care Financing Administration, Office of

Management and Budget, Institute for

Research on Poverty, and the Brookings

Institute. U.S. Department of Commerce,

Bureau of the Census, Characteristics of

the Population Below Poverty. Current

Population Reports. Series P-60, No.

138, March 1983. Money Income and

Poverty Status of Families and Persons in

the United States, 1983. Current

Population Reports. Series P-60, No.

145, August 1984,

39% of the elderly who live on incomes

below the poverty line are covered by

Medicaid.29

What, then, is happening to those who

do not have health care? A 1982 study

showed that one in six uninsured families

reported increased difficulty in

obtaining health care for financial

reasons and one million families did not

get health care for financial reasons, 39

29 Howell, Corder, and Dobson, "Out of

Pocket Health Expenses For Medicaid

Recipients & Low Income Persons 1980."

National Medical Care Utilization &

Expenditure Survey. Series B Descriptive

Report #4. DHHS Pub. #85-20204. Office

of Research & Demonstration, HCFA.

Washington, D.C., U.S. Government

Printing Office, August 1985.

30 Updated Report on Access to Health

Care for American People, Special Report,

No. One, Princeton, N.J.: The Robert

Wood Johnson Foundation (1983).

The increase in the number of

uninsured has put a tremendous strain on

providers that traditionally serve the

poor. Only ten percent of the nation's

hospitals provide forty percent of all

hospital care for the poor .31 These

hospitals have been under stress because

of the increase in the number of

uninsured and because other facilities

are no longer doing their fair share of

serving this population. Market

pressures, such as negotiated lower rates

to hospitals from insurance companies,

and lower rates as a result of the

prospective payment system utilized by

the Medicare program have resulted in

31 Feder, Judith et al., "Falling

Through the Cracks: Poverty, Insurance

Coverage & Hospital Care for the Poor

1980 & 1982." Milbank Memorial Fund

Quarterly Health & Society, 62(4):

544-566, Fall 1984.

many hospitals turning away uninsured

patients. The problem of "dumping"

uninsured patients on to primarily public

hospitais has reached epidemic

proportions. In Chicago, Cook County

General Hospital reported that transfers

to its emergency room increased 1000%. 32

Dallas' Parkland Memorial Hospital33 and

D.C. General in Washington, D.C. each

reported a 400% increase.34 At Highland

General Hospital in Alameda County,

California, 85% of the people whose

32, Bernard, "Patient Dumping: A

Resident's Firsthand View" 34 The New

Physician, 323 (October, 1985).

33 Statement of Ray Newman, Executive

Vice President and Chief Operating

Officer, Dallas County Hospital District

before the Subcommittee on Health,

Committee on Finance, U.S. Senate, Sept.

28, 1984, p. 22.

34 Engel, M., "Hospitals Refusing to

Admit Poor: Patients Transferred to D.C.

General,” Washington Post (October 15,

1984).

health was jeopardized by a transfer,

were uninsured.3° Providers no longer

want to serve uninsured people, nor will

they if they can avoid doing so.

Respondents in this case, the

individuals descrited in Section II-A of

this Brief, and numerous medically needy

applicants are representative of the

uninsured who cannot get health care.

They do not have the income or resources

to purchase private insurance. They are

totally dependent on what the state and

federal government can provide to help

them survive. As shown in Section II, a

six month spenddown in the Medicaid

program seriously hinders their ability

to get the medical care they need. A six

35 Annas, George J., "Your Money or Your

Life: ‘Dumping’ Uninsured Patients from

Hospital Emergency Wards," American

Journal of Public Health," Vol. 76, No.

1, January, 1986.

month spenddown places them in the

position of choosing between medical care

or food and other necessities of life.

CONCLUSION

A one month spenddown will aid

Respondents and those similarly situated

in obtaining the only access to health

care that is available to them. A one

month spenddown is legally required,

administratively workable, and essential

to the health and well-being of the

Respondents, amici Allen and Ignotz, and

thousands of other poor people in this

country. Amici urge this Court to find

for Respondents in this case, to uphold

the decision of the Supreme Judicial

Court for the Commonwealth of

Massachusetts, and to order the

Petitioner to implement a one month

spenddown in Massachusetts’ medically

needy Medicaid progrem.