It is a remarkable story: Long-stay nursing home care by seniors enrolled in Medicaid has been plummeting for 15 years.
It is not clear exactly why, but there are probably several reasons. First, state Medicaid programs have been shifting care from nursing facilities to home and community-based settings–a step that seniors themselves favor and one that may save money in the long-run. While Medicaid still spends more total dollars on nursing home care than on home care, Don’s chart shows that nursing facility use by Medicaid-eligible seniors has fallen by nearly one-third, from 1.4 million in 1995 to just over 1 million in 2010.
The second reason, as Don notes, is that seniors’ enrollment in Medicaid is growing very slowly even though the overall older population is growing rapidly. The number of people 65 and older increased by more than 80 percent from 1975 to 2010 and the number of those over 85 (who are most likely to need long-term supports and services) has tripled. Yet, Medicaid enrollment by seniors increased by only 18 percent from 1975-2010. That’s in sharp contrast to younger Medicaid beneficiaries, who have increased by more than 200 percent.
A third reason may be that nursing homes themselves would rather provide post-acute and rehabilitation services instead of long-stay care. Why? Medicaid pays an average of only about $125 a day for a long-term care resident, while Medicare pays $500 or $600-a-day for a post-acute short-stay patient. As a result, many nursing home operators are shifting beds from long-term care to more lucrative rehab and post-acute.
There is also the question of where seniors are living, if not in nursing homes. In 2010, assisted living facilities had about 700,000 residents, and about one in five were receiving Medicaid. Take Minnesota, for instance. It has aggressively moved Medicaid long-term care residents out of nursing homes and into home and community-based settings. But nearly all care is being provided by residential care facilities, and not in private homes.
It is also important to keep in mind that while community care might be less costly for Medicaid than nursing home care, it may not be cheaper overall. For instance, families or other government programs may be providing housing, transportation, meals, and other supportive services but they, and not Medicaid, are footing the bill. As a result, while fewer seniors may be using Medicaid nursing homes, and while the share of Medicaid nursing homes dollars is shrinking, these additional services are not free. Someone is paying for them.
Still, as Don says, the trend away from Medicaid nursing home stays for seniors is a good one. It is good for seniors, good for the Medicaid program, and even good for many facilities whose real value-added may be in post-acute care in the developing new world of health care.