Photo by Curated Images for Unsplash
I admit that when I learned the so-called One Big Beautiful Bill was going to cut $911 billion from Medicaid over 10 years, my first thought was, That’s really cruel, but at least it doesn’t affect me.
And if Medicaid were, as it was intended to be, a program strictly for older adults in poverty, I might have been right. But Medicaid has become something else in recent years that does affect middle-income families – any Family that would be severely challenged to pay $100,000 or more annually for long-term care. Medicaid has become the payer of last resort: If you can’t afford a Nursing home, your only recourse is to spend down all your cash and assets until you’re broke enough to qualify for Medicaid coverage.
(You knew that Medicare doesn’t cover nursing homes, didn’t you?)
But soon, it appears that we won’t have Medicaid to kick around anymore. Partly that’s because middle-income families glommed onto it, partly because of chronic underfunding, but ultimately because of a political failure to address the ruinous cost of long-term care.
“The real story,” writes Kathy Heery, a nurse and writer, “is how a program designed as a narrow safety net for low-income families was slowly stretched into the country’s primary payer for dementia care, custodial care, and the daily support millions of Aging adults now need.” Medicaid now pays for more than half of all long-term care in the U.S. The reason is also clear, Heery adds. “It happened because no other federal program stepped in.”
It has brought Medicaid to the breaking point. As Heery writes, “The idea that Medicaid will ‘step in when you need it’ is no longer a plan. It’s an illusion.” That’s bad news for every household that doesn’t have several hundred thousand dollars squirreled away for long-term care.
In other words, the safety net has a gaping hole in it. While Medicare and Social Security have made great strides in battling old-age poverty, the U.S. has never developed a policy about long-term care. A report from the Bipartisan Policy Center notes, “Although policymakers have recognized this complex challenge for decades, they have yet to sufficiently tackle it, and the cost of continued inaction is unsustainable with the aging of the baby Boomer Generation.”
In the absence of policy, the burden of care falls on older adults and their families. Most of us hope to avoid the prohibitive cost of long-term care by aging in place. However, a study last year from the Johns Hopkins Bloomberg School of Public Health observes that “without a national long-term care insurance system in the U.S., most services, which are often expensive, must either be paid out of pocket or be provided by unpaid family members.”
How expensive? Here are annual costs today:
home health aide to assist with daily activities: $80,080
adult day care, five days per week: $24,700
assisted living community: $74,400
nursing home, semi-private room: $114,975
These costs explain why three-fourths of older adults in the U.S. with functional or cognitive impairments rely on unpaid family members for support. But that “free” care comes at a cost to the caregivers, who reduce their work hours or leave the workforce entirely, putting intense financial strain on their families.
Until two decades ago, long-term care insurance policies existed to soften the financial blow. But the market has shriveled as annual premiums skyrocketed and most insurers dropped out of the market.
What may be the death blow to Medicaid is the passage last year of the One Big Beautiful Bill, with its nearly $1 Trillion in cuts to Medicaid over 10 years and new rules, such as work requirements for some enrollees. Those cuts mean less Money flowing to the states, which administer the program. This year, states must enact policy changes to keep their programs running with less federal aid. Those changes, according to current estimates, would add 7.5 million people to rolls of Americans without health insurance by 2034.
What can we do about this sad state?
The costs of government-funded long-term care are staggering, and, many would say, prohibitive. Certainly there is no room in the present federal budget for it.
But budgets are moral documents. They accurately convey our priorities and our values. Congress has no trouble allocating $893 billion for defense – a sum that is the highest on the planet and more than double the military expenditures of all 30 NATO nations combined – while slicing $911 billion (over 10 years) from Medicaid.
If you are unhappy with these moral choices, consider replacing your elected representatives with people willing to set different priorities.
