Health care budgetary resources are provided by the federal government in three ways: mandatory expenditures for health care programs, federal tax subsidies, and annual discretionary appropriation funding for health care programs. Medicare and Medicaid spending has risen dramatically in recent decades, largely due to rising enrollment in those programs. Additionally, rising health care spending per beneficiary has also contributed to the growth in spending in those programs. Overall, the growth of health care spending per beneficiary has been faster than economic growth during the past few decades. Most of the projected spending in the major federal health care programs is for people age 65 or older (Congressional Budget Office, 2016).
This article will examine how health option two, impose caps on federal spending for Medicaid, will affect a long-term care facility. Medicaid funding caps present several advantages for the federal government. By setting spending limits, for example, federal Medicaid costs could be better predicted, and the caps might produce varying amounts of budgetary savings. Additionally, spending caps would limit states' ability to increase Medicaid funding from the federal government and reduce the relatively high proportion of program costs currently covered by the federal government. Medicaid covers more than 60 percent of all nursing home residents and roughly 50 percent of the costs for long-term care services and supports (Center on Budget and Policy Priorities, 2020).
Under current law, the federal government matches state spending for eligible beneficiaries and qualifying services without a limit (Rudowitz et al., 2021). By imposing mandatory spending caps on the Medicaid program, states would ultimately be forced to cut payments to long-term care facilities and healthcare providers. For instance, spending per enrollee for children, nonelderly, and non-disabled adults is lower than that for elderly patients and those with disabilities (Congressional Budget Office, 2016). Therefore, a state that enrolls every child, nonelderly adult and non-disabled adult, will remain within its total spending limit. It would be more difficult to achieve this goal if more elderly or disabled individuals were enrolled.
As a recommendation, the facility should expand its services by offering home-based care. A move of care to the home is one of the most promising ways to improve care and reduce costs. New and established organizations are launching and implementing models that make primary, acute, and palliative care accessible in the home (Chandrashekar, 2019). Home-based care can reduce the need for expensive care in hospitals and other institutional settings for frail and vulnerable patients. For example, early results from Independent at Home, a five-year Medicare demonstration to test the effectiveness of home-based primary care, showed that all participating programs reduced emergency department visits, hospitalizations, and 30-day readmissions for homebound patients, saving an average of $2,700 per beneficiary per year and increasing patient and caregiver satisfaction (U.S. Centers for Medicare & Medicaid Services, 2021). Not only will this reduce the high costs associated with institutionalized care, but it will also attract more patients that prefer to age in place by remaining in their home and increase patient satisfaction.
Center on Budget and Policy Priorities. (2020, April 14). Policy Basics: Introduction to Medicaid. Retrieved from https://www.cbpp.org/research/health/introduction-to-medicaid
Chandrashekar, P. (2019, October 17). 5 Obstacles to Home-Based Health Care, and How to Overcome Them. Retrieved from https://hbr.org/2019/10/5-obstacles-to-home-based-health-care-and-how-to-overcome-them
Congressional Budget Office. (2016, December 08). Options for Reducing the Deficit: 2017 to 2026. Retrieved from https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/52142-budgetoptions