Tucked into the 2017 Republican budget introduced this week is a one line provision that calls for lottery winners to be stripped of their Medicaid coverage.
The spending plan, which must first be approved by both the House and the Senate, calls on relevant congressional committees to consider “major reforms” to save $30 billion in the upcoming fiscal year—one being, “ending Medicaid payments for lottery winners.”
The budget text doesn’t describe details of the new policy, but it’s likely borrowed from legislation introduced earlier this year by Rep. Joe Pitts (R-Penn.). His bill, which he called the No Medicaid for Jackpot Winners Act, would allow states to treat any lottery winnings as monthly income that would go toward determining eligibility for public healthcare assistance.
“Medicaid is meant to help the poor—not big jackpot winners,” Rep. Pitts said in January, claiming that his bill would “save taxpayers $400 million.”
It specifically stipulates that any winnings up to $60,000 can be counted as income for one month to determine Medicaid eligibility. For each additional $10,000 earned in a jackpot, another month of ineligibility could be tacked on. Multi-million dollar winnings could lead to a lifetime ban on Medicaid.
The bill would also affect individuals who receive “qualified lump sum income” outside of a lottery. That would include gambling winnings, payments received from a lawsuit, and inheritance from a deceased relative.
In 2014, Michigan passed similar legislation affecting lotto winners. The state found that more than 7,000 residents receiving public assistance had won jackpots worth at least $1,000 in 2013. Passage of the law led to more than 800 people losing their benefits. Michigan claimed it has saved the state $2 million.
Any savings seen from the measure, however, are likely to be short-term since winning the lottery doesn’t guarantee someone lifetime financial stability. According to the National Endowment for Financial Education, roughly 70 percent of people who receive a large windfall of cash like a lotto jackpot end up losing it all within a few years.
