Proposed Medicaid Cuts Could Hurt Access, Care For Assisted Living Residents

Medicaid could soon be on the chopping block. Senior housing and care leaders are warning that the cuts could complicate operations at the least, if not hurt access and care for older adults.

On Tuesday night, the U.S. House narrowly passed a budget resolution bill urging the House Committee on Energy and Commerce to cut $880 billion over 10 years, primarily from Medicare and Medicaid, to offset proposed tax cuts. 

Currently, Medicaid is paid for through a joint effort between states and the federal government. With the move, Congress could effectively shift Medicaid spending to states, imperiling access and care for millions of low-income people, including many older adults.

Private-pay senior living operators typically do not have large exposure to Medicaid, and the program does not cover room and board costs in assisted living as it does in skilled nursing settings. But operators do sometimes include Medicaid waiver beds in their operations as a way to keep costs lower for residents, particularly at assisted living communities located in states like Illinois, Florida and Indiana.

According to data from The American Health Care Association and National Center for Assisted Living (AHCA/NCAL), almost one in five of the more than 800,000 assisted living residents in the U.S. use Medicaid to pay for daily care services.

McMinnville, Oregon-based The Springs Living is one such operator, and anywhere from 10% to 40% of its residents at any given community use Medicaid waivers, according to Founder and CEO Fee Stubblefield.

Right now, Stubblefield believes there’s “nothing to worry about until there’s something to worry about” as it relates to senior living – in other words, he is waiting to see how this plays out. But he is concerned about the broader effects of Medicaid cuts on the senior living industry, not to mention for people growing older in the U.S.

“We don’t know how it’s going to be rolled out,” Stubblefield told Senior Housing News. “Obviously, if it’s cuts that get to providers, that’s significant … it’s an important part of the ecosystem and how the whole population pays for their health care.”

The Springs Living already loses roughly $1,000 per month for every resident on Medicaid for the cost of care compared to what is reimbursed in Oregon, Stubblefield said. If widespread Medicaid cuts are made, the economics of the situation could force operators like The Springs Living to pull back on Medicaid offerings in order to remain a viable operation.

“We already have access problems,” he said. “With an aging population growing, we need to be thinking about how to use dollars better, I agree with that. But you know, who takes care of people if these Medicaid dollars aren’t there?”

Sound senior housing and care industry associations are already sounding the alarm.

AHCA/NCAL is urging lawmakers to protect Medicaid from potential cuts, noting the program has for years faced funding shortfalls in many states. As of 2019, Medicaid only covered 82 cents for every dollar spent on care.

Information from AHCA/NCAL states over the next five years, the U.S. population of individuals aged 80 years and older is expected to increase by more than 4 million people, with roughly one in three being economically insecure at the moment.

“It’s no secret that Medicaid is already underfunded, so any further cuts would be devastating,” Michael Bassett, senior vice president of government relations for AHCA/NCAL, said in a press release. “We will continue to urge lawmakers that there’s a better way to create government efficiencies while upholding the promise made to our nation’s seniors.”

The specifics of the possible Medicaid cuts are unclear, according to Linda Couch, senior vice president of policy at LeadingAge, an advocacy group for not-for-profit aging services, including senior living. However, she said, potential approaches could include reducing federal contributions, imposition of policy changes to limit federal financial participation, such as alterations to the Federal Medical Assistance Percentage (FMAP), or adding work requirements.

Moreover, Congressional Republicans oppose cuts to provider and managed care taxes, which, while legal, help states fund Medicaid services and quality programs, she said.

“Changes to Medicaid will cause massive holes in state budgets that will force state lawmakers to take action,” Couch said in an emailed statement to Senior Housing News. “Medicaid provides the lion’s share of nursing home funding.”

In the meantime, Stubblefield said the industry will simply have to wait and see what happens.

“You want government efficiency, but I don’t think as a country, we’re going to support cuts that hurt vulnerable populations, especially vulnerable older adults, people with disabilities and people who can’t care for themselves,” he said. “That’s the compassion of our country.”

Skilled Nursing News Editor Zahida Siddiqi contributed reporting and writing for this story

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