$880 Billion in Medicaid Cuts: A Threat to Nursing Homes and Vulnerable Populations

As the nursing-home industry finds itself caught amidst a contentious congressional budget debate, proposed reductions of at least $880 billion in mandatory spending cuts to Medicaid could spell disaster for nursing homes and their residents. Medicaid, a federal-state partnership program, plays a critical role in funding long-term care for millions of elderly and disabled individuals. However, the latest fiscal measures being discussed may significantly compromise healthcare for the most vulnerable segments of the population.

A Budget Battle Looms

In February 2025, the House Budget Committee voted to explore substantial spending cuts to programs overseen by the House Committee on Energy and Commerce, which includes Medicaid. The Congressional Budget Office (CBO) has indicated that achieving the budgetary goals set by the current administration, particularly involving tax reductions, will necessitate massive cuts to Medicaid—currently accounting for about 8.6% of the federal budget, as reported by the health-policy research nonprofit KFF.

Industry Leaders Sound Alarm

“Any cuts to Medicaid would be devastating,” stated Clif Porter, president and CEO of the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), the principal trade group representing nursing homes and assisted living facilities. With almost 63% of nursing home residents and 20% of assisted living residents relying on Medicaid, the financial implications of these cuts raise serious concerns about the quality of care that can be provided within these facilities.

Porter elaborated that nursing homes are already underfunded, with an average funding shortfall of 18%. The fear surrounding potential closures is palpable, particularly in light of the 774 nursing homes that have shuttered between February 2020 and July 2024, a trend fueled by a combination of financial pressures, staffing shortages, and the ongoing repercussions of the COVID-19 pandemic. These closures have displaced nearly 30,000 residents, jeopardizing the accessibility of long-term care.

Nursing-Home Deserts and Rural Challenges

The implications of these proposed cuts are particularly glaring in rural areas, which have significantly fewer nursing home options. As of April 2025, 42 counties in the United States are reported to lack any nursing home facilities, with a staggering 85% of these “nursing-home deserts” existing in rural locales where 20% of older adults reside. The likelihood of seniors being relocated to facilities far away from their families raises distressing concerns about the loneliness and emotional well-being of these individuals.

The Ripple Effects of Reduced Services

Dwayne Clark, the chair and CEO of Aegis Living, echoed the belief that cuts to Medicaid will not only affect nursing homes but generate a cascade of problems throughout the entire healthcare system. “If you stop monitoring the elderly and cut community-based services, you’ll see people become progressively sicker,” Clark warned, predicting that hospitals would soon become inundated with patients previously receiving at-home care.

Moreover, a recent legal victory for nursing homes against a Biden-era staffing mandate—intended to bolster caregiver levels—adds another layer of complexity to an already vulnerable industry. The staffing shortage has contributed heavily to the operational struggles of nursing homes, impacting their ability to deliver quality care to residents.

The Aging Population: A Growing Crisis

As the U.S. faces a burgeoning aging population—projected to expand from 14.7 million individuals over the age of 80 today to 18.8 million by 2030—the need for sufficient long-term care resources is at an all-time high. Clif Porter emphasized that cutting Medicaid spending amidst such a demographic shift is illogical, insisting that expansion of existing resources is critical to address the needs of current and future seniors dependent on nursing care.

Expert Opinions on the Impending Cuts

According to Sam Brooks, public policy director for the National Consumer Voice for Quality Long-Term Care, the ripple effect of Medicaid cuts will exacerbate staffing issues and degrade care quality significantly. “Staffing is the No. 1 cost for nursing homes,” Brooks pointed out, further illustrating that fewer staff would result in decreased resident care, leading to severe health issues such as pressure ulcers, which can be life-threatening.

Edward Miller, chair of the gerontology department at the University of Massachusetts Boston, contended that states aren’t equipped to offset the financial losses that would arise from federal Medicaid cuts. “Most states can’t offset those cuts,” Miller asserted, cautioning against the repercussions on families who may see fewer available resources for long-term care.

Conclusion

With discussions of proposed $880 billion cuts to Medicaid, the nursing-home industry stands on the brink of a crisis that could ripple throughout the entire U.S. healthcare system. Aegis Living’s Dwayne Clark summarized the impending concern aptly: “We will create a bubble of sick people, and the repercussions will be felt by everyone.” As legislators grapple with budgetary goals, the necessity for a balanced approach prioritizing the welfare of the aging population must take precedence.