Policy Recommendations for States Facing Medicaid Funding Cuts: Expansion vs. Non-Expansion States

Medicaid funding cuts would have widespread consequences across the U.S., but their impact would vary based on whether a state has expanded Medicaid under the Affordable Care Act (ACA). States with high populations of older adults and robust long-term care (LTC) industries face unique challenges in maintaining healthcare access and sustainability. To help navigate these issues, we outline policy recommendations tailored to Medicaid expansion states and non-expansion states, with examples from states where long-term care (LTC) services and aging populations play a significant role in healthcare.

Medicaid Expansion States: Policy Recommendations

Medicaid expansion states have extended coverage to adults earning up to 138% of the federal poverty level. However, these states face significant financial risks if federal Medicaid funding is cut. States with large senior populations and LTC industries must prepare for increased cost burdens on long-term care, home- and community-based services (HCBS), and hospitals.

Key States: California, New York, Pennsylvania, Illinois

These states have large aging populations and well-developed LTC infrastructures. They rely heavily on Medicaid to fund nursing home care and HCBS.

Policy Recommendations:

1. Strengthen State Funding Sources

   • Implement new revenue streams such as provider taxes or assessments to help fund Medicaid programs.

   • Explore expanding state-based public insurance programs to ensure continuity of coverage.

2. Invest in Home- and Community-Based Services (HCBS)

   • Increase funding for HCBS programs to reduce reliance on institutional care.

   • Expand support for family caregivers through tax credits and respite care services.

3. Promote Value-Based Care Payment Models

   • Shift from fee-for-service Medicaid payments to managed care and value-based models that reward cost-efficient, high-quality care.

   • Encourage Accountable Care Organizations (ACOs) to improve coordination for Medicaid beneficiaries.

4. Leverage Federal Waivers for Flexibility

   • Apply for Section 1115 waivers to test new ways of delivering and paying for Medicaid services, particularly for seniors and people with disabilities.

   • Expand pilot programs for innovative LTC models such as Program of All-Inclusive Care for the Elderly (PACE).

5. Protect LTC Provider Networks

   • Establish Medicaid reimbursement floors to ensure nursing homes and HCBS providers remain financially viable.

   • Incentivize training and wage increases for direct care workers to mitigate workforce shortages.

Non-Medicaid Expansion States: Policy Recommendations

Non-expansion states already have more restrictive Medicaid eligibility, making them especially vulnerable to funding reductions. Older adults and LTC providers in these states could face severe access challenges as Medicaid cuts reduce provider reimbursements and limit available services.

Key States: Texas, Florida, North Carolina, Tennessee

These states have high populations of older adults and large LTC industries but have not expanded Medicaid, making them particularly susceptible to rising uninsured rates and uncompensated care costs.

Policy Recommendations:

1. Expand Medicaid with State-Based Modifications

   • Consider a conservative Medicaid expansion model similar to Indiana’s or Utah’s, which incorporates personal responsibility measures like health savings accounts.

   • Use work requirement waivers or other eligibility conditions to address political resistance to full expansion.

2. Bolster State Funding for LTC Services

   • Increase state investment in LTC programs, particularly for nursing home and home health providers.

   • Utilize state-based tax incentives to encourage private investment in LTC insurance.

3. Strengthen Safety-Net Providers

   • Provide additional funding to community health centers, rural hospitals, and safety-net providers to address gaps in care caused by Medicaid restrictions.

   • Expand state grants for telemedicine and mobile health clinics to increase access in underserved areas.

4. Enhance Alternative Coverage Options for Older Adults

   • Develop state-based Medicare wraparound programs to assist low-income seniors who fall into the Medicaid coverage gap.

   • Encourage partnerships between private insurers and Medicaid to create hybrid coverage models for long-term care.

5. Workforce Development for Direct Care Workers

   • Expand vocational training and certification programs for nursing assistants, home health aides, and LTC staff.

   • Provide wage subsidies or tax credits to incentivize workforce retention in LTC settings.

In Summary

Medicaid funding cuts will disproportionately impact states with large older adult populations and extensive LTC industries. Expansion states should focus on protecting Medicaid access, strengthening HCBS, and adopting innovative funding mechanisms. Non-expansion states should consider Medicaid expansion alternatives, reinforce LTC funding, and develop state-driven coverage solutions. Regardless of Medicaid expansion status, states must take proactive steps to sustain care for vulnerable populations and ensure the long-term viability of their healthcare systems.

For Reference and Posterity

Medicaid Expansion States (41 states including Washington, D.C.):

These states have adopted Medicaid expansion, extending coverage to nearly all adults with incomes up to 138% of the Federal Poverty Level. ​

1. Alaska​

2. Arizona​

3. Arkansas​

4. California​

5. Colorado​

6. Connecticut​

7. Delaware​

8. District of Columbia​

9. Hawaii​

10. Idaho​

11. Illinois​

12. Indiana​

13. Iowa​

14. Kentucky​

15. Louisiana​

16. Maine​

17. Maryland​

18. Massachusetts​

19. Michigan​

20. Minnesota​

21. Missouri​

22. Montana​

23. Nebraska​

24. Nevada​

25. New Hampshire​

26. New Jersey​

27. New Mexico​

28. New York​

29. North Carolina​

30. North Dakota​

31. Ohio​

32. Oklahoma​

33. Oregon​

34. Pennsylvania​

35. Rhode Island​

36. South Dakota​

37. Utah​

38. Vermont​

39. Virginia​

40. Washington​

41. West Virginia

Non-Medicaid Expansion States (10 states):

These states have not adopted Medicaid expansion as of this date. ​

1. Alabama​

2. Florida​

3. Georgia​

4. Kansas​

5. Mississippi​

6. South Carolina

7. Tennessee​

8. Texas​

9. Wisconsin*​

10. Wyoming​

*It's important to note that while Wisconsin has not adopted Medicaid expansion, it provides coverage to adults up to 100% of the Federal Poverty Level through a waiver. ​KFF

For the most current information on Medicaid expansion status, you can refer to the Kaiser Family Foundation's resource: ​KFF