The Proposed Cuts and What They Mean for Nursing Homes
President Donald Trump’s administration has put forth budget proposals that include significant reductions to Medicaid spending. While proponents argue this will address waste, fraud, and abuse, critics and policy experts warn that these cuts could have devastating consequences for vulnerable populations and the long-term care facilities they rely on. The impacts on nursing homes are a primary concern, given their heavy reliance on Medicaid funding. This article delves into the specific policy changes, their potential effects on both facilities and residents, and the broader implications for the long-term care landscape.
Understanding the Specific Policy Changes
Several key provisions and policy shifts are at the heart of the concern surrounding Medicaid funding for nursing homes.
The 'One Big Beautiful Bill Act' (OBBBA) and Its Provisions
The OBBBA, signed in July 2025, includes several measures that could reshape the long-term care system.
- Delay of Staffing Standards: The act delays the implementation of new federal minimum staffing standards for nursing homes by nearly a decade. These standards were designed to improve care quality and resident safety. The delay will likely prolong staffing shortages and their associated negative health outcomes.
- Home Equity Limit: A new federal cap of $1 million on home equity for Medicaid eligibility, starting in 2028, will affect many individuals. This change limits a state's ability to adjust the cap as property values rise, potentially reducing the number of people who can qualify for Medicaid-covered nursing home care over time.
- Enrollment Delays: The bill prohibits implementing new rules intended to improve and streamline Medicaid enrollment until 2034. This delay is expected to perpetuate administrative hurdles for those seeking or maintaining coverage.
The Threat of Block Grants
A potential policy shift that has drawn significant alarm is the move towards converting Medicaid into a block grant program. This would give states a fixed amount of federal funding rather than guaranteeing a match for every dollar they spend.
- Financial Instability: Block grants would create significant financial unpredictability for states. When federal funding proves inadequate, states would be forced to either increase state funding or, more likely, cut benefits, restrict eligibility, or reduce provider reimbursement rates.
- Erosion of Protections: With the elimination of federal matching requirements, many federal protections for residents and their families—such as spousal impoverishment protections—could disappear. States would gain the flexibility to eliminate these safeguards, potentially leaving spouses with no income and families at risk of foreclosure.
Limiting Provider Taxes
States often use taxes on healthcare providers to increase their share of Medicaid funding. The new law imposes new limitations on the use of these provider taxes, cutting off a key funding pipeline for states and reducing their ability to fund Medicaid services, including long-term care.
Direct Impacts on Nursing Homes
The collective weight of these changes presents a formidable challenge to the financial stability and operational capacity of nursing homes across the country.
Widespread Revenue Loss and Potential Closures
Medicaid is the largest payer for nursing home care. Significant cuts could lead to a massive loss of revenue for facilities. A Brown University study, cited by several news outlets, identified hundreds of nursing homes nationwide at risk of closure due to proposed Medicaid cuts. The facilities most vulnerable are those with a high percentage of Medicaid residents and low occupancy rates. This could lead to a cascade of facility closures, particularly in rural areas already struggling with limited access to care.
Increased Staffing Shortages and Declining Quality of Care
Even before recent policy shifts, the nursing home industry was grappling with severe staffing shortages exacerbated by the COVID-19 pandemic. Reduced Medicaid reimbursement rates would likely worsen this crisis by forcing facilities to cut staff or keep wages low, making it difficult to attract and retain qualified nurses and aides.
Lower staffing levels are directly linked to poorer resident outcomes, including an increase in preventable injuries, hospitalizations, and infections. The delay of federal staffing standards under the OBBBA further compounds this issue, preventing much-needed reforms to improve care quality.
Comparison: Status Quo vs. Proposed Medicaid Cuts
| Feature | Status Quo (Pre-OBBBA) | Proposed Cuts (Post-OBBBA) |
|---|---|---|
| Federal Funding | Guaranteed federal matching funds based on state spending, ensuring more stable funding. | Funding could be capped via block grants, creating significant financial risk and uncertainty for states. |
| Staffing Standards | New minimum staffing standards were finalized to improve quality of care and safety. | Implementation of staffing standards is delayed by nearly a decade, potentially worsening staffing shortages. |
| Eligibility Protections | Federal rules protect spouses from impoverishment and limit estate recovery. | Protections could be lost under block grant programs, jeopardizing families' financial security. |
| Home Equity Limit | States have flexibility to adjust home equity limits for Medicaid eligibility based on property values. | Federal cap of $1 million is imposed, potentially limiting future eligibility for many as home values rise. |
| Coverage Certainty | Relatively stable and reliable coverage for long-term care for eligible individuals. | Coverage is less certain, with potential state-level changes to eligibility, benefits, and reimbursement rates. |
Implications for Long-Term Care
The effects of these proposed cuts extend beyond the walls of nursing homes to the entire long-term care ecosystem.
- Shifting Care Burden to Families: Cuts to Medicaid's optional home- and community-based services (HCBS) would force more people who prefer to age at home into institutional settings or place the burden of care on unpaid family caregivers. This increases caregiver stress, reduces labor force participation, and creates financial strain for families.
- Widening Care Gaps: With fewer options for home-based care and the potential closure of nursing homes, particularly in rural areas, individuals will face a wider gap in available long-term care services. This could lead to delayed care, poorer health outcomes, and increased hospitalizations for preventable conditions.
- Uneven State Impact: The impact of cuts will vary significantly by state. Those with more generous Medicaid programs or greater reliance on federal funding will be hit hardest, forcing difficult decisions that could further exacerbate state-level disparities in long-term care quality and access.
Conclusion
The answer to will Trump Medicaid cuts affect nursing homes is a resounding yes, and the effects are far-reaching. The proposed policies—including block grants, delayed staffing standards, and eligibility changes—threaten the financial stability of nursing homes and the well-being of their residents. These cuts risk reducing the quality of care, increasing the burden on family caregivers, and widening the gaps in a long-term care system that is already under significant strain. Stakeholders must understand these potential impacts and engage in informed advocacy to protect this critical safety net for older Americans. For a deeper dive into the potential shift to block grants and its implications, review this comprehensive analysis from the Center on Budget and Policy Priorities. The future of long-term care hangs in the balance, and careful consideration of these policy changes is more important than ever.
