Potential Changes to Medicaid Funding Cause Concern

Amidst all the news and uncertainty about the future of the Affordable Care Act as well as potential changes to Medicare, one overlooked item on the agenda of the new Republican-controlled Congress is a potential change to the current Medicaid program. The Medicaid program provides health care coverage to tens of millions of lower income and disabled people. And although the Commonwealth of Massachusetts has its own health insurance program for lower income and disabled individuals, the program is a joint one established with funds from the federal Medicaid program.

While providing health benefits to lower income individuals and families, Medicaid is also the program that many seniors rely upon to pay for their nursing home costs. The average monthly cost of a nursing home in Massachusetts is approximately $12,000. After the senior exhausts his or her own assets, he or she can become eligible for Medicaid, which will pay for the cost of care in a nursing home. The system is currently set up so that the federal government pays an agreed-upon percentage of each state’s Medicaid costs, no matter how much they rise in any given year. The initial change proposed by House Speaker Paul Ryan in 2012 was to convert Medicaid funding into block grants with a cap on the amount the federal government would provide. This, Ryan argued, would incentivize the states to keep their expenses under control. However, any such change in the Medicaid program would have huge impacts on both the recipients as well as the states.

The key question in discussing these potential changes is how the block grants would be structured. Advocacy groups have warned that Ryan’s 2012 plan would lead to fewer people receiving coverage because the states cannot afford to make up the shortfall if the federal government changes from the agreed upon percentage reimbursement to block grants. A new proposal has recently emerged: states would receive a fixed amount from the federal government for each Medicaid recipient enrolled. This approach is slightly more flexible as it would allow federal payments to a state to increase as more people enroll in the Medicaid program. The 2012 proposal, setting a fixed amount through a block grant, does not allow flexibility in the amount of reimbursement as a state’s Medicaid program enrollment grows.

Given that the Medicaid program helps to protect the most vulnerable of our citizens, we have an obligation to make sure that any changes to the Medicaid program are carefully thought out and not solely based on cutting costs. As Matt Salo, executive director of the National Association of Medicaid Directors recently said, “Some of my members are looking at this and saying if this isn’t done right, if the money doesn’t match what needs to be done, this is potentially the greatest intergovernmental transfer of financial risk in the country’s history.”

Before any changes are made, please contact your state representative and let him or her know that cutting benefits in an attempt at cutting costs is an unacceptable response and that more analysis is needed to understand the potential impact of such proposed changes in the structure of Medicaid reimbursement to states.


Michael Stankavish is a lawyer and owner of North Shore Elder Law and Estate Planning. He can be reached through www.nselep.com