For much of Minnesota, particularly its rural reaches, nursing homes are more than just a care provider for aging or disabled loved ones. They’re also a critical part of the local economy, often serving as an area’s largest employer.
The vital role long-term care facilities play in their communities ought to factor prominently as Minnesotans evaluate the intensifying efforts by Republicans to repeal and replace the Affordable Care Act. A dramatic overhaul of Medicaid, the public health program for the poor, appears to be on the table. Regrettably, too many policymakers and supporters of the ACA’s repeal fail to realize how federal funding cuts could affect families and communities dependent on these critical care providers.
Medicaid provides coverage for more than 1 million Minnesotans. A misunderstanding of Medicaid’s mission is often at the root of political attacks on its funding. Many wrongly believe that it is only a welfare-type program that provides medical care for low-income adults and children. Its mission does include this, but it also fills a substantial gap in another public health program — Medicare.
Medicare is the popular, federally funded health insurance program for those 65 and older. Medicare serves seniors well, but it has a big gap in services it provides. In general, it does not pay for nursing home care or supports to help people get care in their homes.
Medicaid, which is funded jointly by the states and the federal government, steps in when patients meet financial need requirements. Slightly more than two-thirds of the program’s budget has historically been spent on the elderly and the disabled. “Medicaid is the largest single payer of nursing home services in the country, financing about one-third of the total spending,’’ according to a Peter G. Peterson Foundation report. In Minnesota, one of every two dollars spent on long-term care comes from Medicaid, according to the Kaiser Family Foundation.
The size of Medicaid’s budget makes it a tempting target for those wanting to reduce federal spending. In 2014, annual federal spending came to $303 billion, while states spent $195 billion. In Minnesota, the program cost a total of $11.2 billion in 2016; the state picked up 35 percent of the tab. The program’s expansion under the ACA to include more poor adults also makes it a target.
While details of the GOP’s ACA replacement plan are still ludicrously under lock and key, strategies to wring substantial savings from the Medicaid program have been included in blueprints made public. Block grants, which involve giving states a set sum for Medicaid costs, are one possibility. Another is a per capita approach that would pay a set sum per individual enrollee. Either of these will be touted as giving states more flexibility. But the main intent of both is to limit the money the federal government spends on the Medicaid program.
That’s a big change from the existing open-ended funding commitment. Right now, the feds provide matching funds aligned with state spending. This funding can rise to meet demand, such as when an economic downturn increases enrollment. It’s also unclear if block grants or per capita funding would keep up with rising health care costs.
An alarming new analysis from the state Department of Human Services suggests the answer is no. It concluded that the block grant approach would result in massive cuts in funding for the state — up to a “$2.2 billion shortfall in the 2019 fiscal year alone that would accumulate to an $8 billion gap through 2021.” By 2025, the shortfall could reach $5 billion a year.
The consequences would blow a big hole in the state budget and potentially reduce the number of Minnesotans served just as the massive wave of baby boomers creates unprecedented demand for long-term care services.
Fiscal responsibility does require scrutiny of the Medicaid program. But policymakers also have an obligation to thoroughly understand the impact of changes they make. Jobs are also at stake. More than 108,000 Minnesotans work in nursing and residential care facilities, according to the Minnesota Department of Employment and Economic Development.
There’s political pressure to rush an ACA replacement plan. But enacting sweeping changes to Medicaid in haste is irresponsible. It’s also politically unwise. Seniors are key Medicaid beneficiaries. And they vote.