medical bag, nursing home abuseThe proposed cuts to Medicaid imperil the millions of retirees who depend on the government program for their nursing home care services. Earlier this year Republicans proposed steep cuts to Medicaid as part of the effort to roll-back the “Obamacare” healthcare reforms. Medicaid pays for the majority of people who reside in nursing homes. Any changes to the program, without alternative funding and support structures, would rile the nursing home industry.

The Problem

A combination of longer lives and increasing healthcare costs have severely stressed Medicaid’s budget. Moreover, nursing homes were designed under the old-model which presumed residents would eventually leave. However, contemporary residents stay for the long-term and are often the sicker, more complex cases.

Medicaid Funding: By the Numbers

Medicaid provides coverage for about 20 percent of all Americans and 40 percent of poor adults. Around 70 million Americans depend on the program for their medical costs, which amounted to $389 billion in 2016 and are projected to rise an average of six percent every year until 2027 when the program is projected to cost $650 billion. In Alaska, Mississippi, and West Virginia, Medicaid paid for over 75 percent of residents. The vast majority of covered people are:

  • Pregnant women;
  • Children; and
  • Poor, nonelderly adults.

Nursing home residents compose merely six percent of enrollees however they account for 42 percent of Medicaid’s spending. Medicaid pays for the expenses of 64 percent of the 1.4 million residents in nursing home programs. Reduced funding will result in severe cuts to benefits for retirees who are dependent on Medicaid to remain in nursing homes. Moreover, Medicaid requires enrollees to exhaust their assets before applying for assistance. Thus, even people who retire solidly middle class, with decent retirement savings are fully dependent on Medicaid because assets are depleted or insufficient to cover the costs of nursing home care.

Possible Effect Due to Cuts

Medicaid is a federal program that is administered by the states. Medicaid rules require the program to cover nursing home costs. Therefore, states cannot simply cut benefits. However, the states can decide how much money each benefit category is entitled to receive. States who are constrained due to reduced Medicaid reimbursements could severely limit the number of funds disbursed for services, they could require enrollees family members to share costs, and they could make the requirements to qualify for coverage more stringent.

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