02-05-2025
$880 billion in Medicaid cuts would be ‘devastating' for nursing homes and their residents
The nursing-home industry finds itself in the crosshairs of a congressional budget debate.
The House Budget Committee voted in February to seek at least $880 billion in mandatory spending cuts to programs overseen by the House Committee on Energy and Commerce. That committee oversees Medicaid, which is funded through a federal and state partnership.
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The potential $880 billion in Medicaid cuts could hurt the finances of nursing homes and lead to reduced services or outright closures, cutting care for the most vulnerable older populations.
The deep reductions are needed to allow Republicans to achieve their topline budgetary goals, including tax cuts. The Congressional Budget Office said the only way to meet the cost-cutting goals is through massive cuts to Medicaid overall. Medicaid accounts for about 8.6% of the federal budget, according to health-policy research nonprofit KFF.
The final budget details have not yet been hashed out. In April, the Senate passed an amended budget resolution, but the two chambers still must agree to a joint budget resolution.
'Any cuts to Medicaid would be devastating,' said Clif Porter, president and chief executive of American Health Care Association and National Center for Assisted Living, the trade group for nursing homes and assisted-living centers. 'Not only do we have a large portion of seniors on Medicaid, but the program already underfunds [nursing homes] by 18%.'
Nationally, 63% of nursing-home residents and 20% of assisted-living residents rely on Medicaid to pay for their care. There are about 1.3 million people living in nursing homes and more than 800,000 people in assisted living in the U.S., according to AHCA/NCAL.
'The fear of closures is real. Medicaid cuts could bring many homes to the brink and lead to closures,' Porter said.
Any new closures would come on top of the 774 nursing homes that shut their doors between February 2020 and July 2024, according to AHCA/NCAL, amid financial pressures, staffing shortages and the COVID-19 pandemic. That wave of closures displaced nearly 30,000 residents.
All this is putting access to long-term care at risk. Within the United States, 42 counties have no nursing homes as of April 2025, according to AHCA/NCAL. The vast majority — 85% — of these nursing-home deserts are in rural areas, and 20% of all seniors live in rural communities.
'Medicaid covers a lot of community-based, home-based services. If you stop checking on the elderly to see if they're eating right and take away community-based services, people are going to be sicker, sicker and sicker. You'll then have sick people flood the hospitals. Hospitals will be burdened with a lot more sickly patients,' said Dwayne Clark, the chair, chief executive and founder of Aegis Living, an assisted-living company that has 38 facilities with 3,000 residents.
The industry recently won a court battle against a Biden-era staffing mandate that would have required more caregivers in facilities. The rule could have provided a boost to patient care, but the industry sued to halt the requirement. In addition to the pressure on nursing homes' bottom lines, the industry argued it would have been 'impossible' to implement, in part due to a shortage of healthcare workers. According to AHCA/NCAL, the Biden administration staffing mandate would have led to facility closures or reduced bed counts and to the possible displacement of more than 290,600 seniors.
With the federal staffing mandate off the table, nursing homes are now bracing for Medicaid cuts that would be disruptive to the industry and to older people, a population that is projected to grow significantly in the coming years. According to the U.S. Census Bureau, the number of people over the age of 80 will increase from 14.7 million today to 18.8 million by 2030.
'We're dealing with an exploding population. Cutting Medicaid is not a rational approach,' Porter said. 'One danger of potential closures is an increase in nursing-home deserts.'
When nursing homes close, patients are often transported to facilities farther away. In some cases, patients return home.
'Given the age and fragility of the patients, when facilities close, they may be sent to a facility 50 miles away. The senior may still get care, but their loved ones have to travel farther to see them. It can result in an increase in loneliness because of a lack of family nearby,' Porter said. 'People underestimate the impact of loneliness as we age. So when homes close, it absolutely affects the care and spirits of the patient.'
He added: 'Without question, there will be more demand in America. We should be thinking about expanding existing resources. Existing capacity is not enough. We have to do everything we can to have resources for the exploding population.'
Sam Brooks, public policy director for the National Consumer Voice for Quality Long-Term Care, said any cuts to Medicaid would ripple across the healthcare system and lead to higher overall healthcare spending nationally.
'With Medicaid cuts, you'll see less staffing, and that's the key component to quality care. Staffing is the No. 1 cost for nursing homes,' Brooks said. 'Residents won't get out of bed, because there's not enough staff to help them or transport them. Call bells won't get answered. Patients will suffer from pressure ulcers because there's not enough staff to reposition them.'
Brooks noted that pressure ulcers, or bedsores, can be deadly, because they can lead to sepsis. Staff cuts will 'lead to greater illness and increased hospitalizations. It will have a tremendous deleterious effect, because people struggle right now to get quality care, and it would only get worse if there are cuts,' he said.
'With cuts, care quality would inevitably decline,' he added. 'The proposed cuts are an existential threat to nursing homes and to all long-term care services in the United States. It will affect veterans, older Americans and people with significant disabilities.'
If federal Medicaid dollars are cut, states won't have the resources to offset those lost dollars, said Edward Miller, chair of the gerontology department at the University of Massachusetts Boston.
'Most states can't offset those cuts. With even less reimbursement, [nursing homes] will have even less resources, lower staff [levels] and worse quality,' Miller said. 'What happens is that families will have fewer resource options to fund robust long-term-care resources. What is your choice then? Most care is already provided by unpaid caregivers, and that will increase — which will impact their lives, their jobs, their retirement and the economy.'
The proposed $880 billion in cuts to Medicaid could have a domino effect within the U.S. healthcare system, Aegis Living's Clark said.
'There will be this big bubble of sick people. There will be a massive amount of elderly, and we can't fix it right away,' he said. 'This big bubble of sick people will affect everyone.'
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