New Report Portends Further Quality Decline for Nursing Homes due to Medicaid Strains

An overreliance on Medicaid disempowers nursing homes from making quality improvements—right when they need them most

NEW YORK, NY — Covid-19 has shed light on the shortcomings of America’s nursing homes—but their quality issues vastly predate the current pandemic, are worse than what the headlines would suggest, and are likely to deteriorate further in the coming years without meaningful policy intervention. A new Manhattan Institute report from senior fellow Chris Pope suggests that many of these limitations derive from an overreliance on Medicaid to fund long-term care (LTC). Limiting the number of Americans who qualify for Medicaid would encourage the middle class to purchase LTC insurance, alleviate the fiscal strain on Medicaid, and harness competition to motivate quality improvements in nursing care. It would also free Medicaid funding to improve care for those elderly patients who qualify. 

The number of Americans requiring formal LTC (nonmedical assistance with tasks from bathing to meal preparation) is projected to rise from 12 million in 2010 to 27 million in 2050, partly due to rising life expectancy and a decline in those familial ties that would have traditionally provided LTC in an unpaid, informal capacity. As policymakers prepare for the growth in LTC reliance—and as they look to improve resilience in case of future public-health crises—they should consider the outsized role Medicaid is playing in LTC funding (the program footed 52 percent of the total $379 billion LTC bill in 2018) against the realities of Medicaid’s capabilities. They should also consider the role Americans can play in improving quality by rewarding enhancements with their spending decisions. Medicaid, in short, could be more focused on the task of providing good-quality LTC to the subset of the elderly who truly can’t afford it, rather than providing mediocre or poor-quality care to all.

Click here to read the full report.