How cutting Medicaid would affect long-term care and family caregivers : NPR

As Congress looks for ways to reduce the federal deficit, Medicaid is in the spotlight. Last week, the GOP-led House passed a budget framework that allows both chambers of Congress to work on a major budget plan they expect to pass without any Democratic votes. Some House Republicans have called for it to include reductions in Medicaid spending.

Family caregivers and people needing long-term care could be hard-hit by cuts to the program.

Medicaid, jointly funded by the federal and state governments, is the nation's health insurance program for low-income people. But it is also the single biggest source of money for long-term care for disabled and elderly people, paying more than half the $415 billion spent on these services every year.

Medicare, the program for people over 65, does not pay for long nursing-home stays or for ongoing in-home help.

For people with low incomes and few assets beyond a home, Medicaid will pick up the tab for long-term or permanent nursing-home care. It pays for 60% of the nation's extended nursing-home stays, including nearly 1 million people.

About half of Medicaid spending on elders is for “home and community based” services, which help about 4.5 million chronically ill or elderly people in the United States get care at home.

Medicaid pays wages to caregivers — friends, family members, or professional caregivers — who help with essential needs.

Reducing Medicaid services “would have profound effects on their health,” says David Grabowski, health economist at Harvard Medical School. “These are services they need every day to bathe themselves, dress themselves, get themselves to the kitchen.” Cuts could lead to hospitalizations, emergency room visits, and in some cases early death, he adds.

Medicaid also funds adult day programs, social work help, caregiver training, respite programs, and other services that help people stay well at home.

The services and funds help family caregivers stretched thin by their responsibilities. The average American caregiver spends more than $7,000 a year out of pocket, according to a study from AARP.

Sacramento resident Sharon Duchessi cares for her partner, who has diabetes and a bad back. She says there's no way the two could manage without Medicaid support. The program pays her to help him. Both of them also rely on it for their health care. Even so, they're stretched.

As a loan processor, Duchessi made a good salary. Now she earns $18.65 an hour, capped at 189 hours a month. She estimates her partner's care requires at least 250 hours each month. The program compensates her for only 30 minutes spent on laundry each week, for instance. But because he is prone to dangerous skin infections, she must scrub the washing machine and dryer every time she does his laundry.

If she didn't care for him, she expects he'd be in and out of the hospital, which would be far more expensive and bad for his health.

Medicaid home caregivers in California and some other states are unionized, and Duchessi is currently regional vice president in her district of SEIU 2015.

Families bear the cost

Earlier this year, the House of Representatives introduced a budget resolution that would effectively require trimming Medicaid spending by as much as $880 billion over the next 10 years. The blueprint passed last week still includes this directive, though the Senate and House will have to negotiate about what ultimately gets included in the budget.

President Trump and House Speaker Mike Johnson promise to target fraud and abuse. But the federal government's own investigations find that only about 5% of Medicaid payments are “improper,” a term including both fraud and paperwork errors, and estimate that outright fraud adds up to only about $6.5 billion a year. The remaining cutbacks would need to come from reducing enrollment, curbing services, or paying providers less.

States could potentially raise taxes to cover the difference. But most observers think it's more likely that states will reduce payments, change eligibility requirements or cut back on services, which means unpaid family caregivers will likely pick up the slack, says Grabowski.

“It'll put a huge burden on the family,” he says. “Even though there might be savings from a budgetary perspective, families bear this cost.”

Technically, the proposed budget wouldn't be a cut to Medicaid's budget, points out Michael F. Cannon, director of health policy studies at the Cato Institute, a libertarian think tank. It would just mean slower growth.

The Congressional Budget Office projects that to maintain current services, Medicaid's budget would need to grow from between 4% and 6% each year, in line with the annual increase in spending by private insurance. In order to reduce the federal outlay by $880 billion over a decade, the program's budget could only grow by an average of 3% a year.

Limiting Medicaid spending could have other consequences. For many years, the federal government has promoted policies to stabilize elders and disabled people like Duchessi's partner at home, rather than put them into a nursing home. That's usually what people prefer, and it's cheaper. Medicaid spends about $47,000 a year for a long-term care home stay on average — about $11,000 more than it spends to provide community-based and in-home care, according to research and polling group KFF.

Medicaid rules require nursing home stays to be covered for those eligible. But they don't require coverage of in-home personal care. If money is tight, nursing homes will still get paid, but home caregivers and other support services might not, says Nicole Jorwic, chief program officer at Caring Across Generations, an advocacy organization supporting care work.

“There's a real likelihood of unnecessary institutionalization, because of what states would have to do,” says Jorwic. Disabled and elderly people who could have stayed home with some assistance might need to enter a nursing home, simply because that's the only way they can get care.

Financial burden of long-term care

States could also change eligibility rules to make it more difficult for people with middle incomes to qualify for Medicaid. Eligibility varies by state and by program, but in many states, you must make less than $34,812 a year and have less than $2,000 in assets. In order to qualify, some families will spend down their savings. Currently, there are also legal ways to shield some of your assets if you prepare in advance.

If those loopholes were eliminated, some middle-income people might pay for services themselves.

“If you change eligibility rules so that fewer well-to-do people are eligible, you'd have more resources for people who are more needy,” says Cannon. For this reason, he predicts that Medicaid cuts would not have a dramatic impact on long-term care: “Some people would be able to tap their home equity, or rely on savings.”

However, some elders who are now eligible for Medicaid didn't start out poor. Paying for long-term care can bankrupt even middle-class people. Assisted living runs an average of $70,800 a year, according to a major survey of providers in 2024. A private room in a nursing home averages $127,750.

More than half of all people over 65 are expected to need long-term care at some point. Only 4% have long-term care insurance to defray that cost.

Many states already have long waiting lists of people requesting Medicaid funds for in-home care, points out Jorwic. “Cuts would mean the list would grow; some people would get cut from services. It'd be a major impact on the unpaid caregiving that is already filling in the gaps.”

Trimming Medicaid's payments could encourage more people to buy long-term care insurance for themselves, argues Cannon. Currently, the fact that Medicaid will pick up the cost for people who run out of money means there's little incentive to buy insurance.

But that change wouldn't address the needs of the families who currently rely on Medicaid to help with long-term care.

In Duchessi's case, she'd have to go back to work and hope to find someone who could help her partner while she's on the job. That might not be easy. “Caregivers — we're a different breed,” says Duchessi. “It's not something I'd encourage anyone to do unless they're willing to do the work. It's hard work.”

The Senate budget resolution that passed on April 5 does not include the same cuts as the House version, and some Republican senators say they oppose any Medicaid trims. The details, and the ultimate size of the Medicaid budget for the next 10 years, will be hashed out between the two chambers later this year.

Kat McGowan is a caregiving reporter based in Berkeley, Calif.