One of the most significant sticking points in the health care debate is the growing cost of Medicaid. The cost of expanding Mediciad is rising faster than expected in many states, causing budget anxieties and political misgivings, according to Kaiser Health News. With more than 70 million people enrolled, the Congressional Budget Office projects federal Medicaid spending to grow 6 percent a year on average, rising to $650 billion in 2027 from $389 billion this year.
One of the key drivers of the rising costs of Medicaid is the cost of nursing homes for the growing aging population. By 2030, more than 1 in 5 residents in all Minnesota counties will be age 65 or older, according to Wilder research. This substantial shift in population growth will put more pressure on the state’s Medicaid system, as many more Minnesotans will enter nursing homes and be forced to rely on Medicaid to pay the steep costs.
Long-term care in Minnesota can cost anywhere from $20,000 for adult day services to $97,000 or more for private nursing home care. That cost can become an even larger burden for more than 32 percent of Minnesotans age 65+ who live with some sort of disability.
The growing cost of care is changing how Americans pay for nursing homes. While the vast majority of Medicaid enrollees are children, pregnant women and other nonelderly adults, the 6 percent of Medicaid enrollees who are in nursing homes account for 42 percent of all Medicaid spending nationally. And while most Medicaid enrollees are not nursing home residents, most nursing home residents are Medicaid enrollees. Nationally, Medicaid pays for an estimated 64 percent of the 1.4 million people in nursing homes. Minnesota doesn’t trail far behind, with 53 percent of nursing facility residents paying through Medicaid.
Federal law requires state Medicaid programs to cover nursing home care, but it’s left up to state officials to decide how much to pay facilities. States under the growing budgetary pressure of rising Medicaid costs could decrease the amount they are willing to pay or restrict eligibility for coverage to make up for increasing costs.
Recently, the bipartisan Policy Center in Washington said about the future, “States will not be able to sustain spending for long-term care services and supports as baby boomers begin to need these services and supports.” For states trying to balance a budget and provide care for aging populations, leaders need to look to creative solutions.
Minnesota has been a leader in this arena as many communities work with ACT on Alzheimer’s to make their communities more dementia friendly, allowing more seniors to age in place and avoid entering a nursing home longer. The community-based volunteer initiative works to meet the needs of each specific community. In some, that might mean training local businesses to spot the signs of dementia or establishing a respite care program that allows caregivers a few hours of the day to run errands or tend to other needs.
Similar efforts have been shown to save not only time, but money as well. A 2014 study in the highly-regarded journal Health Affairs showed that enhanced support services for caregivers have been shown to improve caregivers’ capabilities and well-being and delay patients institutionalization, which could save Minnesota $996 million in direct care costs.
America’s population is aging and relying more and more on Medicaid every year. Until Congress finds a solution, community leaders would be wise to take actions into their own hands.