I get where the anger and frustration comes from.
However, you can't have it both ways. (Not you, personally). You can't spend your whole life saying "my house is an investment" and put all your financial efforts into saving and building up a net worth and ALSO then say you don't want to use that money on your own care. Too many people feel compelled to pass along inheritances rather than spend their money on end of life care.
Medicaid is an entitlement program. It is asset based, like every other social safety net program. If you can sell assets for liquid cash, you must exhaust those before getting medicaid. Makes perfect sense.
People who choose to live frugally should do so with the mindset that the monies saved will be used by them EVENTUALLY, and they will die with a net worth of zero. That is the ideal outcome. Anything left over is a bonus for their next of kin. It is foolish to live your life assuming that you will never need end of life care. Death is a certainty, but no one can predict how that end comes to be.
If it is absolutely essential to leave an inheritance, you need life insurance policies.
My point was that I didn't think it was right to imply that the OP and others in a similar boat are somehow conniving thieves just because they have the impulse to carry out a parent's wishes with a fairly small percentage of that parents' money. (Doing it anyway once you find out it's actually against the law would be different, but simply asking about it shouldn't draw condemnation.)
Yes, it makes sense that a safety net for the poor should require that people who use it to actually be poor, and to encourage people to save for end-of-life care, but with all of the money the law encourages to be wasted on all kinds of overpriced things, it seems that the state and Federal government's definition of poor enough often seems deliberately designed to humiliate. In almost every case where someone who once was able to pay has to apply to Medicaid, they have too many assets for the program and are forced to deliberately spend them down to qualify. It's not enough money to pay the next nursing home bill, but it's too much to be considered poor, so you get told to do weird things like put new appliances in your home (which you pretend you might some day move back into and thus have to keep maintaining just a tiny bit with the allowed funds, but which everyone involved knows will have to be signed over in about a year or so), or worse, told to use the money to buy a pre-paid funeral plan. With the number of single people growing old in America, that adds up to hundreds of thousands of dollars each year spent on particular commerical items exempt from asset consideration. A logical system would allow people to give that limited amount of discretionary money to a child's educational fund instead of buying a burial plot for that child (yes, that's allowed in some places!), thus letting it do some little true good for one's own family rather than enriching the funeral profession.
Right now in my state, the amount that Medicaid residents are allowed to hold back from retirement income for incidental expenses (by which my mother's facility meant all prescription deductibles, laundry charges, clothing, shoes, special foods not provided by the nursing home, over-the-counter medications, personal-care items like deodorant and soap and shampoo and skin lotion, haircuts, maintenance of her wheelchair, any reading material, stamps and stationary, telephone charges, and yes, basic in-room television programming so you can watch the news, not HBO) is $50/month, which hasn't changed in over 30 years. The rest of it goes to the facility up to the cost billed for custodial care. Well, God help you if your family isn't able to supplement that with regular gifts, because even for a fragile 90 year old who can't get out much, $50/month is a miserable pittance in 2022. (My mother wasn't American by birth, and she lived for cups of hot tea, which the nursing home didn't provide; they only served coffee with meals. We spent more than $50/month just buying her daily 3 cups of tea, let alone keeping her clean and maintaining her wheelchair so that she could go to the restroom and the cafeteria on her own.) Rather understandably, Medicaid facilities often have a problem with theft, as residents take to stealing what they cannot buy for themselves: sweaters, shoes, religious items, costume jewelry, jars of candy kept for treats for grandchildren, decks of cards. Or underpaid staff members steal from the residents. It's obscene.
There has to be some way to create a middle ground, some world where being alone and "not having enough" isn't a choice between living on $50/mo or paying $6000/month (the typical average cash cost of residential skilled care in the US for a single person; memory care costs much more.)
Yes, spending down one's assets to exactly Zero at death would be ideal, but it isn't a very kind or practical goal unless your death and a finite period of time leading up to it could somehow be scheduled and meticulously pre-planned.