The transient’s key findings are:
- Most individuals consider Medicare – not Medicaid – because the well being program for older Individuals, however Medicare doesn’t cowl long-term care companies (LTSS).
- Medicaid does pay for LTSS for these with low incomes and likewise helps cowl their Medicare out-of-pocket prices.
- In consequence, these ages 65+ account for 10 p.c of whole Medicaid enrollees and 20 p.c of its spending.
- Wanting forward, Medicaid could not hold tempo with rising demand for LTSS, so a heavier burden could fall on household caregivers or extra wants could go unmet.
Introduction
Most individuals consider Medicare – not Medicaid – when contemplating authorities well being take care of older Individuals. Nonetheless, Medicaid, this system that covers the medical bills of the poor, spends over $132 billion a 12 months – 20 p.c of its finances – on people ages 65 and over. Aged beneficiaries embody each these with low incomes all through their retirement and those that turn into “medically needy” – that’s, fulfill Medicaid’s means exams after incurring excessive well being care bills.
This transient summarizes the character and quantity of Medicaid spending on Individuals ages 65+ – that’s, the inhabitants already receiving advantages underneath Medicare – paperwork the way it has modified over time, and examines projections of future ranges of spending and the implications for each authorities budgets and the well-being of older households.
The dialogue proceeds as follows. The primary part describes the origins and evolution of Medicaid and compares its beneficiaries to these lined by Medicare. The second part describes the pathways by means of which older Individuals can entry Medicaid advantages. The third part speculates about the way forward for Medicaid and the advantages out there to older Individuals going ahead. The ultimate part concludes that Medicaid is a vital part of the nation’s well being care system offering vital advantages for low- and middle-income elders, however authorities projections recommend that Medicaid outlays could not hold tempo with the rising long-term care wants of an getting older inhabitants.
A Transient Historical past of Medicaid
Medicaid was enacted in 1965 as a part of the identical regulation that created Medicare. Whereas Medicare covers all individuals 65 and older and individuals who obtain federal incapacity insurance coverage, Medicaid was designed to assist low-income households who traditionally couldn’t afford non-public medical health insurance and to offer long-term care companies for the aged poor. In 2023, Medicare and Medicaid spending collectively accounted for 39 p.c of the nation’s whole outlays for well being care (see Determine 1).
Medicaid is financed collectively by the federal authorities and the states. The federal authorities ensures matching {dollars} and not using a cap for certified companies, based mostly on a state’s earnings degree. That’s, the federal authorities offers larger reimbursement charges to states with decrease per capita incomes, with the vary various from a flooring of fifty p.c to a ceiling of 83 p.c.1 Traditionally the federal authorities has paid for 60 p.c of whole Medicaid prices, albeit this share spiked quickly to 70 p.c in 2022 as a consequence of laws enacted in the course of the pandemic (see Determine 2).
State participation in Medicaid is voluntary, however to qualify for matching funds states should observe broad federal guidelines for advantages and protection. (By 1980, all states had opted in.) Medicaid protection was traditionally tied to receipt of money help – both by means of the previous Assist to Households with Dependent Kids (AFDC) program or the Supplemental Safety Revenue (SSI) program, which offers advantages to youngsters and adults with disabilities and to these ages 65 and over.2 Over time, Congress expanded federal minimal necessities for state participation and supplied new protection necessities and choices for states, particularly for kids, pregnant ladies, and other people with disabilities. As well as, states typically present protection that exceeds the minimal ranges set by Congress or federal guidelines.3
Furthermore, in 2010, the Reasonably priced Care Act expanded Medicaid to incorporate non-elderly adults with out dependent youngsters, who had historically been excluded from protection, with incomes as much as 138 p.c of the federal poverty line ($20,780 for a person in 2024). Whereas the Medicaid enlargement was successfully non-compulsory, as of 2024, 41 states and Washington, DC have opted in. These states obtain a better federal match price for these lined underneath this expanded eligibility possibility.
Lastly, COVID-19 additionally had an enormous impact on Medicaid spending and enrollment. At the beginning of the pandemic, Congress required Medicaid packages to maintain individuals repeatedly enrolled – quite than requiring reenrollment (typically yearly) – in change for enhanced federal funding. In consequence, enrollment grew considerably between 2019 and 2023. These provisions began to unwind in April 2023, which has decreased the Medicaid rolls by 13 million from the pandemic peak.4
On account of the enlargement of the teams lined and rising well being care prices, Medicaid expenditures have now grown to three.1 p.c of GDP, however progress has slowed for the reason that 2010s. Medicaid expenditures at the moment are properly beneath Medicare expenditures, which started to rise sharply because the Child Increase began to retire (see Determine 3).
