What’s at stake for older adults amid proposed Medicaid cuts

If Congress slashes $880 billion from the proposed federal budget, it will mean significant changes for Medicaid. According to some policy analysts, seniors will likely bear the brunt of the cuts. Journalists should closely watch the budget bill and how it impacts different states if it becomes law.

Medicaid accounts for one-fifth of health care spending, and more than half of the expenditure for long-term care, according to KFF. About 7.2 million people over the age of 65 rely on Medicaid and Medicare for help with medical care, premium assistance, out-of-pocket costs, and the chance to age at home rather than in an institution.

Cuts to Medicaid could be devastating for a large portion of this vulnerable population, according to Tricia Neuman, executive director for the Program on Medicare Policy at KFF, during a recent webinar, “Medicaid Spending Reductions: Implications for Older Adults” (The John A. Hartford Foundation, who also supports AHCJ’s Aging Health Beat, sponsored the webinar).

“These are essential services for people who would be otherwise unlikely to be able to afford to purchase these services on their own,” Neumann said. “And the stress to caregivers without the support could be immense.”

Why this matters

While there are risks of service cuts to all segments of the population, including low-income children and pregnant people, older adults may be most at risk because their care comprises the majority of health care spending, according to the webinar panelists. Many optional services are also likely to be targeted.

Each state has different needs, proportions of older residents, programs and services. So, changes will look different across the U.S. But, regardless of the decisions made in state capitals, there’s little doubt that many older people and their caregivers will feel the effects of this bill. Journalists can help inform their audiences about what is at stake by reporting on the potential loss of services and support and what that will mean for family caregivers and beneficiaries.

Half of all adults 50 and older do not realize that Medicaid, not Medicare, covers the majority of care for the most vulnerable older adults in the U.S., including the bulk of nursing home care, according to Rani Snyder, vice president of program at the John A. Hartford Foundation. “Nearly two-thirds of nursing home residents depend on Medicaid to pay for their care in this country.”

Approximately 34% of Medicaid spending goes to long-term services and supports, a category that includes nursing home services and home and community-based services, or HCBS. But, since nursing home care is a mandatory benefit, states looking to make up lost federal Medicaid dollars will likely cut some HCBS, which could eliminate programs and lead to geographic limitations and/or waiting lists.

Without these programs, older adults would have to receive care in institutional settings, pay thousands of dollars for private care, or rely almost exclusively on unpaid family caregivers, according to Justice in Aging, a national nonprofit advocacy and legal organization.

Wraparound services

Home and community-based care are part of optional wraparound services, Neuman said. They encompass caregiver support, prescription drugs, home care, dental, vision, and hearing care, among other services, that keep older adults healthier and allow them to avoid or delay nursing home care.

“They are hugely important to people who need support to manage on their own or manage with family caregivers,” she said. These are essential services for people who would be otherwise unlikely to be able to afford to purchase them on their own. Cuts to these optional Medicaid benefits would also place tremendous stress on family caregivers, who may be struggling to care for an older parent while juggling a job and children at home.

Funding reductions to home-based services will also impact direct care workers — the aides, personal care assistants and companions that help older adults manage at home. Many direct care workers rely on Medicaid for their health coverage, according to the Medicare Rights Center.

Most direct care workers are hired through home care agencies paid by Medicaid. If payments to providers are included in the cuts, some workers could be laid off, or agencies could shutter, further exacerbating the direct care worker shortage, according to Justice in Aging Executive Director Kevin Prindiville.

No good options

Prindiville described two buckets of proposals with various ideas when it comes to Medicaid cuts. In one bucket, are proposals that would cut the amount of federal funds that flow to states by changing how Medicaid is financed.

These include:

A switch to block grants, a fixed sum of money sent to the state.
Per capita caps, limited payments made by the federal government to states, based on a preset formula. These payments do not increase based on actual costs.
Reducing federal matching assistance, the percentage of Medicaid that is federally funded and what is funded by states.
Restrictions on how states use provider taxes to maximize federal support for the program.

In the other bucket are proposals that would cut federal Medicaid spending by reducing enrollment or slashing covered services. This category of cuts includes:

Work requirements for some populations in the Medicaid program, which could impact family caregivers who may rely on Medicaid.
The repealing of regulations that set minimum standards or requirements in the program.

The overall goal of these proposals is for the federal government to be spending less money. Allocating less money for states to fund Medicaid programs leaves them with budget gaps. States will be forced to fill these shortfalls by cutting benefits, cutting eligibility and enrollment, cutting payment rates, or a combination of all three, Prindiville said.

“There’s not a scenario where these policies, if adopted, do not lead to cuts to services for people that rely on Medicaid, including and especially older adults,” he said.

The House budget bill is not a done deal. Legislation must first pass in the Senate. This process may be more challenging among the upper chamber’s GOP lawmakers and will likely face complete opposition from Democrats, according to U.S. News & World Report.