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Under the proposed budget resolution passed by Republicans in the House of Representatives, nearly a million nursing home residents could immediately lose coverage for nursing home care.  Further, all of the standards that govern nursing home care today could disappear. 

A study of the costs of nursing home care, released April 21, 2011 by John Hancock Financial, reports, "the national average annual cost of care in the U.S. is $85,775 for a private room in a nursing home; $75,555 for a semi-private room in a nursing home."[1]

The House Republican Budget Resolution purports not to change Medicare for new beneficiaries until 2022.  But, for current Medicare beneficiaries who live in nursing facilities, the overwhelming majority of whom rely on Medicaid for their nursing home coverage, the impact of the Budget Resolution would be immediate and devastating.  With the repeal of Medicaid, fewer residents would be covered by Medicaid and more of the costs of nursing home care would be dramatically shifted to residents and states, and, for the first time, to residents' families.  Residents could be required to pay for prescription drug coverage under Medicare Part D, whereas, under current law, those with Medicaid have no cost-sharing.  And all current federal standards of care for nursing homes could be lost.

Nursing home residents using Medicaid already pay for a considerable portion of the nursing home charges for their care.  They are required to contribute virtually all of their income toward the cost of their nursing home care, usually retaining only a small monthly personal needs allowance.[2]  In addition, states can recapture the cost of a Medicaid resident's nursing home care by placing a lien on the resident's property and by collecting from the resident's estate after the resident's death.[3]  No other Medicaid beneficiaries are required to repay the Medicaid program in this way for Medicaid benefits they received.

Families also spend billions of dollars in caregiving that is never reimbursed by any public program.  AARP estimated the value of unpaid caregiving at $350 billion in 2006.[4]  The Kaiser Family Foundation reported in 2009 that "Direct out-of-pocket care spending by individuals and families accounts for 22 percent" of the $178 billion spent on nursing home care – more than $39 billion.[5]

Nursing Home Residents Could Lose Medicaid Coverage of Their Nursing Home Care

Nearly a million and a half people live in nursing facilities.  In March 2011, more than one million of them relied on Medicare or Medicaid to pay for their care in whole or in part – 198,799 relied on Medicare; 887,555, on Medicaid.[6]

However, while the Medicare program pays for many residents at the beginning of their stay,[7] Medicare actually provides a relatively short benefit for nursing home care.  On average, in 2009, Medicare paid for only 27.3 days of care in a benefit period.[8]  Most residents remain in a nursing home far longer than a month.  The National Nursing Home Survey (2004) reported, "The average length of time since admission for all current nursing home residents was 835 days," the median length of time since admission, 463 days.[9]  For most residents, Medicaid quickly becomes the primary payer for long-term care.  The Medicare Payment Advisory Commission (MedPAC) reported in March 2011 that Medicare-covered days are only 12% of total resident days;[10] Medicaid, 65% of total resident days.[11]

The House Republican Budget Resolution for Fiscal Year 2012 repeals Medicaid as it is known today, leaving nearly a million people without a secure source of funding for their care. 

Even if states choose to pay for nursing home care under a block grant program, Medicaid's current financial rules and protections for residents and their families would disappear.

Although it is unlikely that states would stop providing at least some coverage for nursing home care, the specific services that would be covered, how much the state would pay for them, and how much residents and their families would be required to pay, would be likely to change drastically from current practice. 

Under a Medicaid block grant program, states could reduce the types of services, or the duration of services, that they cover under a Medicaid nursing home benefit.  Many people who are currently entitled to comprehensive nursing home care would see their nursing home services reduced in scope or duration, or both. 

States could also change the income, resource, and medical need eligibility rules.  Some residents could lose their eligibility for any Medicaid coverage of their nursing home stays.  Others could face new financial obligations since the Budget Resolution does not require states to continue current federal rules for Medicaid coverage of nursing home care.  Medicaid funding under block grants would not be Medicaid funding as it is known today. 

Four of the most significant current financial protections that have been enacted over the more-than-45-year history of the Medicaid program could be lost under a block grant.  They are:

  • Relative Responsibility.  Since 1965, the Medicaid program has prohibited nursing facilities from requesting or requiring contributions from residents’ families.[12]  Adult children have never been legally responsible for their parents' nursing home care under the Medicaid program.  That provision disappears if Medicaid is repealed.  States could require residents' families to contribute to the cost of their relatives' care, even as they address their own health care needs or seek to help a child attend college.
  • Supplementation.  The Medicaid program requires that nursing homes accept the Medicaid rate as payment in full for covered services.[13]  This provision means that nursing homes are not allowed to ask residents or their families to pay any amount above the Medicaid rate for services that are covered by Medicaid – to "supplement" the Medicaid rate.  Loss of this protection means that residents receiving Medicaid coverage could be asked to supplement the Medicaid payment with their (or their families') personal funds.  Inability to supplement the Medicaid rate could disqualify individuals from admission to a facility.
  • Liens and Estate Recovery.  Under current law, states cannot place a lien on a home where a Medicaid beneficiary's spouse, dependent or disabled children, or certain siblings live.  States cannot foreclose on a lien on a beneficiary's home if adult children live there who cared for the Medicaid beneficiary before the beneficiary received Medicaid.  Similarly, states cannot recover from a deceased beneficiary's estate while a spouse or dependent child are living. These protections are lost if Medicaid becomes a block grant program.  States could place liens on residents' homes and force foreclosure, or recover from a deceased resident's estate, depriving the resident's spouse and dependent or disabled children of their home or other assets on which they may depend.
  • Spousal Impoverishment.  Since 1987, the Medicaid program has recognized that the spouse of a nursing home resident needs to retain some of the couple's income and assets in order to be able to continue living in the community.[14]  The loss of this statutory protection could return the country to the time when all of a couple's money was used for nursing home care and the spouse in the community was left with, literally, no income at all.

