Baby boomers beware: GOP’s Medicaid cuts could hurt you later
Massachusetts is vulnerable. Hundreds of thousands of Bay Staters could lose their health insurance if the Republican-authored American Health Care Act becomes law. Many others will see their out-of-pocket costs jump.
This could happen even if we try to preserve much of the state’s pioneering health care system. And it’s not just the poor who are at risk; it’s also the elderly.
Seniors often get overlooked in this debate because, hey, they’ve got Medicare. But there’s a giant hole in Medicare coverage, a hole that many aging American seniors eventually fall into: Nursing home care isn’t generally covered, and neither is full-time assistance at home.
So where does that money come from if Medicare won’t pay? The answer is Medicaid, the other government insurance program, the one more often associated with the poor than the elderly.
About 60 percent of nursing home residents rely on Medicaid. Which means that if the Republican plan to slash $834 billion from Medicaid goes forward, it could have a devastating impact on seniors with critical health needs.
Seniors are at particular risk because they’re expensive — and the budget-cutters’ mantra is “go where the money is.” Nationwide, seniors account for 21 percent of Medicaid expenses, even though they make up about 9 percent of enrollees. In 2016, Massachusetts’ Medicaid program — called MassHealth — spent $1.2 billion on nursing facility care alone.
And we are just getting started.
Right now, baby boomers are still in their first decade of AARP membership. Twenty years from now, that wave will be deep in their 80s, an age when health care costs can run 2.5 times higher than you typically find with 65-year-olds.
Between 2025 and 2035, there is going to be a 17 percent increase in the number of Bay Staters over 85, generating a burst of new Medicaid applications and a jump in spending on long-term care, both at home and in nursing facilities.
Federal funding won’t keep up, not the way the Republican health care bill is structured. Rather than reimburse states based on actual Medicaid expenses, the GOP plan shifts to a “per capita cap,” where states get a fixed amount per Medicaid recipient. And while the new formula does include extra money for seniors, it doesn’t distinguish between 65-year-olds and 85-year-olds. So it will drastically underestimate the needs of aging baby boomers.
It’s a recipe for yawning state deficits: less federal funding for Medicaid, greater need among the elderly. And states won’t have a lot of good options.
Take Massachusetts. We could raise taxes to make up for the loss of federal funding. But those losses are expected to reach quickly into the billions and get bigger every year. I reckon that replacing that much money could mean raising the state income tax rate to nearly 6 percent.
Alternatively, the state could pare back spending. Eliminating nursing care entirely is not an option, as that’s a baseline federal requirement. But there are lots of other changes that could save money — albeit by making it harder for elderly Americans to get the long-term and nursing care they need.
Right now, for instance, seniors in Massachusetts need to have pretty low incomes in order to qualify for Medicaid — at or below the poverty line. But that already-low threshold could be pushed further down. Federal rules allow states to limit enrollment to people earning roughly 75 percent of poverty wages, or less.
More generally, states offer all manner of optional and additional services for the elderly. Perhaps the best example is the HCBS waiver program, which allows people to get long-term services in their homes or other community settings, rather than moving into a nursing home. More than just health care, these programs can provide help with laundry, chores, meals, and more. But none of this is required by law, and all of it is expensive. So if the federal government stops providing much-needed money, states could stop offering the programs.
Then what? It’s one thing when working-age adults lose access to Medicaid; they can at least try to get private insurance — perhaps with help from government subsidies. But when Medicaid rejects your application for long-term care, that’s pretty much it. Unless you invent a time machine to go back and purchase long-term-care insurance when you were 40, you’re stuck.
And while family and friends can sometimes step up, caring for an aged relative is an intensive experience — a lot to ask, in terms of time and money. Especially for families struggling to keep their own finances in order.
Which brings us to the one, big wild card in all this. Will people fight back if it becomes harder for seniors to get the long-term care they need through Medicaid?
Usually, cuts to Medicaid are considered politically safe, because recipients tend to be poor, with little political clout. But that logic doesn’t apply to seniors, who are a powerful voting block; and it may not apply to the frustrated children of care-seeking baby boomers, who could be activated to join the fight.
Whether they can stop this bill is unclear. But even if they don’t, perhaps they’ll remember it next time they head to the voting booth.