The "art" of the cuts: Medicaid

Investment Analysis Clubs Macro Economic Trends and Risks
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Given that the base of the base is crusty, old, white, men. any cut that takes a little from everyone, will have the base up on it’s hind legs, howling.

The “arty” cut is to take everything away, from a small subset, of the population. Then the majority of the base is unharmed, so they can be conned into supporting the cuts.

Some years ago, I mentioned that, as my mother’s 12 year stint as an Alzheimer’s patient in a nursing home burned through her life savings, I worried the state would decide to give me a lecture on “personal responsibility”, and burn through my savings too, before mom could go on Medicaid. That didn’t happen in Michigan, but others on this board have mentioned that some states do require family members to be destroyed financially, before the patient is allowed to go on Medicaid.

Here is the trajectory Medicaid expenditures for nursing homes is on.

Screenshot 2025-02-20 at 15-56-02 Medicaid spending on long-term care services 1990-2022 Statista
Screenshot 2025-02-20 at 15-56-02 Medicaid spending on long-term care services 1990-2022 Statista1187×698 60.7 KB

“They” could impose a Federal requirement that the patient’s spouse, spawn, and siblings, all be given the “personal responsibility” lecture, and bankrupted, before the patient is allowed on Medicaid. Given the “JC” preference for defined contribution pensions, there is an identifiable stack of cash in the name of the majority of working people now, that could be liquidated to pay nursing home bills, so the money that the government is spending on nursing homes could, instead, be given to the “JCs”.

Steve

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Those are called filial responsibility laws. Something like 30 states have them but they seem to be rarely enforced in the cases of adult children being held responsible for their parents nursing home bills. Also Federal Medicaid rules prohibit nursing homes from requiring a third party guarantee for billing.

intercst

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I read the synopses of some of those state laws. Some of them cast a pretty wide net. If your sibling or parent, is an utter nutjob, totally irresponsible, and qualifies for government assistance, you can be on the hook for their support, rather than them going on Medicaid or food stamps.

Also Federal Medicaid rules prohibit nursing homes from requiring a third party guarantee for billing.

That could be “fixed” with the stroke of a pen on an EO.

That would fit wonderfully with the current administration’s ambitions to cut spending, to enable more “JC” tax cuts.

Steve

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Perhaps, but I suspect only if the Nursing Home etc Owners Associations have already given or give a very very significant “tip” of “free speech” equivalents to Trump and company.

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What is in it for the nursing homes? Status quo, of the Medicaid payout, or charging the family full boat, until they are broke too?

Seems that what Medicaid pays a nursing home is hard to determine. I found this report that showed the average daily rate for Medicaid patients is $198, vs $284 for “all payers”. “all payers” includes Medicaid, people with private nursing home insurance, and people paying out of pocket.

Other sources cite a private pay rate, for a semi-private room, of $9500/month, or $316/day.

So, it appears, using the government to force family members to pay, at the private pay rate, after the patient is bankrupted, drops more than $100/day of pure profit in the pocket of the PE group that owns the nursing home.

But, think big. With the stroke of a pen on an EO, HHS changes the rules so that, to go on any sort of assistance, food stamps, ADC, Medicaid, you need to prove that your parents, siblings, and spawn, are all too broke to support you. That would move a lot of “black sheep” off of the dole, and onto family members.

Steve…has known a few “black sheep” over the years, who fell out of the middle class

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Adjusting for inflation, Medicaid expenditures went up 8% between 2019 and 2022. Over that same period the US population over 65 increased by 8%.

Real spending per capita appears to have been stable, so the increase is based on an aging population.

DB2

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So? The objective is to reduce/eliminate spending on Proles, so the money can be given to the “JCs”.

Steve

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So? I was surprised that the spending per capita was stable. I have come to expect health care inflation to be greater than average.

DB2

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Under President Biden, enrollment in Medicaid hit a record high and the uninsured rate reached a record low… This puts the entire program in the sights of the current guy. The nearly $900-billion-a-year government health insurance program, Medicaid, could balance the budget if eliminated. As long as people with money are not effected the clown car will continue.
I expect that Medicaid will be a thing of the past before this administration ends its tenure.

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Spending at the Medicaid rate, per capita, was stable. I suspect the rate people are paying out of pocket has escalated, but I can’t find solid information on that. iirc, when mom was still paying out of pocket, the rate was about $3,000/month, some 20 years ago. Apparently, the average rate in Michigan is now about $8,500/month, vs an average across the country of $9,500.

Steve

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iirc, the annual deficit is closer to $2T/year, so entirely wiping out Medicaid would only close half the gap.

But the trick is how you spin it. Recall “Plan Steve” to “save SS and Medicare”, by imposing a work requirement for able bodied Medicare recipients, regardless of age, and denying SS benefits to able bodied people, regardless of age. would sharply reduce SS benefits paid, and reap more FICA tax revenue from old folks forced back into the workforce. But, the full slate of benefits would remain for people so feeble and broken up they can’t work, so the government could brag that the programs were fully available “for the truly needy”. Same thing with Medicaid: bankrupting the entire family before allowing anyone on Medicaid would sharply reduce benefits paid, while the pols can brag they “protected the truly needy”.

Steve

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One thing that is not widely understood about the ACA is that it was mostly reforms to Medicare. Since the 1970s (and probably before) medical inflation was higher than regular inflation, so your expectations were in line with past observation. After the ACA was passed, Medicare costs per beneficiary have increased only slightly more than CPI.

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Do you know if general health care costs have continued to exceed the CPI?

DB2

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Seems health care costs, generally, track CPI and PPI. Health care did not inflate as much as the other indexes in 2022.

Screenshot 2025-02-21 at 21-17-15 Inflation-Adjusted Health Care Spending is Falling for the First Time in Half a Century Altarum
Screenshot 2025-02-21 at 21-17-15 Inflation-Adjusted Health Care Spending is Falling for the First Time in Half a Century Altarum675×362 62.6 KB

Steve

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I guess ending Medicare would do the trick.

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Need to do an “arty deal”, so the majority of the crusty, old, white, guys, in the “base” are not impacted, only “others”.

Steve

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“Yet, for the first time in 2021, real health care spending growth was flat, and in the first quarter of 2022, real health care spending actually declined by 1.7% year over year.”

Well, that’s a surprise.

Screenshot 2025-02-22 at 4.28.35 AM
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DB2

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Well, we had a “far left loon”, a “Commie” in charge, right? That situation will be fixed, as soon as someone hands “him” a check.

My UNH got a right thumping yesterday, but that company has a unique way of ducking the charges: the CEO who promoted those policies was murdered. The company can whine “he was in charge, there was nothing lower management, or the Board, could do”…then hand a check to TIG and the charges go away, or are settled for peanuts.

Steve