Medicaid for “the Aged”
Medicaid offers advantages for 5 essential teams of low-income people – youngsters, adults (underneath 65) in households, adults (underneath 65) with out youngsters included underneath the Reasonably priced Care Act (ACA), people with disabilities, and people who qualify based mostly on age (65+). In keeping with the newest knowledge out there – 2021 – the aged 65+ group accounted for 10 p.c of beneficiaries and 20 p.c of spending (see Determine 4).
Throughout the Age 65+ group, Medicaid beneficiaries will be categorised as “categorically needy” and “medically needy.” Most Medicaid beneficiaries are enrolled by means of categorically needy packages.5
Categorically Needy
SSI Members. As famous above, traditionally, eligibility for Medicaid advantages has been tied to packages that present money advantages to low-income households. Within the case of these 65+, the money advantages have been supplied by the SSI program. This pathway has declined in significance over time, nonetheless, for the reason that SSI earnings and asset necessities haven’t been up to date in many years. In 2024, the utmost month-to-month SSI profit is $943 per thirty days for a person and $1,415 for a pair, which is 75 p.c of the federal poverty degree. SSI beneficiaries are additionally topic to an asset restrict of $2,000 for a person and $3,000 for a pair. Not surprisingly, the share of the 65+ inhabitants receiving SSI has dropped from 9.3 p.c in 1974 to three.7 p.c in 2024. At the moment, SSI contributors account for under 36 p.c of Medicaid 65+ beneficiaries (see Determine 5).
Poverty Associated. Luckily, over 40 p.c of states have elected to increase Medicaid to seniors whose earnings exceeds the SSI restrict however is beneath the federal poverty degree. The majority of those states set the earnings restrict at one hundred pc of the federal poverty line, the federal most for this pathway.
For each these eligible by means of SSI and the poverty-related path, states should provide Medicare Financial savings Applications (MSPs) by means of which low-income Medicare beneficiaries obtain Medicaid help with some or all of their Medicare out-of-pocket prices. Medicare’s out-of-pocket prices will be excessive. In 2024, Medicare Half A, which covers inpatient hospital companies, has an annual deductible of $1,632; Half B, which covers outpatient companies, requires an annual premium for many beneficiaries of $2,100 in addition to a 20-percent co-pay for companies. For Medicare beneficiaries with incomes as much as the federal poverty line, Medicaid pays Medicare Components A and B premiums and cost-sharing. For these with barely larger incomes (100-120 p.c of poverty), Medicaid solely covers the premiums. Poverty-related standards account for the majority – 44 p.c – of whole 65+ Medicaid beneficiaries.
Particular Revenue Rule. Lastly, states are allowed to supply protection particularly for individuals who want long-term companies and helps (LTSS), together with nursing residence care. One pathway to those advantages – supplied by 42 states – is the “special income rule,” which permits people with earnings as much as 300 p.c of the SSI limits to qualify for advantages. About 13 p.c of Medicaid beneficiaries qualify by means of this pathway.
Medically Needy
Some states additionally prolong Medicaid to “medically needy” people. Recipients should once more have belongings beneath limits that fluctuate by state however, underneath the essential guidelines, are typically much like the SSI asset limits. The earnings take a look at, nonetheless, is earnings internet of out-of-pocket medical bills. After paying their medical payments, recipients will need to have incomes beneath their state’s “medically needy income limit,” which tends to be beneath the SSI earnings restrict.6 Not all states provide this pathway, and medically needy people account for under 7 p.c of Medicaid beneficiaries ages 65+. Traditionally, the most typical impoverishing expense has been nursing residence care. Certainly, long-term care could be very costly – in 2023, the median annual prices had been $116,800 for a non-public room in a nursing residence, $64,200 for an assisted dwelling facility, and $75,500 for residence well being aides.7
Overlap of Medicare and Medicaid
In fact, nearly all individuals 65+ have Medicare, which covers hospital care, doctor companies, and pharmaceuticals. Many mistakenly consider that Medicare covers long-term care companies, which it doesn’t. One potential supply of confusion could also be that Medicare covers as much as 100 days of care in a talented nursing facility, after a hospital keep of not less than three days. Nonetheless, over half of Medicare-covered expert nursing facility stays are for 20 days or much less, and 90 p.c for 60 days or much less.8 Equally, Medicare additionally covers some residence well being care companies for as much as 21 days and offers hospice care. Total, nonetheless, many of the care lined by Medicare is medical, short-term, and related to an acute or terminal occasion.
