Don't be worried about Medicaid funding cuts — be very afraid

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John O'Connor
John O'Connor

If there is one sector that proves the adage about incentives driving behavior, it's skilled care.

Operators in this field don't need Deep Throat to tell them to follow the money: it's practically baked into their DNA.

Skilled care as we know it essentially came to be after President Johnson signed legislation in 1965 setting aside public dollars for care of the aged. As Medicaid was the easiest funding spigot to tap, it quickly became the industry's preferred financier – an arrangement that has continued for more than five decades.

When more generous Medicare funds opened up, many operators re-engineered to become post-acute rehab facilities.

Which brings us to last week's unveiling of the Trump healthcare plan, which should probably be called Anything But Obamacare. The industry's worst fears about what the legislation might contain have not just been met: They have been far exceeded.

For starters, the American Health Care Act would cap Medicaid funding. It also would start cutting federal Medicaid funds to the states, beginning in 2020. If this proposal is enacted, the clear result will be far fewer Medicaid dollars flowing into long-term care facilities.

But don't take my word on this budding apocalypse. Take LeadingAge President and CEO Katie Smith Sloan's. She said the plan will “fundamentally destroy the Medicaid program as we know it.”

Those are some pretty strong words. They also happen to be spot on.

To be sure, this sector always has had a bit of a love/hate relationship with Medicaid. Its payments, quite frankly, have never been adequate — a revelation that will come as no surprise to anyone outside MedPAC. Moreover, many states have not exactly been quick to cut those substandard checks.

Still, Medicaid has been, if nothing else, a reliable funding source. So what's going to happen when that meager benefit is taken away?

Barring some as-yet detected silver lining, I think we will see two developments.

First, operators who can will do as much as possible as fast as possible to stay clear of the Medicaid program.

As for the others? They will have to do their best to get by on funding that is even more problematic. In other words, expect to see staffing and other services pared to the bone.

Our friends at the Centers for Medicare & Medicaid Services may think they have too many yo-yo facilities on their hands right now. To them, I say this: just wait.

For if you think healthcare is lousy now, just wait until the current batch of architects in Washington makes it “better.”


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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.