A new analysis from the Urban Institute’s Health Policy Center paints a concerning picture for ten states and Washington, D.C., projecting a potential loss of $468 billion in Medicaid funding over the next decade if proposed federal cuts to the Federal Medical Assistance Percentage (FMAP) go into effect. Of this staggering sum, $161.1 billion is directly tied to the care of the elderly, a demographic heavily reliant on Medicaid for long-term care services in nursing homes.
FMAP represents the portion of Medicaid expenses the federal government reimburses to states. As lawmakers explore avenues to curb Medicaid spending, reductions to this crucial funding mechanism are on the table. This could have significant repercussions for the nursing home industry and the millions of vulnerable individuals it serves.
“Given the populations that Medicaid serves, cuts in federal Medicaid funding would place more of the responsibility on states for financing the care of millions of vulnerable people, including children, disabled and elderly people, and pregnant women,” the Urban Institute report states. This shift in financial burden could force states to make difficult choices, including raising taxes, cutting other essential state programs, or reducing Medicaid eligibility, benefits, and payments to providers, including nursing homes.
The ten states facing the most substantial losses are California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New York, New Jersey, Washington, and Wyoming, along with Washington, D.C. According to the analysis, proposed reductions by members of the House of Representatives could lead to Medicaid funding cuts of $189.5 billion for individuals with disabilities and $50.1 billion for children in these jurisdictions over the next ten years, in addition to the $161.1 billion impacting elderly care.
The potential impact intensifies when considering other proposed federal Medicaid cuts, such as the funding support for states that expanded Medicaid eligibility. The Urban Institute analysis suggests that if the FMAP reductions were combined with these additional cuts, the total loss of federal funds for these eleven entities could balloon to a staggering $835 billion over the next decade.
To maintain their current Medicaid programs in the face of these potential FMAP reductions, the analysis indicates that state Medicaid funding would need to increase significantly, ranging from 4.1% in Maryland to a dramatic 63.2% in Washington, D.C. This underscores the immense pressure states would face to continue providing essential healthcare services, particularly to the elderly population residing in nursing homes.
The Robert Wood Johnson Foundation funded this analysis, highlighting the growing concern among healthcare experts about the potential consequences of federal Medicaid cuts on vulnerable populations and the healthcare providers who serve them. The nursing home industry, already facing numerous challenges, could be particularly hard hit by these proposed funding reductions, potentially impacting the quality of care and access to services for its residents.