Most of long-term care’s problems boil down to heavy dependency on low Medicaid reimbursement rates. The program paid 61% of total U.S. LTC spending in 2022 at about 70% of private-pay rates. Economists explain that government price fixing causes market disruptions. Set prices too low, and shortages occur.
Providers are forced to compensate by compromising on services. Most complaints about questionable LTC quality, high cost, inadequate staffing, caregiver shortages, too much nursing home and too little home care, all the big challenges would improve or disappear entirely if Medicaid paid market rates.
How did Medicaid come to dominate America’s LTC service delivery and financing system, often paying less than the cost of providing the care? Its enactment in 1965 supercharged LTC funding. The Social Security Act’s appropriation language authorized Medicaid to provide medical assistance, rehabilitation and related services, including LTC, to individuals “whose income and resources are insufficient to meet the costs of necessary medical services… .”
With that open-ended authorization, Medicaid took on a potentially boundless financial responsibility.
The commitment to fund LTC for everyone who cannot afford it raised a lot of difficult questions. Who should qualify? How much income and resources are “insufficient” to meet medical necessity?
The full article can be found in McKnight’s Long-Term Care News.
