Proposed Medicaid cuts impact on long-term care financial stability

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POLICY

Effects likely to be immediate and far-reaching

Proposed Medicaid cuts impact on long-term care providers would severely weaken the financial stability of long-term care providers by reducing their primary source of funding, restricting state support mechanisms, and increasing uncompensated care. This would likely lead to facility closures, reduced access to care, lower quality of services, and greater reliance on unpaid caregivers, putting millions of vulnerable Americans at risk

1. Reduced Reimbursement Rates and Revenue

Medicaid is the single largest payer for long-term care in the United States, funding more than 60% of all nursing home care and about half of all home- and community-based services (HCBS)

Cuts would translate directly into lower reimbursement rates for LTC providers, shrinking their primary revenue stream and making it difficult to cover operating costs, particularly for those already operating on thin margins

2. Increased Financial Strain and Risk of Closures

With less federal funding, states would be forced to either reduce payments to providers, restrict eligibility, or cut back on covered services

Many LTC providers, especially nursing homes and facilities in rural or underserved areas, could face insolvency or closure if they cannot offset these losses, threatening access for vulnerable populations

3. Provider Tax Limitations

The proposed freeze on provider taxes (which fund about 17% of Medicaid spending, mostly for nursing homes) would further reduce states’ flexibility to support LTC providers financially

This restriction could exacerbate funding shortfalls and limit the ability of states to redirect resources to where they are most needed, compounding financial instability

4. Retroactive Eligibility and Cash Flow Issues

Proposals to limit retroactive Medicaid eligibility to a one-month lookback would increase uncompensated care, as providers may deliver services before coverage is approved but not get paid for them

This would worsen cash flow problems, making it harder for providers to meet payroll and other obligations.

5. Increased Burden on Unpaid Caregivers

As providers reduce services or close, more care responsibilities would shift to unpaid family caregivers, further destabilizing the formal LTC sector and increasing the risk of negative health outcomes for seniors and people with disabilities

6. Overall Systemic Risk

Medicaid is described as an “interconnected ecosystem”-cuts to one area ripple throughout the entire system, jeopardizing service quality, access, and provider viability

The cumulative effect is a less stable, more fragile LTC sector, with fewer resources to invest in quality improvement, staffing, and innovation.

EXCELAS: 20TH YEAR ANNIVERSARY

Resolving external challenges with
grit, grace and vision

“That’s what she said!” is a phrase television audiences recognize as a recurring, inappropriate statement made popular by the character, Michael Scott (Steve Carrel), in 2005’s breakout series “The Office.”

“That’s what she did,” is what occurred, equally notable, in the same year, to revolutionize the medical/legal analysis sector: Excelas was launched by Jean Bourgeois from a kitchen table in Northeast Ohio.

Excelas could have easily been a customer of The Office’s fictional Dunder Mifflin Paper Company, as documents and work products were primarily in paper format. But Jean recognized these mountains of paper were not enabling clients to have information at their fingertips. What her team of medical/legal analysts needed was a way to deliver work product using a powerful technological solution.

What they did: Much has changed since those debuts. Fans followed the ups and downs of the fictional Dunder Mifflin for nine TV seasons, yet real-life Excelas is still going strong twenty years later. This milestone provides an opportunity for reflection on the attributes that contributed to this longevity.

A recurring theme in conversations about Excelas with staff, partners, and clients is resilience.

The team depicted in The Office dealt with external challenges, such as dwindling paper demand and heightened competition from “big box” retailers, all while under the guidance of an awkward but well-meaning manager.

Similarly, the Excelas team has contended with rapidly changing technologies, shifting regulatory standards, and the impact of a global pandemic. Fortunately for Excelas, Jean Bourgeois’ leadership bears no resemblance to that of Michael Scott. Through her strong guidance, Excelas has been able to adapt and flourish.

As we mark Excelas’ twentieth anniversary, we will delve into key moments and the team’s responses that have shaped Excelas’ journey leading into 2025.

Vision. Challenges. Lessons learned.

INSURANCE

How proposed Medicaid cuts will affect the insurance industry

If Medicaid cuts are implemented, the insurance industry faces a smaller Medicaid market, higher uncompensated care costs, destabilized risk pools, and greater administrative burdens. These changes could drive up private insurance premiums, reduce insurer participation in some markets, and ultimately diminish access and affordability for millions of Americans.

The proposed Medicaid cuts for 2025-projected at $880 billion over a decade-would have several direct and indirect impacts on the insurance industry:

1. Loss of Medicaid Managed Care Enrollment

Medicaid managed care organizations (MCOs) administer health coverage for a large share of Medicaid beneficiaries. With an estimated 8.6 million people expected to lose Medicaid coverage, MCOs would see a substantial drop in enrollment, directly reducing their premium revenue and market share

Insurers that have invested heavily in Medicaid contracts, especially in states with large expansion populations, would face significant business contraction and may need to adjust operations or exit certain markets

2. Increased Uninsured Population and Shifting Risk Pools

As millions lose Medicaid coverage, the number of uninsured Americans will rise. Some individuals may turn to the Affordable Care Act (ACA) marketplaces, but many will not be able to afford private coverage, especially if ACA subsidies are also reduced
This shift could lead to a sicker, higher-cost risk pool in the individual insurance market, potentially driving up premiums for non-group plans

3. Impact on Dual-Eligible and Near-Elderly Populations

Many who lose Medicaid are “dual eligibles” (enrolled in both Medicare and Medicaid) or near-elderly adults. Loss of Medicaid means they lose help with Medicare premiums and cost-sharing, making care less affordable and reducing utilization

Insurers offering Medicare Advantage or supplemental plans may see changes in enrollment patterns and increased bad debt as more members struggle with out-of-pocket costs

4. Pressure on Provider Networks and Reimbursement

With reduced Medicaid funding, providers may limit participation in Medicaid networks or increase cost-shifting to commercial insurers to make up for lost revenue

Insurers could face higher negotiated rates from providers, especially in markets where Medicaid cuts lead to facility closures or reduced capacity

5. Uncertainty and Strategic Shifts

The insurance industry may respond by diversifying away from Medicaid-heavy lines of business, investing more in Medicare Advantage, ACA exchanges, or employer-sponsored insurance.
Companies may also increase lobbying efforts to protect Medicaid funding or seek regulatory changes to stabilize risk pools and maintain profitability.

STRATEGIC DOCUMENTATION

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