The Ryan Budget passed by the Republicans in the House of Representatives could seriously hurt assisted care facilities and nursing homes as well as the elderly residents that depend on them.
The bill, called the Ryan Budget Plan after its sponsor Rep. Paul Ryan (R-WI), contains a provision that eliminates federal funding for the joint Federal-State Medicaid program. Medicaid provides health care to one in six Americans including 8 million people over age 65. Since about 60% of all the patients in nursing homes and assisted living facilities depend on Medicaid to pay for their care, this could have a major impact on that industry.
Enrollment in Medicaid has been rising in the last decade, as have costs. Medicaid enrollment grew 58% with 6 million recipients added in the last year. Rising health care costs, the recession, and the aging of baby boomers will all contribute to increasing demand for Medicaid services in the next few years.
What the Ryan Budget Does to Medicaid
This budget that passed the House simply transfers the obligation of Medicaid from the federal budget to the states reducing the federal budget at the expense of state budgets.
The bill eliminates Medicaid and “allows” states to design and fund their own plans to provide health care for its citizens. In lieu of Medicaid, it proposes to give block grants to the states to help them cover the cost of taking over the health care costs presently covered by Medicaid. This allows states to drop or cut back services that are mandated by the current federal law such as children’s health, nursing home care, and mental health.
Eliminating Medicaid will result in a savings to the federal budget, but it hurts the budgets of nearly all the states that are having a hard time just coming up with their matching share of Medicaid now.
Governors met with the President in February this year and told him that they will be forced to close children’s health facilities and cut programs due to the increase in the number of persons requiring Medicaid unless the funding that states received under the Stimulus Bill is extended by Congress another year. Congress did not extend the Stimulus funding, but instead voted to eliminate federal participation in Medicaid altogether under the Ryan Budget.
How the Ryan Budget affects state budgets and local economies
Presently, the federal government funds approximately 57% of Medicaid costs. The states and co-pay cover the rest.
Last fiscal year (2010), federal expenditures for Medicaid amounted to $338 billion. Of this sum, almost $50 billion dollars went to nursing homes, and $12.5 billion went to assisted living centers, and an additional $47 billion went to home health care. Even with the Block Grants, states will not be able to fund Medicaid at the same levels it is currently funded because enrollments are going up so fast, as are costs.
In addition, the bill repeals the Health Reform Act passed last year. That law would have allowed seniors after 2014 to buy insurance in pools which would result in more seniors having private insurance. Now, this is uncertain.
This will result in cut backs and dropping of recipients from the program now, and a reduction of the number of recipients approved in the future. This will hurt local economies since 90% of the money from Medicaid programs gets put back into local economies through health care providers impacting sales taxes, property taxes etc. Cuts will further exasperate local budget deficits.
State Legislatures have history of diverting Block Grants
There is history when it comes to block grants given to States. Often States receive a grant for one purpose, and use it for another that they deem to be a higher priority. This happened with the Stimulus money when money intended for “shovel ready” projects in some states went to cover budget shortfalls in operating budgets instead.
States, unlike the federal government must balance their budget every year, so there will be a battle on an annual basis in State Legislatures to determine if the grant money will be used for health care for needy citizens and not other priorities.
Also, there is no guarantee that future Congresses will continue the block grants at all let alone at a level needed to continue these programs.
Since seniors living in nursing homes or assisted living centers and the indigent do not have lobbyists, they are easy targets for budget cuts. Therefore, this Budget could spell trouble for Nursing Homes and Assisted Living facilities if patients can not afford to move in and pay their bills.
One bright spot for those worried about Medicaid being eliminated is that the Bill passed by the Republican House is not likely to pass the Senate, and if it does, the President will veto it sending it back to square one.
“How Ryan’s Foes Defined His Budget Plan” Tom Curry, National Affairs Writer, MSNBC, 5/06 2011
“Medicaid Spending Growth Exceeds Expectations” Chris Fleming, Health Affairs Blog
“Medicaid Enrollment Drops”, Richard Wolf” USA Today, 2 19/10
Congressional Budget Office
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