Trump Megabill Threatens Low-Income Health Insurance And Nursing Homes

In the scramble for Donald Trump’s megabill, the Senate had to make changes to the House version to pass the body’s rules for reconciliation. The result included large cuts in programs that serve the financially needy, including Medicaid.

There are two major implications of the Medicaid cuts. One has been discussed widely: the loss of health insurance coverage for millions and the impact on the nation’s healthcare system. The second has garnered less attention. There are enormous implications for the availability of nursing homes at a time when changes in demographics have made all forms of senior housing much more important in the U.S.

The Medicaid Numbers

Medicaid is an expansive program dually funded by the federal and state governments. KFF, formerly known as the Kaiser Family Foundation, has compiled extensive data on the program by analyzing federal government statistics.

In 2023, Medicaid covered 19% of all hospital care spending. That was $283 billion out of $872 billion in total Medicaid expenditures, or 32%. Physician and clinical services were 14%, and retail prescription drugs, another 6%.

There has been no Congressional Budget Office scoring on the Senate version because of timing. According to KFF’s estimate, the Senate bill, which became the law, will reduce federal Medicaid spending by $1.04 trillion over the next ten years, or a $104 billion per year reduction on average. That will result in 11.8 million more people nationwide without insurance. Another measure is the amount of Medicare funding states would lose. Thirty-seven states would lose a minimum of 13% annually, and another five would lose between 7% and 10%.

The lack of insurance has broader implications as well because the medical care those 11.8 million people need affects many more. KFF projects the cuts to ultimately affect an estimated 83 million people. In addition to those covered by Medicaid, there are state workers (Medicaid, again, isn’t purely federal), and healthcare providers who are independent, working in clinics, and associated with hospitals.

As U.S. health expenditures as of 2023 were 17,6% of gross domestic product according to the Peterson-KFF Health System Tracker, there is a potential significant impact on the entire economy.

Senior Housing

The senior housing real estate market incorporates several types of living arrangements, including independent living, assisted living, skilled nursing (also known as nursing homes), memory care, and in-home care. Around for many years, these options are becoming more important because of the country’s aging demographics. From 1920 to 2020, the U.S. population age 65 and older grew about five times faster than the total population, as the Census Bureau has written. By 2020, that group numbered 55.8 million, or 16.8% of the U.S. population. By 2024, the 65-and-older group numbered 61.2 million. The under-18 population decreased by 0.2% to 73.1 million. The number of metro areas with more older adults than those under 18 grew from 58 to 112.

By 2030, 20% of the population is expected to be 65 years or older, or 71.6 million, as S&P Global notes.

The older people grow, the greater the need for specialized housing. However, Medicaid is the primary payer of nursing facility residency, covering 63% of the residents, KKF says. The program paid for 44% of the $147 billion the U.S. spent on long-term care in 2023. “Most Medicaid enrollees using institutional [long-term care] are dually enrolled in Medicare, compared to just over half of those using home care,” the organization said.

According to Senior Housing News, senior living broadly is somewhat insulated from the Medicaid spending cuts, but not immune. “The bill likely means more financial challenges ahead for nursing homes, hospitals and community health centers and could push them to scale down services or even close their doors,” they wrote.

It will take time for the effect of the cuts on senior housing, hospitals, and insurance for lower-income to become obvious. However, it could be disastrous.