ST. PAUL, Minn. (AP) -A growing number of budget-crunched states are considering a crackdown on retirees who give money away to relatives so they can get Medicaid to pay for nursing home care.

Critics of the move say it is a misguided attempt to find wealthy scofflaws. But lawmakers say the tactic is costly for states – an estimated $12 million a year for Minnesota alone.

“Doing this says, ‘I’m going to pass on my wealth to my descendants and your descendants can pay for my health care,”‘ state Sen. Sheila Kiscaden said.

To fight back, Minnesota and Connecticut are asking permission from the U.S. Centers for Medicare and Medicaid Services to crack down on people who hide their money.

Massachusetts is weighing a similar request, and experts say 15 or 20 other states are considering such action.

Though Minnesota and Connecticut expect to save less than $15 million per year, supporters say the potential is much larger.

Medicaid, in which the government reimburses states some of the health care dollars they spend on the needy, paid more than $47 billion for nursing home care nationwide in 2001.

There’s no good estimate of how much of that was for people who could have afforded to pay.

“If Minnesota and Connecticut get approved, I think you’ll have a rush to the trough,” said William Browning, incoming president of the National Academy of Elder Law Attorneys and a lawyer in Columbus, Ohio. “A lot of folks are watching.”

Guidelines governing Medicaid payments for nursing homes vary by state. Minnesota’s version is called Medical Assistance and, broadly, it won’t pay for nursing-home care for people worth more than $3,000, not counting their house and car.

The government currently lets states go back three years in examining applicants’ finances. If a state finds the applicant gave away assets to qualify for government aid, it can impose a waiting period before it begins to pay the nursing home bill.

Minnesota’s plan would add another three years to that “look back” period and make the waiting period start the date the person applied rather than the date the money was given away.

The changes would make it trickier for people to time giveaways to their need for nursing home care and encourage more people to purchase long-term care insurance rather than trying to rely on government money, supporters say.

The insurance has traditionally been a tough sell, in part because prices rise as people age. Without insurance, a year in a nursing home typically costs $50,000 or more.

Browning said the crackdown is driven by bad information.

He said his typical client is a spouse of someone entering a nursing home who wants to protect more of the couple’s income than would be allowed under standard Medicaid regulations.

“There’s this myth out there that millionaires are giving away all their money to be eligible for Medicaid,” he said. “And we just don’t see it.”

Minnesota state Rep. Mary Ellen Otremba, a widow and farmer, also opposes the changes. She said she fears farmers could lose their ability to pass property to their children.

“Those who are wealthy and have good lawyers will always be able to hide assets,” said Otremba, 52. “Is it fair to my children, who already don’t have a father, to be totally wiped out?”

Connecticut’s effort has been opposed by members of its congressional delegation, nursing homes and attorneys. Minnesota’s is still in a public comment period.

The states would need federal approval to make the changes and the prospects of getting that approval aren’t certain. Minnesota sought permission for a similar change in 1996, and it was formally rejected in 2000.

But state officials say they are more optimistic now, in part because the Bush administration has signaled a willingness to give states more flexibility in running their programs.

Kathleen Henry, the Health Care Program manager for Minnesota’s Department of Human Services, said the change would be especially appropriate now as the state is proposing to eliminate Medicaid-paid health insurance coverage for thousands of low-income people out of budget concerns. The state is facing a $4.2 billion deficit, about 15 percent of the budget.

“It’s very reasonable for us to expect people to take responsibility for themselves and use their own resources for their own health care needs,” she said.

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On the Net:

U.S. Centers for Medicare and Medicaid Services: http://cms.hhs.gov

AP-ES-04-25-03 0313EDT