Why Gutting Health Care As Boomers Turn 80 Is A Really Bad Idea

This is a particularly inopportune moment to make long-term care inaccessible.
A senior waits for a charitable food donation in California in 2011. 
A senior waits for a charitable food donation in California in 2011. 

For decades, health care providers and policy wonks have known the time would come when aging baby boomers would need a lot more support than the generations that preceded them, including long-term services.

Now, just as the oldest boomers are moving into retirement, the House Obamacare replacement bill would strip away funding that nursing homes, assisted living facilities, and home health agencies depend on to care for the most vulnerable seniors.

“What we’re talking about here is straight-up rationing care,” said Judith Feder, who studies health policy at the Urban Institute think tank.

Medicaid’s big role in elder care

Nursing homes, assisted living facilities, and intensive home services are too expensive for most families to pay for out of pocket, and Medicare usually doesn’t cover them either.

So today Medicaid pays for more than half of long-term care costs in the U.S. Typically, an older person who needs help with basic activities like bathing and eating will spend all their money on care services, eventually becoming poor enough that Medicaid starts picking up the bills.

But if the Medicaid provisions in the House bill make it through the Senate and become law, it’s going to be harder to get those services paid for.

Starting in 2020, instead of providing state Medicaid programs with funding based on residents’ needs, the federal government would give them a fixed pot of money. That could take the form of a simple block grant that doesn’t adjust to population changes or a per capita allocation, which would base payments on the number of state residents who fall into particular categories, like poor children or disabled adults.

Payments would rise each year, but only at the inflation rate for medical care services. The Congressional Budget Office predicts that will be less than the actual growth in enrollees’ costs between now and 2026, creating a growing gap.

Over the next few decades, the problem will get even worse as boomers go from “young-old” to “old-old.” Between 2015 and 2060, the Census predicts that the population aged 65 to 84 will grow 89 percent. Meanwhile, the number of people 85 and older will more than triple. It’s those older seniors who are most likely to need long-term care. But the “elderly” category in the House plan lumps everyone over 65 together, setting the baseline for per-capita costs based on the population mix in 2016, which is much more heavily weighted toward younger, healthier seniors.

The way the bill sets the baseline, it also entrenches decisions many states have made to try to keep their costs down. States that offered stingy benefits in 2016 would be forced to keep doing so, unless they can find all the money for expansion in their own budgets.

“When you put these kinds of lids on spending, and given the constrained spending we’ve had before, what you’re doing is freezing in place gross inequities across states,” Feder said. “Essentially you’re denying federal resources that would enable low-spending states to catch up.”

Cost control

Rhonda Richards, a senior legislative representative at AARP, said states that don’t have the money to pay for the care their older residents’ needs might tighten their eligibility rules. That would leave more people without any care at all. Or they might reduce the rates they pay providers ― even though Medicaid already generally pays less than Medicare or private insurance for a given service. Richards said that could have a big impact on nursing homes and other facilities.

“Certain providers might decide not to provide services whose care is being paid for by Medicaid,” she said. “It could also impact the quality of care that’s provided.”

The bill would be even worse for home health and community-based long-term care. The federal government requires state Medicaid programs to cover residential facilities, but not the kinds of care that let people keep living in their own homes. Faced with less money to go around, this might well be the easiest place to make cuts.

“We’re really focused on the impact this has on older adults’ ability to live independently in their homes and communities,” Richards said.

Getting care at home is much cheaper than moving to a nursing home, and most people prefer it. But Feder said states have been slow to cover home and community care precisely because they’re so popular that the programs can be overwhelmed with demand ― unlike with nursing homes, which are almost always a last resort.

“The concern that states have had is it will serve more people,” she said. “That’s the objective, but that has made them reluctant.”

Under the Republican health bill, rather than continue to slowly expand coverage for home and community health, states would be likely to roll it back.

What’s the alternative?

Ultimately, the single biggest problem facing the long-term care system, and American health care at large, is that health services are expensive. The conservatives seeking to cut Medicaid have been denouncing it as an “out of control” entitlement for decades. And, indeed, under current law the program is expected to be 2 ½ times bigger in 2025 than it was in 2009. But private health insurance spending is growing nearly as fast.

Regardless of politics, people will need more help as they get older. If authorities cut the spending that lets seniors get that help, the burden will fall elsewhere, often on family members who end up overburdened and financially strained. And, of course, some seniors simply won’t have anyone willing or able to help them for free.

Lawmakers ― including Republicans ― know this. It’s the reason Rep. Daniel Webster (R-Fla.), one of the last holdouts before the House bill passed, expressed strong reservations. He only relented when the Trump administration assured him that they were “committed to find a solution” to keep nursing home care fully funded.

As the Senate drafts its own Affordable Care Act replacement bill, we’ll find out just how seriously the Republican Party takes the notion that this is a problem that needs to be solved.

States With Medicaid Policies That Hurt The Poor