Government

Medicaid Long-term Care: The Ticking Time Bomb

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Executive Summary

Current health care reform efforts have been focused on controlling costs and increasing health care access for the uninsured, poor, elderly and disabled. The convergence of an aging population and health care reform's mandate for increased access to care will have far-reaching consequences for Medicaid. Not only will it force Medicaid to examine existing benefit programs for the elderly and the poor, it will also push Medicaid to rethink how it can address the full range of elderly needs with the resources it possesses and can mobilize. A key beneficiary of those resources will be people needing LTC. This paper examines the Medicaid expenditures for LTC, in both institutional and community-based settings. If the current trend continues as demonstrated in this paper's base model, more than 35 percent of a state's budget will be needed for Medicaid by 2030, of which half will be for LTC services. Research indicates that nursing facility expenditures are not driving this cost escalation, so a push to manage LTC costs by eliminating less-costly home/community care programs could boomerang, with the result that beneficiaries end up requiring more costly institutional care. The paper also examines how health care reform's mandate for increased access will worsen Medicaid's expenditure trend. The Senate bill estimated that Medicaid coverage would be expanded to include an additional 14 million individuals. At a time when unemployment rates remain high, state tax revenues have decreased and state budget deficits have increased, states are being asked to do more with less in regard to health care resources.

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