| Four Medicaid Solutions for States

| Allison Cook

| The One Big Beautiful Bill Act was signed into law in earlier this month. It includes Medicaid measures that will harm older adults and their caregivers, such as cuts to rural hospital funding, the addition of work requirements, limits on how states can raise funding, changes to the Affordable Care Act marketplace, increased out-of-pocket costs, and more. As Jason Resendez, President and CEO of the National Alliance for Caregiving, shared in his Q&A with Aging in America News, “Congress voted to weaken America’s already inadequate caregiving and long-term care infrastructure. I won’t sugarcoat it: this is a devastating setback for [older adults and] families who rely on Medicaid to make caregiving possible.” Is there anything states and advocates can do to mitigate some of these harms? The (relatively) good news is that some of these changes are not immediately effective—they’ll phase in over the next few years. People have the opportunity to continue to advocate with their elected officials to roll some of these cuts back. As Resendez shared, “This sets up a fierce battle in the coming years to restore hard-won gains in coverage and access to home and community-based services.”

States have the opportunity to figure out ways to make smart adjustments to their programs, rather than implementing flat cuts. While these strategies will not fully restore this vital safety net program, here are four options that could soften the impact of some of these cuts for older adults and their caregivers:

1. Provide respite and support for family caregivers. Our long-term care system heavily relies on unpaid, and often unsupported, family caregivers. Providing them with training, respite, and other supports lets them care for their loved ones more effectively. It can prolong an older adult’s ability to remain in the community (rather than in a more expensive nursing home), minimizing the burden on the Medicaid system.
2. Find the right balance of institutional versus community-based long-term care. Federal Medicaid rules require states to cover institutional care, including nursing homes and other facilities, but often don’t require them to cover community-based care, such as home care or adult day services. Not only does “rebalancing” the system to provide more community-based care meet the preferences of older adults and their caregivers but it can also save money (since community-based care is often less expensive).
3. Promote options that combine Medicare and Medicaid coverage. 13.7 million Americans are eligible for both Medicaid and Medicare. In those circumstances, Medicare covers their hospital and doctor visits, while Medicaid covers their long-term care. Coverage options exist that combine Medicare and Medicaid into one plan, such as Program for All-Inclusive Care for the Elderly (PACE) programs and Disability Special Needs Plans (D-SNPs). Investing in quality long-term care (on the Medicaid side) can often result in savings in acute care (on the Medicare side), due to fewer hospitalizations, slowing down chronic disease progression, and more. Therefore, promoting enrollment in options that combine Medicare and Medicaid coverage can allow states to capture some of the savings generated by investing in long-term care and preventative care. For example, states could support health systems in becoming age-friendly, which can lead to fewer and shorter hospital stays and lower costs per day. They can also create value-based payment initiatives that promote quality long-term care and reduce hospitalizations.
4. Create new ways to pay for long-term care. Medicaid is a vital safety net and has become the largest payer for long-term care. We desperately need to take some of the pressure off the program by creating additional ways to pay for long-term care. Most families cannot afford to pay out-of-pocket, and the market hasn’t successfully created long-term care insurance plans that are accessible and affordable to most of the middle class. States should explore building a new program to help pay for care. Washington State created the WA Cares Fund, which makes up to $36,000 in benefits available to people who have paid into the program through a payroll tax. A handful of states have begun to explore similar approaches. These programs could delay or prevent older adults from needing to relay on Medicaid, and they could support family caregivers.

These four strategies are a starting point for states as federal Medicaid cuts force challenging decisions. States should also turn to resources and processes like Multisector Plans for Aging, which bring together experts, providers, older adults, caregivers, and advocates to come up with smart recommendations for improving how we age. Targeted state advocacy can help mitigate some of the harm caused by cutting the safety net that may Americans rely on.

Allison Cook is the founder of Better Aging and Policy Consulting.