The proposed American Health Care Act (AHCA) would make significant changes to the Medicaid program, which serves as a critical safety net for millions of people who deplete their life savings and turn to Medicaid for assistance as their ability to care for themselves declines. The bill would repeal the Medicaid expansion and implement a capped financing model for states. According to the nonpartisan Congressional Budget Office (CBO), the AHCA would cut $834 billion from the Medicaid program through fiscal year (FY) 2026. CBO projects that 23 million people would lose coverage as a result of the AHCA, most of them — 14 million — because of the changes to Medicaid.
The Centers for Medicare & Medicaid Services (CMS), which administers the Medicaid program, has released a new report suggesting, based on different assumptions, that 8 million people would lose Medicaid under the AHCA through FY2026. While the numbers differ between the CMS and the CBO, one thing is clear: The AHCA would cut Medicaid financing to states and millions of people would lose coverage for critical services. In its report, CMS also makes clear the danger of the bill for Medicaid enrollees, particularly for older adults and people with disabilities that rely on Medicaid for home- and community-based services.
Medicaid Home and Community-Based Services in Jeopardy
Zeroing in on the CMS report, an initial read suggests minor implications of capped financing for Medicaid. According to CMS, “There is no estimated impact on Medicaid enrollment because of the presence of the per capita allotments.” Reading between the lines, however, tells a much different story.
To reach this conclusion, CMS assumes that states will “(i) lower provider reimbursement rates; (ii) manage utilization and program efficiency; and (iii) reduce optional services.” When CMS refers to “optional services” it means services that are not required by the federal government and offered at the discretion of states. Home- and community-based services (HCBS) are generally classified as optional, and states have the flexibility to offer this support or to take it away. Notably, while “optional,” HCBS is often a more cost-effective option than nursing home care — not to mention what people tend to prefer.
According to analysis from the Center on Budget and Policy Priorities, most (88 percent) Medicaid spending on optional services went toward older adults and people with disabilities, and of this spending, more than half went toward home- and community-based services.
If, as CMS suggests, states are going to reduce optional services to make up for gaps caused by capped Medicaid financing, HCBS will almost certainly become a target. This is a potential unintended consequence of the bill — that is, states limiting access to Medicaid HCBS to stay within the caps and thereby likely increasing the use of more expensive services like nursing home care, which is required by law.
While HCBS are more in line with consumer choice and has the potential to limit cost growth, they are optional in Medicaid and thus in jeopardy if the bill becomes law. The new CMS report makes this clear, and suggests additional, long-term danger for Medicaid under the AHCA.
Long-Term Implications of the AHCA for Medicaid
In addition to the impacts of the per capita caps on HCBS, the CMS report makes clear that the proposed per capita caps in the AHCA may have long-term impacts that threaten how states run their programs.
The report states, “Over a longer time period, it may be more difficult for States to operate their Medicaid programs without making more significant changes to their programs,” although no further explanation is available.
Additional research, however, has given insight toward the long-term impacts of capped Medicaid financing. A recent AARP report, for example, shows that the growing and aging of the 65-plus population will have significant cost implications for Medicaid that the AHCA does not take into account.
If a per capita cap structure is implemented in Medicaid, the impact will be felt for years beyond 2026. The limited growth rates allowed by the caps would lead to shortfalls in how much money states have to serve older adults, people with disabilities and low-income children and adults. As a result, states will be forced to cut services, restrict eligibility, cut provider rates — or a combination of any number of those.
Whether it’s research from CMS or CBO, it is clear that changes proposed to the Medicaid program under the AHCA pose significant near- and long-term risks to states and to consumers. Reducing access to home- and community-based services — and Medicaid in general — will harm older adults and people with disabilities. Going forward, discussion around health reform should focus not on where to cut Medicaid, but rather on how existing funds could be used more efficiently to meet people’s needs.
Brendan Flinn is a policy research senior analyst for the AARP Public Policy Institute. He works on Medicaid, long-term services and supports, and family caregiving issues.
This is an exciting month for AARP’s Public Policy Institute. We’re set to release our third Long-Term Services and Supports (LTSS) State Scorecard Report on June 14, and this powerful tool is far more interactive and comprehensive than the 2011 and 2014 installments.
A lot has changed since 2011 when we first partnered with the Commonwealth Fund and the SCAN Foundation to conceive of the idea for a scorecard that would measure long-term services and supports for older adults as well as people with physical disabilities and family caregivers on a state-by-state basis.
