What's wrong with the policy is that it makes no sense. Why should they be forced to live in poverty for the rest of their lives to qualify for assistance? How does it help them; how does it help their children; how does it help society?
If they made $50k a year instead of $15k a year, that would make no meaningful difference to how much the state would or will pay on their $M bills.
Wouldn't a better policy be: If you have a catastrophic medical event, you are guaranteed that the state will use tax revenue for your care. Your family won't have to be destitute to qualify, or meet some dollar limit last changed 20+ years ago.
Treating the need for catastrophic medical insurance, or medical insurance period, as some moral failing is stupid and counter-productive.
Cheers,
Scott.