Medicaid Cuts

Trump intends to cut Medicaid by more than $800 billion over the next decade. McKnight’s reported on a recent study conducted by Vincent Mor, PhD, a noted long-term care researcher in Brown’s Department of Health Services, Policy & Practice. He notes that 579 nursing homes are named in a new report as being at “elevated risk” of closure if Medicaid cuts become law.

In some states, the Brown University analysis commissioned by Senate leaders found that dozens of nursing homes are at elevated risk because Medicaid covers more than 85% of their residents. This already makes them financially vulnerable, and it will leave nursing home occupancy rates below 80%.

Mor also identified 1,749 SNFs nationwide with a Medicaid payer share greater than 85%, which could be at risk as they are “disproportionately located in urban areas and are concentrated in states like Illinois, Texas, California, and Georgia.”

The Congressional Budget Office stated that it would require states to reduce payments to providers. Most nursing homes across the U.S. are already underpaid for Medicaid patients, with a 2024 study showing the average reimbursement rate at 82 cents for every dollar spent on care. Healthcare advocates warn that limiting states’ ability to collect provider taxes will ultimately reduce the funds available for care within the nursing home.

The Senate Parliamentarian stated that the Senate would need 60 votes to approve provider tax changes, which is nearly impossible in a Senate with divided Party Lines.

“The Medicaid nursing home benefit is the last line of defense protecting American seniors and those with disabilities from destitution,” Senate Finance Committee Ranking Member Ron Wyden, D-OR, said in releasing the analysis. Additionally, he adds that this Republican bill will worsen conditions in hundreds of nursing homes, particularly in states that Republican lawmakers represent.

He argues that many facilities are already struggling financially, and could be forced to close. This leaves the vulnerable seniors and their families at a loss, facing many hardships in deciding how to move forward.

The closure of 579 nursing homes will represent a 4% loss of facilities in the market, just behind the 5% decline over the last decade, which was fueled by COVID. This comes at the worst time, as it coincides with the highest level of senior population growth.

Mor and his Brown colleagues warn that cuts will likely force states to reduce non-mandatory home-and community-based services, leading to more patients being directly admitted to nursing home care, which they cannot afford. Alongside this increased demand, states are also less likely to provide quality-level care as there will be no additional funding for this.

“States that will no longer be able to use provider taxes to increase Medicaid transfers will be harder hit, perhaps prompting absolute reductions in payment rates,” the analysis said. Mor warns that if states freeze or cut Medicaid payment rates, given the rising labor costs, nursing homes will struggle even more to find and recruit staff. Facilities with predominantly Medicaid residents, low occupancy, and poor quality performance are likely to become increasingly reliant on Medicaid, which will exacerbate their financial instability.