At the time, I concluded in an article that, based on the report’s findings, even the best performing states had a long way to go to create a high-performing system of long-term services and supports. Certainly many states have made progress since then, and no doubt the 2017 Scorecard will continue to highlight that progress. But there’s also little doubt that the Scorecard will uncover a list of shortcomings and areas for improvement. That’s what the Scorecard was all about in its 2011 and 2014 iterations, and that’s what the 2017 Scorecard promises to illuminate.
Of course, the actual Scorecard release is not the most exciting part. What’s truly exciting is the impact it can have after its release. We’re encouraged by how policymakers and advocates viewed the 2014 Scorecard for what it was: a call to action. Many used the information in the report as a tool to make positive change in their states. With Americans living longer and LTSS demand continually growing, our call to action must be louder and more pronounced than ever.
Thanks to the efforts of all involved in compiling and organizing data for the 2017 Scorecard, I’m proud to say that—no question—it tops the 2014 installment in value as a key tool in the field. So, what’s the same and what’s different this time around? Like the first two installments, the 2017 Scorecard examines state performance across five key categories, or dimensions:
- Affordability and access
- Choice of setting and provider
- Quality of life and quality of care
- Support for family caregivers
- Effective transitions
But this year, we’ve placed an emphasis more than ever on how the results are presented. The information on our website will be truly interactive and engaging than in years past. (The new version of the site, http://www.longtermscorecard.org/, will appear June 14.) Users can easily customize data to suit their needs, no matter what role they play in LTSS and where they’re located. While our accompanying report remains an invaluable source of information, the interactive website has become the true centerpiece of the offering.
Other new additions of which we’re extremely proud: Visitors to the site will have access to videos, called Impact Stories, that show how improving on the Scorecard can impact the lives of real people. Users can also download Promising Practices such as this one as well as Emerging Innovations that states can use as they work to improve the lives of older adults, those with physical disabilities, and family caregivers. Better still, new and groundbreaking content will not stop with the June 14 Scorecard release. We’ll continue to bring you more Promising Practices and Emerging Innovations, as well as releases in our Impact Story video series, throughout the year.
My colleague Jean Accius, vice president for Independent Living/Long-term Services and Supports, who was instrumental in spearheading these changes, summed up their value succinctly when he said, “These concrete tools and innovative practices will help states improve their performance and, ultimately, the lives and well-being of others.” As for the addition of the Impact Story videos this year, he added that they “literally complete the picture—putting a face to the diversity of individuals whom the Scorecard examines.”
Will this year’s Scorecard illuminate shortcomings and challenges in LTSS as it has in the past? Absolutely. (Here’s a teaser: we’ve got a long way to go.) But I’m extremely excited that we’ll also shine a light on a path forward for all caregiving stakeholders.
Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.
Courtesy of Greg Kahn
An important AARP study shows that an overwhelming majority of people would like to remain in their homes and communities for as long as possible. Personal care services, such as assistance with bathing, eating, and dressing, are critically important to helping older adults and people with disabilities of all ages live independently and avoid costly nursing facility placements.
Medicaid plays a critical role in providing this support. It is the largest payer of long-term services and supports (LTSS), including home and community-based services (HCBS) like personal care. While there has been an increase in funding for HCBS over the years, institutional care still accounts for 59 percent of Medicaid LTSS spending for older adults and people with physical disabilities. Nevertheless, through such programs as Community First Choice (CFC), the trend has continued toward greater availability of HCBS across all populations. And with HCBS being both cost effective and a means of enabling greater independence, it’s a trend that needs to continue.
Yet the recently released American Health Care Act (AHCA), the proposed legislation to replace the Affordable Care Act (ACA), puts the future of CFC in jeopardy. With a provision that repeals the program, if enacted the AHCA could disrupt services for older adults and people with disabilities covered through CFC.
How Does Community First Choice Work?
Community First Choice is a provision of the ACA that offers additional federal funding to states to provide personal care and assist individuals with activities of daily living (ADLs), instrumental activities of daily living (IADLs), and health-related tasks. States may also leverage CFC funds to cover transition services to help people leave nursing facilities and return to their homes and communities.
The CFC option empowers older adults and people with disabilities through its emphasis on self-direction. Unlike some other types of Medicaid programs, individuals enrolled in CFC and their families are guaranteed the right to self-direct their services and oversee the people that provide their personal care.
