Cutting Medicaid: Bad for Families, Bad for the Economy

We cannot allow the health and security of our most vulnerable citizens to be sacrificed in a deficit deal that asks everything of those that have the least, and nothing of those that have the most. Keeping the Bush-era tax breaks for the wealthiest 2% of income-earners and refusing to put reasonable revenue increases and defense cuts on the table -- and looking to Medicare and Medicaid as sources for steep cuts -- is a choice that hurts us all.

Medicaid Matters: 

For People with Disabilities: 

Of the 2,199,371 Medicaid beneficiaries in PA, 24% (538,464 people) are under age 65 and living with a disability. Medicaid allows these folks to receive home and community-based services through one of Pennsylvania’s HCBS Waiver Programs, or care in an assisted living facility.

For Low-Income Seniors: 

Of the 2,199,371 Medicaid beneficiaries in PA, 11% (235,668 people) are seniors age 65 and over.

Low-income seniors can qualify for Medicaid in Pennsylvania if they earn less than 100% of the Federal Poverty Level ($11,170 for a single, and $15,130 for a couple in 2012).

391,855 Pennsylvania seniors are eligible for both Medicare and Medicaid. These folks are called “dual eligibles.” Some qualify for full Medicaid benefits, which helps cover the services Medicare doesn’t and helps cover the costs (premiums, co-pays, coinsurance and prescription costs) a senior would normally be responsible for paying under Medicare. 85% of “dual eligible” seniors receive full Medicaid benefits -- that’s 333,096, while 15%, or 58,759 are eligible for partial Medicaid benefits (help with cost-sharing under Medicare). 

For All of Us to Afford Long Term Care:

Paying for long term care can wipe out a lifetime of savings faster than you’d think. Medicare -- which is health insurance, meant to cover short-term illness, injury and preventive care -- does not cover long term care costs (except in special situations, where someone is recovering from a hospital stay or being treated for a condition that’s not permanent). And, most folks don’t have insurance that covers long term care. 

That’s why Medicaid is so important -- it helps seniors (even those with moderate incomes) and middle class families afford long-term care. Long term care is a broad description for a number of services, including: care received in assisted living facilities, in nursing homes, through home and community based services, and in continuing care retirement communities.

The income limits for Medicaid when it’s only covering your long term care costs -- either in a nursing home, or through home and community based services using the Dept. of Aging waiver program are higher: 300% of the Federal Benefit Rate for Social Security. That’s $2094/month for a single person or $3,033 for a couple (the person applying must have less than $8,000 in countable assets). In situations where one spouse requires nursing home care and the other is healthy and living at home, the community spouse is limited to $113,000 in countable assets (not including the house they’re living in, and their car). 

The US Dept. of Health and Human Services found that nearly 70% of people over age 65 will need long term care services at some point during their lifetime, and more than 40% will need care in a nursing home. Half of all seniors on Medicare earn less than $21,183 each year, meaning that for the majority of America’s seniors, Medicaid is the only route to affordable long-term care.

Just one year in a nursing home can cost upwards of $70,000 in Pennsylvania. 62.2% of Pennsylvania’s nursing home residents rely on Medicaid to pay for their care. Home and community-based services that allow seniors to get the care they need at home generally cost around $3,000 a month. Without Medicaid, seniors and their families would have few options for long term care. 

In 2010, Medicaid spending in Pennsylvania (state funding with a federal match) totaled $18.7 billion. 59% was spent on acute care services like doctors’ visits, prescription drugs, and payments to managed care organizations ($11.1 billion), while 36% was spent on long term care ($6.8 billion). 

For Public Health

Chronic diseases are a major driver of health care costs. When you’re uninsured, you’re far less able to manage or avoid getting a chronic disease. But, access to preventive and regular care can often prevent onset of disease (e.g., breast cancer, diabetes, and cardiovascular disease) and significantly reduce the severity of prognosis and increase chances of leading a healthy and productive life. More folks covered equals less chronic illnesses, and a population that’s better able to manage these illnesses. 

A strong Medicaid program helps reduce the spread of infectious diseases, which keeps us all safer and more secure -- and it helps us begin to reduce health care disparities. For example, low-income individuals have higher rates of heart disease and diabetes and consistently shorter life expectancies than their wealthier counterparts. African-Americans with breast cancer, cardiovascular disease, or even pregnancy experience poorer outcomes than whites with the same condition. 

For Pennsylvania’s Health Care Workforce

Pennsylvania faces the unique challenge of an aging population and not enough direct care workers to meet the growing demands. Nearly 158,000 direct care workers (home health aides, nursing aides, and personal care attendants) provide care to Pennsylvanians who need long-term services. To meet the demands of its aging population, by 2016, Pennsylvania will need to expand its workforce by 25%. 