Medicare and Medicaid Law Establish the Standard of Care in Nursing Facilities

The Medicare and Medicaid programs do more than provide funding for nursing facility residents' care.  The Nursing Home Reform Law,[15] which was enacted during the Reagan Administration as part of the 1987 budget reconciliation law, amended the Medicare and Medicaid statutes to set out a comprehensive framework for nursing home law – the standards of care that facilities must meet as well as a regulatory structure to ensure that the standards are met.  If Medicare and Medicaid are repealed, the Reform Law will be gone, with all of its provisions governing the care of residents and enforcement of those standards.[16]

Standards of care that will be lost if Medicare and Medicaid are repealed include:

  • Requirements that facilities' multi-disciplinary teams comprehensively assess each resident and develop an individualized plan of care to meet each resident's medical, nursing, therapy, activities, and social services needs;
  • The requirement that facilities actually provide each resident with care and services to maintain each resident's "highest practicable physical, mental, and psychosocial wellbeing;"
  • The requirement that facilities respect residents' rights, including rights to privacy, access and visitation rights, protection from discrimination, protection of resident funds, and transfer and discharge rights;
  • The requirement that nurse aides be trained and demonstrate competency before providing care to residents.

The Nursing Home Reform Law also requires annual surveys and investigations of complaints and sets out a system of remedies that may be imposed against facilities that fail to provide residents with the quality of care and quality of life they need. 


The House Republican Budget Resolution purports not to affect current Medicare beneficiaries.  But the limited Medicare benefit for nursing homes means that many current Medicare beneficiaries rely primarily on the Medicaid program to help pay for their nursing home care.  Proposed block grants for Medicaid would eliminate the financial and quality of care protections that residents have relied on for decades.  Further analysis of the House Republican Budget Resolution must await actual legislative language.  The implications for current nursing home residents and their families could be worse than the facts and predictions discussed here.


[1] John Hancock, “John Hancock Announces Results of 2011 National Long-Term Care (LTC) Cost Study” (April 21, 2011),
[2] Nursing home residents receiving Medicaid and those receiving Medicaid-financed home and community based services are the only Medicaid beneficiaries who have a second financial determination made after they are found eligible for Medicaid.  In the "post-eligibility" financial determination, the state determines how much of his or her income the Medicaid beneficiary must contribute to the cost of nursing home or community based care.  All income must be contributed, with limited deductions for health insurance premiums, costs of maintaining the home while a spouse or dependent child lives there, and a monthly personal needs allowance of $30 (which some states supplement).  42 C.F.R. §§435.832, 436.832 ("Post-eligibility treatment of income of institutionalized individuals; Application of patient income to the cost of care").
[3] 42 U.S.C. §1396p.
[4] AARP Public Policy Institute, "Valuing the Invaluable: A New Look at the Economic Value of Family Caregiving,"
[5] Kaiser Family Foundation, "Medicaid and Long-Term Care Services and Supports" (Feb. 2009),
[6] American Healthcare Association, LTCStats: Nursing Facility Patient Characteristics Report (March 2011), (click on the report), based on data from the Centers for Medicare & Medicaid Services’s Certification and Survey Provider Enhanced Reporting (CMS-CASPER), formerly OSCAR data.
[7] The National Nursing Home Survey reported in November 2010, that in 2004, 543,100 of 1,492,200 residents used Medicare at the time of admission.  At the time of their interview, however, only 189,400 were using Medicare.  Many residents had shifted to Medicaid.  518,700 residents used Medicaid at admission, but by the time of their interview, 890,200 relied on Medicaid.  Table 8, "Number of nursing home residents by selected resident characteristics according to all sources of payment at time of admission and at time of interview: United States, 2004," (click on Series 13, No. 167).
[8] Medicare Payment Advisory Commission (MedPAC), Report to Congress: Medicare Payment Policy, 154, Table 7-3 (March 2011).
[9] Center for Disease Control and Prevention, The National Nursing Home Survey: 2004 Overview page 4, Vital and Health Statistics, Series 13, No. 167 (June 2009),  
[10] MedPAC, supra note 3, 149.
[11] Id. 165.
[12] 42 U.S.C. §1307a(a)(17)(D).
[13] 42 C.F.R. §447.15.
[14] 42 U.S.C. §1396r-5.
[15] 42 U.S.C. 1395i-3(a)-(h), 1396r(a)-(h), Medicare and Medicaid, respectively.
[16] More than 90% of nursing facilities participate in both Medicare and Medicaid.  American Healthcare Association, LTCStats: Nursing Facility Operational Characteristics Report, Table 3, page 5 (March 2011), (click on the report), based on CMS Form 671:F9.  As a result, the repeal of Medicaid would not lead to the immediate loss of the Reform Law’s protections as long as a facility continued to participate in Medicare.  However, with immediate changes to Medicaid and changes to Medicare on the horizon, it seems likely that the federal standards of care would soon be substantially compromised.

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