A new bill passed by Congress is set to slash Medicaid and other crucial services across the U.S., and while the senior living industry is somewhat insulated from those cuts, it is not immune, either.
The tax and spending bill, which passed the Senate on July 1 and cleared the House of Representatives on July 3, includes historic cuts to Medicaid that include work requirements, changes to provider taxes that states use to fund Medicaid services and higher out-of-pocket fees for enrollees. According to the Congressional Budget Office (CBO), the bill would cut almost $1 trillion from Medicaid spending over the next 10 years and imperil insurance access for fewer than 12 million people by 2034. That would represent the largest cuts to the program since it was created in 1965.
The bill likely means more financial challenges ahead for nursing homes, hospitals and community health centers and could push them to scale down services or even close their doors.
While the spending bill cuts Medicaid and other services, it gives a boost to U.S. Immigration and Customs Enforcement (ICE) in the form of $170 billion for immigration- and border enforcement-related funding provisions, including money earmarked for building new immigration detention centers and tripling the law enforcement agency’s budget. It also preserves 2017-era tax breaks, among many other provisions.
Senior living operators are directly insulated from public funding cuts given the primarily private-pay model of the business. But the spending bill could still lead to ramifications that affect them or their residents immediately or down the road.
For example, states could rebalance or review their long-term care spending, including funding for home and community based services that cover some of the costs of assisted living, according to Jeanne Delgado, vice president of government affairs with the American Senior Housing Association (ASHA).
“These are important programs that create opportunities to offer affordable senior living to lower income older adults,” Delgado told Senior Housing News.
About 18% of assisted living residents in the U.S. rely on Medicaid to pay for some assisted living costs through state waiver programs. In many states, there are waiting lists for assisted living waivers due to limited slots and great demand for the service, Delgado said.
The bill will lead to lower provider Medicaid reimbursement rates for providers that take the funding and facility closures that further increase barriers to care access, according to Mollie Gurian, vice president of policy and government affairs for LeadingAge.
“When states are faced with budgetary constraints in their Medicaid programs, they have historically reduced average spending per enrollee in HCBS and reduced provider rates,” Gurian said. “While AL is already difficult to access in many states via Medicaid, the cost shift to states from the federal government in complying with new work requirements and other provisions of the bill will reduce available state funding for services to individuals in assisted living and other HCBS programs.”
Advocacy group Argentum worked with lawmakers to remove direct Federal Medical Assistance Percentage (FMAP) cuts that would impact senior living communities, which Senior Vice President of Public Affairs Maggie Elehway said is a “significant victory for communities.” However, the organization still is watching for whether the bill contains additional harm or consequences for the industry.
“We want to make sure that [states] don’t inadvertently cut this important Medicaid waiver program, because this program actually saves them money,” Elehway told Senior Housing News. “They should be expanding it. So our fight is really going to go on educating states on how important these programs are and how much money they save.”
Currently in the bill is a $6,000 tax credit for older adults who make $75,000 or less, or $150,000 if filing jointly, which Elehway said will give them the flexibility and hopefully pay for some of their long term care needs.
She added: “We really hope that the Congress will all do more on long term care affordability, and that’s going to be our continued push in the future.”
Even so, assisted living operators have previously warned that any cuts to Medicaid would at least complicate operations or care for older adults. And operators in states like Illinois, Florida and Indiana often use Medicaid waivers to help keep their services more affordable for residents.
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, according to previous data from The American Health Care Association and National Center for Assisted Living (AHCA/NCAL).
On Thursday, LeadingAge CEO Katie Smith-Sloan called the spending bill a “significant blow to a core element of our country’s social safety net: Medicaid” and warned “the consequences will not be pretty.”
“Millions of Americans will lose health insurance coverage resulting from cuts to Medicaid and to Affordable Care Act Marketplace coverage. Due to the level of deficit this bill will create, Medicare payments to providers may be reduced by 4% for the next 10 years,” Smith-Sloan said. “Bandaids included in the bill such as only-freezing-but-not-reducing nursing home provider taxes, and the creation of a rural health transformation fund – touted as protections for older adults and aging services providers – will soon prove ill-equipped to stop OBBB’s damage.”
The cuts could affect Programs for All-Inclusive Care for the Elderly (PACE) and adult day programs that some senior living companies use to keep costs lower and fill a service gap, according to LeadingAge.
“Residents of affordable senior housing will be at risk of losing insurance due to onerous work requirements and increased eligibility checks, and may also lose access to food assistance. And, the difficulties that our mission-driven and nonprofit members already navigate to deliver care and services, including recruiting and retaining staff, will grow,” Smith-Sloan said.
“Caregiving responsibilities will fall to family members, who, while also possibly struggling to access their own health care, will have to rearrange their lives to fill in the sizable gaps that Congress has created with the passage of this bill,” she said.
