President Joe Biden is continuing his quest to inject more government into our healthcare system. His $2 trillion infrastructure plan would direct $400 billion to expand Medicaid coverage for at-home and community-based care for the elderly. It’s the costliest line item in the package.
Nearly 75% of likely voters support the measure, according to recent polling. But throwing more money at Medicaid won’t fix our nation’s lack of affordable, high-quality, long-term care. In fact, it’s part of the problem. In 2019, Medicaid spending exceeded $613 billion. That’s 16% of the nation’s total healthcare bill. Much of that money is wasted. The latest estimate from the Centers for Medicare and Medicaid Services is that more than one-fifth of all Medicaid payments are “improper.”
Wasting 1 in 5 taxpayer dollars is bad enough. But that waste has serious consequences.
The American Health Care Association and the National Center for Assisted Living, which represent more than 14,000 long-term care facilities, say that “Medicaid reimbursements only cover 70 to 80 percent of the actual cost of nursing home care.” Because of those low reimbursements, nursing homes do not have an incentive to invest in quality or employ more caretakers. A 2020 analysis from the Manhattan Institute’s Chris Pope concluded that “the poor quality of nursing-home care owes much to the dependence of the industry on Medicaid revenues.”
Biden’s plan wouldn’t fix the waste that’s rampant in Medicaid, nor would it incentivize long-term care providers to provide better care. It would reward the failing program with $400 billion more and simply turn more people into wards of the state. We should be looking for ways to get those in need of long-term care out of Medicaid. One way to do so is to create incentives for people to save for their own long-term care needs or purchase private long-term care insurance. That won’t happen as long as Medicaid crowds the private sector out of the market.
Elderly people and their families would undoubtedly benefit from more affordable long-term care options. Pouring more money into Medicaid isn’t the solution.
Sally Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.