The purpose of this disclosure is to explain how we make money without charging you for our content.
Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.
Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.
Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.
Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.
To find out more about our editorial process and how we make money, click here.
Dawn Burnfin’s 94-year-old grandmother recently had a massive stroke in a Missouri nursing home. She quickly recovered well enough to tell the end-of-life hospice workers caring for her to go home, since she had no plans to die.
But the Medicaid funds that help pay for her care are now up in the air.
“I don’t know where she would go,” Burnfin, 43, says of her grandmother, if she loses her bed in the nursing home. “It’s really scary.”
Included in the Better Care Reconciliation Act, the bill Senate Republicans have proposed to replace the Affordable Care Act, are an estimated $772 billion in federal cuts to Medicaid through 2026, plus a reduction in the funding formula that would sharply decrease spending beyond that. The nonpartisan Congressional Budget Office projected on Thursday that federal Medicaid spending in 2036 would be 35% less than under current law.
Proponents of the bill say the new Medicaid structure would increase states’ flexibility to design their Medicaid programs around the unique needs of their populations. But the proposed cuts have many like Burnfin wondering who will pay to keep her grandmother cared for?
While Medicaid is best known for insuring low-income Americans, the government program also provides a vital safety net to elderly Americans who need long-term care, either at home or in a facility. Medicaid covers about 60% of nursing home residents, and according to a 2015 study by Truven Health Analytics, roughly 2.2 million elderly Americans received Medicaid-financed long-term care in 2011. As more baby boomers reach older age, these numbers will only grow.
Burnfin lives in Chisholm, Minn., not close enough to provide hands-on care to her grandmother, although though she has plenty of expertise: Burnfin herself works as a home care worker, providing in-home assistance to an elderly woman on Medicaid. Her own livelihood depends on the program’s health.
Medicaid is such an important safety net because Medicare, the federal health insurance program for those ages 65-plus, does not cover the kind of routine assistance that most elderly need: help with dressing, bathing, eating and other activities of daily living. According to government estimates, 70% of people turning 65 will eventually need such assistance in older age.
When it comes to finding—and financing—long-term care for older loved ones, most families are on their own. And many end up turning to Medicaid when their money runs out. It’s not hard to drain your life savings on nursing home care that runs around $82,000 per year but can go much higher in costlier areas of the country. To qualify for Medicaid for long-term care, applicants need to have depleted most of their resources. Criteria vary by state; in New York, for example, the asset limit is about $14,000, not including a certain amount of home equity.
Eligibility criteria would likely get even stricter under the Better Care Reconciliation Act, experts say. That’s because the bill would fundamentally change the entire Medicaid program, not just the parts affected by the ACA: it would switch Medicaid financing from an open-ended benefit to one that’s capped.
Instead of receiving increased federal funding to meet mounting needs—say, to fund opioid addiction treatment or to pay for a new breakthrough drug—beginning in 2020 states would receive a capped amount. This would represent “a transfer of risk, responsibility, and cost to the states of historic proportions,” according to a statement by the National Association of Medicaid Directors, a bipartisan organization representing leaders of state Medicaid agencies nationwide.
Spending caps would become even more harsh in 2025, when Medicaid spending could only rise each year with general inflation, which tends to lag medical inflation by several percentage points. “The bill’s Medicaid cuts are really about starving the program, and states won’t think about the long-term, they’ll think about surviving until the next year,” says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.
Medicaid finances are already stretched, and there’s not that much fat to cut in the system. “It’s not like Medicaid systems have been rolling in cash under the current system, due to the need,” says Eric Carlson, a directing attorney in Justice in Aging, a nonprofit legal advocacy organization.
Nobody knows yet how states would respond to the cuts, but experts say all long-term care supports and services are vulnerable–that includes quality care in nursing homes for patients whose needs are best met in such facilities, and also in-home care for patients who can stay at home with assistance.
Among the limited choices states would have to cope with the cuts: they could restrict Medicaid eligibility, reduce the already-low payments Medicaid makes to medical providers, and reduce the number of services that Medicaid covers. In-home care is generally considered an optional benefit in state Medicaid programs, so it would likely be on the chopping block if the Senate bill becomes law. Nursing home care, by contrast, is considered mandatory. “What’s horrible about the bill is it will force institutionalization,” says Michael J. Amoruso, president-elect of the National Academy of Elder Law Attorneys and a practicing attorney in Rye Brook, N.Y. In other words, the bill would force older, vulnerable citizens out of their homes and into nursing facilities.
This week, Senate Majority Leader Mitch McConnell postponed the Senate’s vote on the bill until after the July 4 recess, hoping to shore up support. Burnfin agrees with critics who say the Senate’s actions are shortsighted. Keeping older patients at home for as long as possible not only increases their quality of life, it also generates economic activity in their communities, Burnfin says: the residents continue to pay property taxes on their homes and consume goods and services in their area. They also employ caregivers in greater numbers than nursing homes. The ratio of caregivers to care recipients is 1:1 at a patient’s home, but about 9:1 in a typical nursing home, Amoruso says.
Burnfin has an even more personal connection to Medicaid: her family is also insured through the program. She works full-time as the primary breadwinner for her family, but her income remains low enough that they qualify. Her husband is disabled, and the four of her children who live at home have complex medical needs. She worries for their future as well.
“We couldn’t survive without the Medicaid,” she says. “We just couldn’t.”
This story has been updated to include a Congressional Budget Office report released Thursday.