Even without direct cuts to consumers, the doom scenarios for Medicaid are severe, and it doesn’t take much imagination to reach them.
The first step is a reduction in reimbursement rates, which people may not immediately notice or experience. A nursing home’s daily revenue suddenly drops from $200 to, say, $185 per patient, while still having to maintain the same staffing levels due to requirements.
“Nursing homes are currently a losing industry. According to Chris Orestis, a retirement adviser who founded Retirement Genius, “everyone is negatively impacted if 10% of the reimbursement is eliminated.” “They can’t hire more people, they can’t bring in new people who need care, and then they start shutting down.”
While many more seniors file for Medicaid every day to cover long-term care costs as they age, patients in closing institutions must relocate, making placement even more challenging. After a few quality dips, Orestis declared, “it’s musical chairs.”
Even though President Donald Trump has pledged not to reduce Medicare, Social Security, or Medicaid, all of this is already underway, even in the absence of any financial restrictions that might result from the Republican framework for a budget agreement.
According to estate lawyer John Ross, co-host of the podcast “Big Picture Retirement Podcast,” “if you look at the rate of baby boomers aging versus the number of beds, this is coming anyway.”
Cuts will only make things worse for people who are already receiving Medicaid and living in a care facility, as well as for the older population that is currently applying to institutions. MarketWatch’s request for comment from Medicaid was not immediately answered, but experts say the following will be the most painful:
Staffing reductions for Medicaid agencies
According to Ross, Medicaid is required by law to accept applications within 45 days, but he never observes that. It can take a hundred days or longer in Texas and other places where he practices. Ross claimed that despite technological advancements, the filing process has not altered in the 20 years that he has been doing it. He gathers all of the records (today via uploads, with AI summarizing them), but he must print them all out in batches of 100 pages for faxing. After 90 days, he must update the information and begin faxing again because Medicaid demands all of an applicant’s financial documents for the previous three months. The submissions must be compiled and processed by a human on the receiving end, which most likely entails re-digitizing them.
“None of it is operating well and budget cuts don’t fix that,” Ross stated.
The already delicate balance for new Medicaid participants who are either waiting for places in nursing homes or those who have been paying privately but have run out of money would be disrupted if applications take longer to approve overall.
As of right present, the majority of facilities that are aware that Medicaid is pending work with families on a transitory basis. Medicaid will then pay the institution back to the day the patient was considered eligible. However, it won’t be practical if that goes on for too long, and some families would have to pay for it in the interim. Depending on where they reside and the kind of facility they select, families may have to pay anywhere from $5,000 to $12,000 per month, or more, for private pay rates at nursing homes, which are significantly higher than what the government reimburses.
Medicare reimbursement rate reductions
According to federal figures, Medicare only pays roughly 82 cents for every dollar of service, meaning that the reimbursement rate is already low. Services will suffer significantly if that 10% is cut.
“The impact on older persons in need of care and on our nonprofit, mission-driven nursing facility members who provide it would be substantial regardless of how federal cuts are handled. Linda Couch, senior vice president of policy at LeadingAge, an organization of nonprofits that provide aging services, including nursing homes, stated that it would not be a good idea.
In 2023, there were nearly 14,000 complaints regarding the amenities, and there is already a bed deficit. The American Health Care Association reports in its Medicaid information sheet that staffing is still 60,000 below pre-pandemic levels and that 775 nursing facilities have closed in recent years.
Patients have rights after enrolling in Medicaid, including the ability to contest discharges and report inadequate treatment. However, you need to know the regulations or have someone battling for you on your behalf.
According to Indiana estate lawyer Jenny Rozelle, “I would make sure families of residents understand that residents are entitled to various rights through the 1987 Nursing Home Reform Law.” “If a family has any issues with residents’ rights, I’d seek either legal assistance or help through their state’s long-term-care ombudsman.”
One method to acquire assistance is to hire a lawyer, but since Medicaid’s asset limit is usually less than $2,000, it might be costly for families who are already having trouble paying for care or for an elderly person who is incapacitated and has no money.
Reductions in eligibility
Two-thirds of all nursing home residents in the United States are already covered by Medicaid, making it the last safety net for long-term care. People who are eligible for the program are left with no other choice, typically have no assets, and only get Social Security, which they give to Medicaid along with a meager monthly personal-needs allowance of less than $100.
Where would Medicaid enrollees who are currently in nursing homes go if states changed their eligibility rules or eliminated them from the program?
Although it had no direct impact on his clients, Ross saw a small preview of what might occur in Arkansas during the first Trump administration when the state removed roughly 18,000 people off the Medicaid rolls. He appears to be increasingly involved in the dumping of patients who are wanted by nursing homes, which could occur more frequently if there are budget constraints.
“The patient will magically get the flu or something else that takes them to the ER, and then once they are there, the nursing home says they can’t come back,” Ross explained. “Now the hospital has to try to figure out where to put them, but if there’s no payer source, it becomes an adult protective services issue, which brings the state back into it.”
At this point, he said, it’s merely bureaucratic problems (and upsetting for anyone going through it), and it hasn’t become a life-or-death scenario. However, he believes that if this begins to occur on a large scale, with facilities closing and a large number of disabled people being forced into the market when there is no space for them, then fatalities will begin to occur.
Is this ominous?
“I don’t think it’s likely to happen on a grand scale,” Ross stated. But for 20 years, I’ve been yelling about this. At a time when the government is struggling financially, the elder tsunami is beginning to collapse after building and building. Not enough beds, facilities, or funds are available to cover all of our expenses.
