# Amicus Curiae Brief — Atkins v. Rivera

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0457%3A11

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1986
- **Citation:** 477 U.S. 154

## Text

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
BETTER COPY CAN BE OBTAINED, A NEW FICHE

WILL BE ISSUED.

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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0457%3A11. Public record. Not legal advice.