As Congress works to replace the Affordable Care Act, a dangerous proposal has emerged that would dramatically alter Medicaid's financial structure and shift far more of the risk for the increasing cost of long-term supports and services (LTSS) to the states, where Iowa’s budget is ill-equipped to deal with the additional burden.
The American Health Care Act (AHCA) contains cuts and caps to Medicaid that could result in a serious decrease in financing for Iowa’s aging services, a reduction of care for Iowans who need LTSS, and home care job losses in Iowa as high as 6,351 according to a new report released by the Center for Consumer Engagement in Health Innovation at Community Catalyst (the Center) and LeadingAge.
The key factor in the AHCA impacting aging services is the change to the federal contributions for the Medicaid program to either a set amount per enrollee (known as a “per capita cap”) or to a block grant which is a fixed, overall contribution.
Today, Medicaid is funded through a federal-state matching partnership. Under the AHCA, the federal government is stepping back from that historic commitment providing less money over time. The burden for covering that increased cost will shift to the states.
For example, the Kaiser Family Foundation estimates that within the first 10 years on average, states would have to increase their contributions by 37 percent to backfill the reduction in the federal contribution to the program due to per capita caps. This will inevitably result in cuts to Medicaid eligibility or services.
Aging service providers who are on the front lines of providing care for Iowa’s seniors, whether in nursing homes or through home and community-based services, and funded significantly by Medicaid, know all too well the impact this will have on care and services for some of the most vulnerable older Iowans.
This will lead to cuts in already insufficient payment, further straining their ability to pay competitive wages to the health and direct care workforce, and threatening the quality of care seniors receive.
Medicaid has become the default payer for LTSS because there are no significant alternative sources of payment other than out-of-pocket. Nearly one out of every two people in a nursing home in Iowa are on Medicaid. People in need of LTSS often are the oldest and frailest Americans, many with complex health conditions. They have few options, and very few can pay for these services on their own.
In addition to the impact to funding for aging services, a recent report from the Center and LeadingAge shows the AHCA’s $834 billion in cuts to Medicaid and per capita spending caps are projected to cause job losses as high as 6,351 in Iowa’s LTSS and home care sector.
All of this will happen just as the baby boom population approaches the stage in life when the need for LTSS becomes much more likely, exploding demand for senior care. Based upon census projections over the next 15 years, 200,000 additional Iowans may need to utilize some form of aging services, creating huge demands on the system.
Medicaid is essential to older Iowans, enabling them to live out their later years with dignity and support at the place they call home. Per capita caps or block grants are the wrong policy at the wrong time. Any legislation to change Medicaid will hurt Iowa’s seniors.