Community First Choice and the States
As of 2016, eight states offer this option in their respective Medicaid programs. An analysis of just four of the states (California, Oregon, Washington, and Montana) showed that the program has served more than 500,000 people since its inception. States that offer CFC must offer the program to all populations, and the analysis found that 40 percent of CFC enrollees were adults 65+ and 55 percent were people with disabilities under age 65.
While a more recent enrollment count is not available, the current total is likely much higher today due to the increased number of states offering this option.
The Financial Impact of Personal Care and Community First Choice
Numerous studies and analyses reveal that providing people LTSS in their homes and communities is generally less expensive than doing so in a nursing facility. A 2016 analysis from Genworth, for example, shows the median annual cost for a private room in a nursing facility exceeds $92,000, while the cost for 30 hours of personal care is $32,000. AARP research on Medicaid-funded HCBS also found that Medicaid pays nearly three times as much for each person served in institutional settings as it does for each person served in the community. Additional studies found annual cost savings of $11,912 per older adult who transitioned from a nursing facility back to the community through Medicaid’s Money Follows the Person Rebalancing Demonstration. In short, redirecting more resources to provide Medicaid HCBS is cost-effective compared with nursing facilities.
Given the lower expenses associated with personal care and the full spectrum of home and community-based services, increasing the portion of Medicaid LTSS dollars spent on these services could yield significant long-term cost-savings to states and the federal government. We are already moving in that direction. The most recent data on Medicaid LTSS expenditures shows that 53.1% of all Medicaid LTSS dollars go towards HCBS for all populations, up from 51.3% the previous year. Since its inception, Community First Choice has become an important tool to help states continue balancing Medicaid LTSS toward HCBS.
The Future of Community First Choice
The CFC option is an important piece of the puzzle for helping states provide services that enable people to live independently in their homes and communities. It also has the potential to help states and the federal government improve and expand access to LTSS while containing costs.
Including a repeal of Community First Choice through the AHCA, therefore, could hinder the progress made toward balancing long-term services and supports and limit access to home and community-based services for the growing number of states that have embraced the program. Given CFC’s current role in expanding HCBS, and the potential for cost savings to Medicaid through increasing access to HCBS more broadly, it would be wise for policymakers to preserve CFC and allowing state governments to continue offering HCBS through this mechanism.
Brendan Flinn is a policy research senior analyst for the AARP Public Policy Institute. He works on Medicaid, long-term services and supports, and family caregiving issues.
Medicaid is the country’s largest public health insurance program, providing access to needed health care and long-term services and supports (LTSS) to millions of low-income Americans, including more than 17 million children with disabilities, adults with disabilities, and poor seniors.
Right now, states and the federal government share the cost of Medicaid in a way that guarantees services to all who are eligible. Under this arrangement, federal funding increases (or decreases) in response to changes in enrollment, service costs and service use.
That could change, and the implications are significant. Recent proposals would limit federal Medicaid funding by giving states a lump sum of money to cover the cost of their entire program (a block grant), or by giving them a specified amount of money for each enrolled person (a per capita cap). Because both approaches aim to save federal Medicaid dollars, it is likely that neither will adjust over time to reflect increases in cost. This means that the funds will pay for less and less over time and states will need to find ways to deal with the significant loss of federal dollars.
Under these proposals, states would have several choices. They could allocate more tax dollars to Medicaid, which is unlikely, given competing pressures on state budgets for education, law enforcement and other essential functions. They could cut back on the amount of money they pay health care providers, which could cause providers to stop serving the Medicaid population and thus create access problems. They could also stop covering certain groups of people.
Finally, states could limit or eliminate services they are not legally required to provide (also known as optional services) — like home- and community-based services (HCBS). The result would mean that millions of poor seniors and people of all ages living in community settings could lose access to HCBS — like help with dressing, bathing, toileting and eating — to meet their daily needs. These individuals would end up with unmet needs or be forced to rely on costly institutional care (e.g., nursing homes).
The result would be a bad deal for these vulnerable individuals, the vast majority of whom prefer to remain in their homes and communities as long as possible. It would also be a bad deal for states. States pay nearly three times as much per person in institutional settings than they do for each individual receiving LTSS in the community.
Under the current shared financing structure, many states have elected to provide optional services (e.g., HCBS) because they recognize that providing such options best meets the needs and preferences of their residents, including those who require LTSS — not to mention that it can even save them money by keeping people out of institutions. Shifting costs to states through block grants or per capita caps could lead states to cut the critical services and supports that millions of people count on.
Lynda Flowers is a senior strategic policy adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.