As an older adult or someone helping an older adult, you’re likely aware of how medical expenses can quickly add up, even if you are covered by traditional Medicare or a Medicare Advantage plan. If you’re fortunate, you have savings, or help from Social Security or a retirement plan, or maybe you were even lucky enough to get yourself a valuable long-term care insurance policy. The Center for Medicare and Medicaid Services (CMS) reports that on average, US adults 65 and older spent $22,356 on personal health care expenses in 2020 (that number is likely higher today), which is 2 ½ times higher than young adults spend. What happens if you don’t have the funds to support that level of spending? Or your expenses suddenly skyrocket because you become seriously ill, or you need more help, or need to enter a long-term care facility? You may go without the care you need, or you may be eligible for receiving both Medicare and Medicaid (known as dual eligibles). Estimates are that 13 million adults are covered by both Medicare and Medicaid (7 million of whom are over 65). Whether you are eligible for Medicaid and what it will cover is dependent upon what state you are a resident of, but generally speaking, Medicaid is obligated to cover expenses not already covered by Medicare, including home health care and nursing home care. In fact, it is because of long-term care expenses that many formerly middle-class people become acquainted with Medicaid, given that they lack sufficient funds or spend down their money to pay for the extraordinary expense of in-home or in-facility long-term care. Many of these recipients of Medicaid funding for long-term care are persons living with dementia (estimates are about 24% of people with dementia are supported through Medicaid).

Medicaid is a publicly funded finance system for health care, jointly funded by federal and state funds in a complicated system largely dictated by the federal government but with latitude given to states on some of what they may cover. Medicaid (NOT Medicare) is the single largest payer of long-term care, including nursing home care, covering 63% of nursing home residents. Medicaid also provides significant funding to allow people to age in place at home, paying for such care as home care aides and personal care assistants. Medicaid is also heavily involved in paying for such community programs as PACE, which provide support and services to allow older adults with physical or cognitive impairments to continue living in the community. For an example of what PACE programs can do and how Medicaid cuts could threaten these vital programs for older adults living in the community, look here. 

So what will be the impact on older adults, both directly and indirectly, if the federal Medicaid budget is cut by the current administration? While such cuts are politically unpopular, and the President has said that Medicare benefits will not be cut (not clear whether he made that same commitment to Medicaid funds) the current Republican budget proposal in the House of Representatives seems to suggest reducing the Medicaid budget by $880 billion over the next decade, which would amount to a 10% cut each year. President Trump has stated that he supports this House budget plan.

Medicaid accounts for 20% of all hospital funding and total health care spending nationwide. So, cuts to Medicaid will affect the stability of hospitals, especially in rural areas, along with nursing homes, home care providers, and other programs and services that older adults rely on, whether or not they do so through Medicaid. Even if you are an older adult with significant assets, if your hospital or long term care facility is at risk because of loss of Medicaid funding, you too will experience problems and potential hardship. Nursing homes, which are already under economic peril and are often sponsored by mission-driven not-for-profits, will be in real jeopardy if they lose a percentage of their Medicaid funding. And if it takes longer for people to obtain Medicaid or hire more workers due to budget cuts, everyone, whether or not they are Medicaid recipients, will suffer.  

While we are waiting to see how the federal budget process plays out, it behooves us all to understand that potential cuts to Medicaid at the federal level will directly affect the ability of states to fund and manage important Medicaid programs, many of which directly affect the lives of older adults. More broadly, the health care system we all rely on, whether or not we use Medicaid, will be substantially affected. For more insights on the impact Medicaid cuts may have, take out your calculator and click here and here.