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GOP’s Obamacare replacement cracks down on lottery winners who receive Medicaid

A Powerball lottery ticket. (Andrew Kelly/Reuters)

The lottery is a famously bad bet. People are more likely to be zapped by lightning while drowning, canonized a saint or hit by an asteroid than win a jackpot. Very few people walk away from the Powerball with massively engorged bank accounts. In 2016, the Powerball was won nine times, either by individuals or pooled groups.

Smaller wins occur more frequently but are still not common. Fewer than two dozen people, for instance, have won sums of $100,000 or more in the Connecticut lottery this year.

Yet 10 pages into the American Health Care Act, the bill took aim at lottery winners who receive Medicaid. The measure that House Republicans unveiled Monday as the replacement for the Affordable Care Act devoted roughly a tenth of its 6o-odd-pages to lottery winners.

Under the new bill, states would be able to disenroll “High Dollar Lottery Winners” from Medicaid. The joint federal and state program, which helps low-income Americans, provides health-care coverage to more than 70 million people.

The size of a winner’s loot would affect how long he or she lost Medicaid: one month for a win of $80,000 or less; two months for wins of $80,000 to $90,000; and three months for winnings up to $100,000, plus an added month, to a limit of 10 years, per every additional $10,000. The bill proposed an exemption for medical hardships, as allowed by an individual’s state.

House Republicans release long-awaited plan to replace Obamacare

Why the AHCA’s authors devoted so much space to lottery winnings might strike some as curious. The bill’s brevity, after all, was a point of pride for the White House. During a news conference Tuesday, press secretary Sean Spicer gestured to two stacks of paper, one towering and one svelte.

“Look at the size,” Spicer said, pointing first to a stack representing Obamacare and then to the Trumpcare pile. “This is the Democrats. This is us.”

(The number of pages — a function not only of words, but text size, paper dimensions and margins — has been criticized as a poor shorthand for a proposed law’s transparency or elegance.)

Trump, Pence and Ryan keep saying a plan to repeal and replace Obamacare will be released soon, but few details have been released so far. (Video: Sarah Parnass/The Washington Post, Photo: Jonathan Newton/The Washington Post)

The debate over the Affordable Care Act is really a debate over wealth redistribution

Despite the poor odds and low numbers involved, a few current and former members of Congress have eyed the intersection of Medicaid and the lottery as an opportunity for savings. Retired Rep. Joe Pitts (R-Penn.) had pushed for a similar measure in the past.

“Medicaid is meant to help the poor — not big jackpot winners,” Pitts said in a statement in January 2016, when he introduced legislation that would treat lotto wins as income for purposes of Medicaid eligibility. Pitts estimated that such a measure would save $400 million over the course of a decade.

That number was in line with a Congressional Budget Office estimate in March 2016. Using data supplied from the state of Michigan and the lottery industry, the CBO predicted that, if the loophole were closed, 9,000 to 10,000 lottery winners would lose Medicaid in any given month.

“Using the typical per capita cost for Medicaid adults,” according to the CBO, “this provision would reduce direct spending by $475 million over the 2016-2026 period.”

In 2011, the media circulated reports about a Michigan man who won $2 million in a “Make Me Rich!” lotto game but remained eligible for food stamps. In 2012, Michigan Gov. Rick Snyder signed a law preventing lottery winners from receiving food or other assistance programs. By 2013, the state had expelled some 500 lotto winners from various welfare programs, Michigan Live reported.

Congressman Fred Upton (R-Mich.) introduced a bill in February to alter Medicaid so that it would continue to take lump-sum lotto winnings into account after the month in which they were won, allowing states to disenroll winners. “Medicaid is meant to help the most vulnerable amongst us — not high-dollar Lottery winners,” Upton said in a statement at the time.

“We believe this bill would bring in savings in the hundreds of millions,” a spokesman for Upton told U.S. News with respect to the new AHCA provisions.

People with low incomes make up a disproportionate share of lottery players. One 2011 study found that the people who spent the most days gambling on the lottery had the highest neighborhood disadvantage — a term that reflected unemployed adults, households on public assistance and poverty levels.

It would not be inconceivable for lottery players to seek medical assistance or other welfare programs, even after winning. The nonprofit National Endowment for Financial Education estimated that 70 percent of people who won large lotto sums or had significant cash windfalls could not properly manage their bank accounts, going broke within a few years.

“Everybody dreams of winning money, but nobody realizes the nightmares that come out of the woodwork, or the problems,” said William “Bud” Post III in 1993, a Pennsylvania man who felt besieged after his $16.2 million lotto win.

As The Post recounted at the time of his death in 2006, his woes included: “a brother who tried to hire a contract murderer to kill him and his sixth wife; a landlady who forced him to give her one-third of the jackpot; and a conviction on an assault charge, after Mr. Post fired a shotgun at a man trying to collect a debt at his deteriorating dream house in northwestern Pennsylvania. He went bankrupt, came out of it with $1 million free and clear and spent most of that windfall, too.”

Richard Lustig, a seven-time lotto grand-prize winner from Florida, would advise other winners to hire financial planners and accountants.

“The reason you hear those horror stories about people who win huge amounts like that,” he told Time magazine in 2016, “and all of a sudden they’re filing bankruptcy is because it’s usually from people who have never had that kind of money before in their lives.”

“They just go through it like crazy. They think there’s no tomorrow. Well, there is a tomorrow and eventually it will run out.”

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