Long-term-care providers say they may be forced to reduce the number of Medicaid patients they serve, shift more costs to private payers and cut services if Congress limits Medicaid growth by letting states control more of the program's spending.
Sometime after Congress returns from its spring recess, lawmakers will begin debating plans to grant a fixed amount of Medicaid money-known as a block grant-to states each year to use as they choose. The annual growth of the grants would be limited to 5% or less (See related stories, this page and p. 20).
Republicans are proposing to cap Medicaid growth at 4% to 5% a year. They estimate savings ranging from $115 billion over five years to $180 billion over seven years.
A study prepared for the American Association of Retired Persons argues that a 5% cap on Medicaid growth would cut payments for long-term care by $37.4 million over the five years ending in 2000, reducing the number of disabled elderly people receiving Medicaid long-term-care assistance by 1.7 million by 2000.
The federal government's share of Medicaid expenses now grows roughly 10% to 11% a year. Provider groups say half that annual growth is the result of inflation, while the rest is caused by increases in the eligible population, and by the intensity and utilization of care.
Federal and state governments spent $36 billion for Medicaid nursing home services in 1993. That was more than half the $69.6 billion spent for nursing home care in the United States in 1993 and represented 32% of the $112.8 billion in federal and state Medicaid expenditures that year.
Provider groups and senior citizen advocates say a cap on Medicaid cost growth probably also would squeeze nursing home reimbursement rates, potentially prompting nursing home managers to avoid Medicaid patients and seek private-pay patients to subsidize Medicaid beds.
That worries providers and senior citizen advocates alike. "One has to look very carefully at the social acceptability of Medicaid block grants," said Paul Willging, executive vice president of the American Health Care Association.