Medicaid Cuts Could Jeopardize Access to Critical Long-Term Care Services for People with Disabilities and Older Adults

Congressional Republicans are considering making major funding cuts to Medicaid, the primary payer in the United States for long-term services and supports (LTSS). LTSS include services delivered in institutional (e.g., nursing home) and home and community-based settings (HCBS) to people who need assistance with daily self-care tasks (e.g., eating, bathing, dressing, and preparing meals) due to illness, disability, or age. Six million people rely on Medicaid for LTSS; most are age 65 and older and may be living with a disability.

Medicaid provides crucial access to LTSS. These kinds of services are not traditionally covered by private health insurance and only covered by Medicare for a short duration in limited circumstances. In 2022, over half of the $415 billion spent nationally on LTSS was provided by Medicaid; $131 billion was spent in institutional settings and $284 billion in HCBS. Much of this pays for nursing and home-based care for seniors who need assistance with daily activities. The majority of beneficiaries who receive LTSS through Medicaid are people with disabilities.

How does Medicaid support older adults and people with disabilities with LTSS needs?

• Older Americans. As of 2024, 30 percent of Medicaid program spending goes to support individuals dually eligible for both Medicaid and Medicare. One of five seniors enrolled in Medicare count on Medicaid to provide access to LTSS. Medicaid is also the primary payer for over 60 percent of nursing home residents.
• People with disabilities. Medicaid is the primary payer of LTSS for individuals with intellectual disabilities or developmental disabilities. Seventy percent of Medicaid enrollees who use LTSS qualify for coverage due to a disability. To qualify for Medicaid on the basis of a disability, individuals must meet the Supplemental Security Income (SSI) definition for disability and receive SSI benefits, which involves strict limits on income and assets. In addition, Affordable Care Act (ACA) expansion allows low-income individuals to qualify for Medicaid based solely on income, opening the door to coverage for over 60 percent of nonelderly adults with disabilities who do not meet the SSI criteria.

How does Medicaid expansion support people with LTSS needs?

Many people who use LTSS qualify for Medicaid through the expansion pathway under the ACA. Ten percent of people who use Medicaid in HCBS and 20 percent of those in institutional settings have access to these services because they live in a state that has expanded Medicaid eligibility. This means that people with disabilities in the workforce are more likely to be employed if they live in expansion states that have higher income eligibility limits, rather than nonexpansion states, because they can increase their earnings without losing their Medicaid coverage.

States that expanded Medicaid under the ACA receive a 90 percent federal match for newly covered adults, and those that adopted expansion after 2021 under the American Rescue Plan Act qualify for an additional 5 percent increase in federal match for two years. This enhanced federal match is especially important for nonelderly Medicaid enrollees who rely on LTSS, a significant portion of whom qualify for coverage based on their low income rather than disability.

What do budget reconciliation policy proposals mean for older adults and people with disabilities?

In February, the U.S. House of Representatives passed a budget resolution instructing the House Energy and Commerce Committee, which has jurisdiction over Medicaid, to reduce federal spending by at least $880 billion. Congressional Republicans frame their approach to Medicaid cuts as an effort to eliminate fraud, waste, and abuse, particularly within the Medicaid expansion program. However, the Congressional Budget Office recently confirmed that the only way to meet the target entails deep spending cuts to the entire Medicaid program. This will result in cuts that drastically reduce the number of people enrolled in Medicaid and the services offered to beneficiaries.

Proponents of reducing the Federal Medical Assistance Percentage (FMAP) for the expansion population have argued that federal spending on this group has come at the expense of vulnerable populations covered by traditional Medicaid. Yet, recent data have shown that the expansion population is not crowding out the traditionally covered groups. Medicaid expansion states spend more per enrollee than nonexpansion states for all five eligibility groups — adults age 65 and older, people with disabilities, children, other adults eligible for traditional Medicaid (e.g., low-income parents), and adults eligible under the Medicaid expansion — illustrating that the Medicaid expansion does not divert funding from traditional enrollees. Individuals near retirement age and people with disabilities that do not meet the SSI definition for disability are two of the key populations benefiting from Medicaid expansion.

The following policy proposals have gathered broad support among Congressional Republicans:

Outlook

Medicaid proposals currently under consideration in Congress, including those targeted at the ACA expansion population, would have a devastating impact on older Americans and people with disabilities who rely on Medicaid coverage for access to health care and long-term care services. Cuts to LTSS could also exacerbate shortages in the nation’s direct care workforce and lead to job losses in the health care sector, potentially harming both access to services and local economies. While reducing waste, fraud, and abuse is important to program integrity and fiscal responsibility, current proposals would have broad consequences for beneficiaries and their access to critical services. If the goal is to secure the financial stability of Medicaid for vulnerable populations, Congress should instead examine expert proposals to address improper payments and program integrity.

Acknowledgment

The authors thank Celli Horstman of the Commonwealth Fund for creating the graph used in this blog post.