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.

Which brings us to the unveiling of the Trump healthcare plan. The industry’s worst fears about what the legislation might contain have not just been met: They have been surpassed.

For starters, the American Health Care Act would cap Medicaid outlays. 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.”

To be sure, this sector has always had a bit of a love/hate relationship with Medicaid. Its payments, quite frankly, have never been adequate.

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 rest? They will have to do their best to get by on funding that is even more problematic.   

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 “improves” it.