Asset tests for health care: A solution in search of a problem

Ben Horowitz
May 10, 2016

The Minnesota House Health and Human Services budget includes a proposal that would add a counterproductive, complex layer of bureaucracy between Minnesotans with low incomes and health care. If enacted, this provision would impose asset limits for some Minnesotans who get health care coverage through Medical Assistance (MA) and MinnesotaCare.

This practice was abolished for most non-elderly Minnesotans and people without disabilities in 2014, and is one that deserves to be filed under “may sound simple, but is harmful and complicated in practice” for the following reasons:

  • It is unnecessary. People with low earnings but enough income from assets to maintain a higher-income lifestyle are already ineligible for MinnesotaCare and MA.When a person applies for health care coverage through MA or MinnesotaCare, their eligibility is determined based on a comprehensive measure of income called modified adjusted gross income (MAGI). MAGI doesn’t just include earnings like wages, tips and self-employment income; it also folds in a family’s other resources derived from assets, like capital gains, investment income and withdrawals from retirement accounts.
  • It is inefficient. Only a tiny portion of MinnesotaCare and MA enrollees have assets above the proposed limit, but the policy would complicate administration of these health insurance programs for everybody.In 2013, the state estimated that eliminating asset limits for most categories of Minnesotans eligible for MA would increase enrollment by just 1 percent. MA and MinnesotaCare serve more than a million people; re-instituting asset limits would make things more complicated for all of them. Other states’ experiences show that asset limits do not significantly change the number of people who access public supports, and they may even cost states money due to the burden of administering these inefficient rules.
  • It penalizes families who’ve saved for their future. The asset limits proposed by the House are $10,000 for a single individual and $20,000 for bigger households. Imagine the difficult decision that forces on someone who has saved for years to put a down payment on a house, or on soon-to-be-parents building up a financial cushion before they welcome their new family member. Families should not have to choose between a necessity like health insurance and saving for their futures.
  • It is especially harmful for farmers and small-business owners. Small businesses and farms require a lot of assets that may not always generate a lot of income. MinnesotaCare is an affordable health insurance option allowing entrepreneurs and independent farmers to weather recessions and depressed crop prices without sacrificing their health insurance or abandoning years of hard work and careful investments in their future.

When a Minnesotan falls on tough times, they should have access to affordable, quality health insurance. A basic necessity like health care shouldn’t be held hostage just because a family has managed to build a modest nest egg. Policymakers should drop this harmful idea.

-Ben Horowitz