Because the majority of Medicaid money goes to pay for long-term care for seniors and people with disabilities, when cuts to Medicaid are made, it’s the quality of care that folks receive that suffers the most. Pennsylvania already has a very low standard for how much care folks must receive in nursing homes. Patients must receive at least 2.7 hours of hands-on, direct care per day

When funding is cut and nursing homes cut back on staffing, there are fewer nurses and aides available to care for patients, putting our loved ones in jeopardy. Those who didn’t lose their jobs now have to do the jobs of 2 or 3 people or took a pay cut, which means they’re being forced to do much more with much less support. Either way, tired and overworked staff means the quality of care for the patients goes down significantly.

Cutting Medicaid funding forces providers to look for ways to cut costs -- and the two biggest costs for providers are staffing and supplies. We should be investing in our health care workforce and improving the quality of care for our loved ones, not putting them at risk. A strong Medicaid program with adequate payment for providers is essential to helping Pennsylvania build a workforce that can meet the long-term care needs of all its residents, whether they have Medicaid or not. 

For Pennsylvania’s Economy

Medicaid has consistently been proven to stimulate economic activity including jobs, income and state tax revenues. Medicaid payments made on behalf of enrollees benefit hospitals and health care providers. 

There is also a positive multiplier effect: More people insured creates more clients for hospitals and doctors, which leads to increased purchasing. This causes suppliers to hire to meet the demand. Newly employed workers then spend their earnings, supporting local economies. Our overall workforce is also healthier and more productive as low-income workers are able to utilize preventive care and avoid chronic, costly illnesses.

Cuts = Scary

In 2009, Medicaid spent approximately: 

  • $21,268 per senior citizen age 65 and above
  • $12,883 per disabled citizen under age 65
  • $3,692 per enrolled adult
  • $2,748 per enrolled child

In 2010, Pennsylvania spent $6.8 billion providing long term care to seniors and people with disabilities: 

  • 8.8% or $602.7 million went to intermediate care facilities for the intellectually disabled
  • 1.1% or $73.4 million went to mental health facilities for inpatient psychiatric care
  • 51.4% or $3.5 billion went to skilled care facilities like nursing homes, and
  • 38.7% or $2.6 billion went to home and community based care services 

Less Care for Seniors and People with Disabilities

Federal cuts will put pressure on Pennsylvania to either raise taxes (not likely) or scale back on these services by cutting reimbursements to providers. When states make cuts in long term care funding, home and community based services suffer most (because states are required to cover nursing home care with Medicaid dollars, but are not required to cover home and community based care) which could result in more seniors being forced into institutional settings, when they want to stay at home (where it’s often much cheaper, and what the family wants).

Fewer Jobs and Heavier Workloads for Health Care Workers

If Pennsylvania lost just 5 percent of federal Medicaid funding, it would cost the state 12,300 jobs and $1.5 billion in business activity. A 33% cut could cost over 80,000 jobs in our health care workforce.

Medicaid accounts for 16% of all U.S. health care spending and 17% of all spending by hospitals.

It allows health care providers to grow and invest in hiring and training new workers. Cutting funding to providers and forcing health care workers to do more with less would not only put patients at risk, but also put an enormous strain on our health care infrastructure. This hurts all of us in the long run.


  1. Center on Budget and Policy Priorities: “How the Across-the-Board Cuts in the Budget Control Act Will Work.” April 2012:  
  3. Kaiser Family Foundation, State Health Facts. Pennsylvania: Medicaid Beneficiaries. Distribution of Medicaid Enrollees by Enrollment Group, FY2009: > Pennsylvania > Medicaid & CHIP.
  4. Kaiser Family Foundation, State Health Facts. Pennsylvania: Medicaid Beneficiaries. Distribution of Medicaid Enrollees by Enrollment Group, FY2009: > Pennsylvania > Medicaid & CHIP.
  5. Kaiser Family Foundation, State Health Facts. Pennsylvania: Dual Eligible Beneficiaries, 2009: > Pennsylvania > Medicare > Dual Eligibles
  6. Kaiser Family Foundation: Medicare Policy, Data Spotlight “Projecting income and Assets: What Might the Future Hold for the Next Generation of Medicare Beneficiaries?” June 2011:
  7. Kaiser Family Foundation, State Health Facts. Pennsylvania: Distribution of Medicaid Spending by Service, FY2010: > Medicaid Spending.
  8. PHI, PolicyWorks, State-By-State Projected Demand for New Direct-Care Workers, 2006-16 (Washington: PHI, December 2009), available online at
  9. Kaiser Family Foundation, State Health Facts.Pennsylvania: Medicaid Payments per Enrollee, FY2009: > Pennsylvania > Medicaid & CHIP > Medicaid Payments per Enrollee.
  10. Kaiser Family Foundation, State Health Facts. Pennsylvania: Distribution of Medicaid Spending on Long Term Care, FY2010: > Medicaid Spending > Spending on Long Term Care
  11. Jobs at Risk: Federal Medicaid Cuts Would Harm State Economies. A Families USA Report, June 2011. Accessed 10-27-11 at:
  12. U.S. Department of Health and Human Services, Medicaid Cost-Savings Opportunities (Washington: Department of Health and Human Services, February 3, 2011), available online at file:///G:/MEDICAID%20-%20LTSS/data%20and%20talking%20points/ percnet%20of%20health%20care%20spending.html.