Medicaid is the first payer for long-term care, which incorporates not solely nursing residence care but additionally private help at residence for actions of day by day dwelling, equivalent to consuming, bathing, and dressing, and care supplied in assisted dwelling settings. In recent times, the setting for such care has shifted away from institutional care in nursing houses and moved towards home-and-community-based companies (HCBS), which embody care supplied in individuals’s houses, grownup day care facilities, assisted dwelling preparations, and group houses.9 The shift displays the preferences of the beneficiaries and necessities for states to offer companies within the least restrictive setting potential.10 It could additionally hold fiscal prices in test each by avoiding fee for the room-and-board part of institutional care and by rising reliance on unpaid household care.
To get some concept of the significance of Medicaid to retirees, Desk 1 compares enrollees and expenditures for these 65+ underneath each Medicaid and Medicare. When it comes to each metrics, Medicaid accounts for 16-17 p.c of the Medicare determine.
Apparently, whereas nonetheless vital, the share of Medicaid advantages going to these 65+ has declined sharply for the reason that inception of this system (see Determine 6). This sample displays the decline within the share of these 65+ receiving SSI plus a deliberate enlargement of Medicaid by each the federal authorities and the states to cowl youngsters and working-age adults.
Future Medicaid Spending
The extra essential query is what does future Medicaid spending appear like for these 65+, given the getting older of the U.S. inhabitants. Certainly, the variety of individuals 85+ – a gaggle with substantial wants for long-term care – is projected to extend from about 7 million at the moment to 11 million in 2035 (see Determine 7). Will future Medicaid spending mirror this elevated demand for lengthy term-care? And what are the implications of future Medicaid spending for presidency budgets and the well-being of older households?
The Congressional Funds Workplace initiatives well being care spending as a share of the federal finances by means of 2034, which reveals that the federal share of Medicaid is scheduled to carry regular at 10 p.c of non-interest federal spending (see Determine 8). This projection differs sharply from that for Medicare, the place expenditures over the identical interval improve from 15 to twenty p.c of non-interest finances outlays – reflecting each the getting older of the inhabitants and medical inflation.
Wanting underneath the hood offers some insights into the CBO projections. Complete Medicaid enrollment is projected to say no from 97 million to 85 million, led by the unwinding of the pandemic-related steady enrollment provision, which had quickly elevated enrollment. Moreover, decrease beginning charges are contributing to fewer youngster beneficiaries, and the variety of adults – in each the normal eligibility classes and people eligible by means of the ACA – is predicted to say no (see Desk 2). The age 65+ class is the one group the place enrollment is projected to extend, albeit by only one million in comparison with 4 million within the 85+ inhabitants.
Turning to prices, the aged and people with disabilities are the 2 most costly teams, however the ones with the smallest will increase in common price. The slower improve in prices possible displays each the shift away from nursing amenities to home-and-community-based care and the idea that whereas well being care prices develop with medical inflation, different long-term care prices develop in step with wages. Furthermore, many employees offering long-term care have much less medical training and supply extra hands-on companies than medical professionals. Conversely, the prices for kids and adults are projected to extend sharply, however their price degree is kind of low and, as famous, their numbers are projected to say no. The underside line is that – regardless of the getting older of the inhabitants – Medicaid will not be projected to play a bigger position sooner or later than it does at the moment.
The flipside of fiscal restraint could also be unmet wants or a bigger burden on households. As proven in Determine 9, whereas Medicaid is the key payer for paid care, it covers solely 22 p.c of the hours required to take care of these 65+ over their lifetimes. The extra frequent supply of help is unpaid casual care supplied by relations – primarily spouses and youngsters. Going ahead, declines in fertility and the rise in divorce will diminish the provision of casual caregivers.11 And, the share of retirees with prolonged household or different group help methods has been declining for 3 many years.12 With out expanded help from Medicaid, the tip outcome shall be that many could have care wants that merely go unmet.
