Assessing Potential Impact of Medicaid Caps on States, Care Workers

The American Health Care Act under consideration in the U.S. Senate would create varying degrees of economic stress on individual states and could lead to the elimination of as many as 713,000 jobs held by home health and personal care aides, according to new research prepared by UMass Boston Gerontology Professor Marc Cohen.

The legislation, which has been passed by the House, would place limits on spending for Medicaid in the future. The report by Cohen, who is co-director of the LeadingAge LTSS Center @ UMass Boston, identifies which states could be more vulnerable to those cuts.

Currently, Medicaid operates as a federal-state partnership in which each pays a percentage of Medicaid’s costs and federal financial support increases with need. Under a per capita cap system proposed in the AHCA, the federal government would provide states with an aggregate amount of funding based on the number and category of eligible beneficiaries in each state.

The Congressional Budget Office estimates the legislation would cut $834 billion from the Medicaid program. States would likely have to account for the decreased funding by cutting benefits, cutting payments to providers, changing eligibility requirements, and/or adding to program waiting lists.

Cohen’s report identifies five factors that would affect the ability of states to provide Long Term Services and Supports in a per capita cap system.

The factors are the projected rate of growth in the population age 85 and older between the years 2015 and 2025, the percentage of people over age 65 with at least four chronic conditions, states having an above average federal medical assistance percentage, states with above average expenditures on home and community based services, and states with above average expenditure growth on people aged 65 and older.

All states face at least one of the five factors. One state – Florida – was found vulnerable to all five. States vulnerable to four of the five factors were Delaware, Georgia, Maine, Missouri, Montana, New Mexico, South Carolina and Tennessee.

The report also estimates between 305,000 and 713,000 jobs would be lost as a result of a change in the Medicaid financing structure to per capita caps. The estimates are based on a range of projected reductions in the number of beneficiaries receiving home and community based services.

Home health and personal care aides provide the bulk of those services and have comprised one of the fastest growing sectors in the U.S. economy, increasing by roughly 7 percent annually. In 2014, there were slightly more than 3 million direct care workers comprising roughly one in five health workers.

Cohen’s report was prepared with colleagues at The Center for Consumer Engagement in Health Innovation at Community Catalyst and LeadingAge, which represents more than 6,000 member and partners, including not-for-profit organizations representing the entire field of aging services, 38 state partners, hundreds of businesses, consumer groups, foundations and researcher partners.

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