Conclusion
Medicaid is the nation’s publicly financed well being and long-term care program for low-income individuals. It was initially established to offer advantages to these receiving money help or “welfare.” Over time, nonetheless, Congress and the states have expanded Medicaid to succeed in a broad array of uninsured Individuals dwelling close to or beneath the poverty degree. Medicaid is financed collectively by state and native governments. The federal authorities units some primary necessities, however states have the flexibleness to design their very own variations of Medicaid inside the federal statute’s primary framework. Spending on Medicaid has grown considerably over time as a share of GDP and as a share of federal and state budgets.
Surprisingly, Medicaid is essential for older Individuals. Though most individuals over 65 have Medicare, it doesn’t present long-term care companies and helps, solely restricted residence well being care and post-acute care in a talented nursing facility after a hospital keep. Furthermore, Medicare itself is pricey with vital premiums and deductibles. Low-income older individuals require help for each these wants. At this level, these 65+ account for 10 p.c of Medicaid enrollees and 20 p.c of Medicaid expenditures.
With the projected progress within the oldest outdated – these 85+ – the demand for long-term care companies will improve. Funds projections, nonetheless, recommend that Medicaid is unlikely to increase past its present position. How will the elevated demand be addressed – extra care from household or unmet wants?
References
Belbase, Anek, Anqi Chen, and Alicia H. Munnell. 2021. “What Resources Do Retirees Have for Long-Term Services & Supports?” Challenge in Transient 21-16. Chestnut Hill, MA: Middle for Retirement Analysis at Boston Faculty.
Brown, Susan L. and Matthew R. Wright. 2017. “Marriage, Cohabitation, and Divorce in Later Life.” Innovation in Getting older 1(2): 1-11.
Burns, Alice, Maiss Mohamed, Molly O’Malley Watts, and Bradley Corallo. 2024. “Medicaid Eligibility and Enrollment Policies for Seniors and People with Disabilities (Non-MAGI) During the Unwinding.” San Francisco, CA: KFF.
Facilities for Medicare and Medicaid Companies. 2013. “Medicare and Medicaid Statistical Supplement, Table 13.4 and Table 13.10.” Washington, DC.
Facilities for Medicare and Medicaid Companies. 2023. Nationwide Well being Expenditure Accounts. Washington, DC: U.S. Division of Well being and Human Companies.
Congressional Funds Workplace. 2024. “Budget and Economic Data, Historical Budget Data.” Washington, DC.
Congressional Funds Workplace. “Baseline Projections-Medicaid: 2007-2024.” Washington, DC.
KFF. 2024. “Medicaid 101.” San Francisco, CA.
Komisar, Harriet. 2013. “Medicare Does Not Pay for Long-Term Care.” AARP: Washington, DC.
Genworth Monetary, Inc. 2023. “Cost of Care Survey.” Richmond, VA.
Medicare Cost Advisory Fee and the Medicaid and CHIP Cost and Entry Fee. 2024. “Beneficiaries Dually Eligible for Medicare and Medicaid.” Knowledge Guide. Washington, DC.
Nationwide Affiliation of State Funds Officers. State Expenditure Report, 1987-2023. Washington, DC.
Olmstead v. L.C. 1999. 527 U.S. 581. Washington, DC: U.S. Supreme Court docket.
Tolbert, Jennifer and Bradley Corallo. 2024. “An Examination of Medicaid Renewal Outcomes and Enrollment Changes at the End of the Unwinding.” San Francisco, CA: KFF.
Wettstein, Gal and Alice Zulkarnain. 2019. “Will Fewer Children Boost Demand for Formal Caregiving?” Working Paper 2019-6. Chestnut Hill, MA: Middle for Retirement Analysis at Boston Faculty.
U.S. Census Bureau. 2023a. “Projected Population by Age Group and Sex for the United States, Table 1.” Washington, DC.
U.S. Census Bureau. 2023b. “The Older Population: 2020.” Report No. C2020BR-07. Washington, DC.
U.S. Congress Joint Financial Committee. 2019. “An Invisible Tsunami: ‘Aging Alone’ and Its Effect on Older Americans, Families, and Taxpayers.” (January 24). Washington, DC.
