Potential Medicaid cuts under President Donald Trump, amounting to more than $2.3 trillion over the span of a decade, are likely amid Republican leadership’s reluctance to trim Medicare and Social Security, with the nursing home sector expected to face deep impacts.
In total, House Republicans are exploring over $5 trillion in potential cuts to offset finance priorities such as tax cuts and border security. The proposed spending reductions target various programs, including Medicare, Medicaid, the Affordable Care Act (ACA), climate initiatives, and welfare. The list of possible offsets developed by the House Budget Committee aim to mitigate the costs of a massive party-line reconciliation bill, as well as efforts to reform government spending, according to an article in Politico.
There is a “good chance” that portions of the proposals may be included in the final resolution bill, Tao Qiu, a senior health care equity research analyst at Macquarie, said in his latest investment note. Qiu is estimating a base case cut of roughly $50 billion in 2026 and 2027.
“We believe hospitals, nursing home services and personal care services providers would be the most affected by the proposed Medicaid cuts,” he said.
And while companies in Macquarie’s coverage, which includes giants Ensign and PACS, have made accommodations to diversify their payor mix, cater to higher acuity residents and acquire assets with less exposure to Medicaid, these Medicaid cuts could still pose “a serious challenge” to earnings, he said.
Brian Ellsworth, vice president for public policy and payment transformation with Health Dimensions Group (HDG), agrees.
“Any serious Medicaid cuts will have a major impact on long-term supports and services, broadly defined to include nursing homes, home health and personal care,” Ellsworth told Skilled Nursing News. “Those services comprise over a third of Medicaid spending nationally and would certainly be under the chopping block at the state level if serious cuts were made to Medicaid in Washington.”
HDG provides management services to 41 senior living and care communities in 9 states, including independent living, assisted living, memory care, skilled nursing facilities, and life plan communities.
Some of the potential losses for the nursing home sector will, of course, be tempered by a likely repeal of the staffing mandate so hospitals would really bear the brunt of the Medicaid cuts.
“Hospitals would also be impacted by additional proposals, including site neutrality and uncompensated care-related cuts. In contrast, nursing homes could benefit from repeal of the minimum staffing mandate, and home care agencies could see the 80/20 Medicaid Access Rule abolished, offsetting the headwinds from potential funding cuts,” Qiu noted.
That said, other policies of the new White House could cause setbacks to the long-term care workforce over time, Ellsworth said. Fragile gains made to staffing in 2024 stand to disappear, with the Trump Administration’s immigration stance and mass deportations not helping the cause.
“Providers facing these [Medicaid] cuts will still be subject to serious workforce pressures, with or without the staffing mandate, because of the prospect of reduced legal immigration and the shrinking working age population relative to the growing elderly population,” he said.
Disproportionate impact on states
Cuts to Medicaid could save up to $2.3 trillion by introducing per-capita caps and work requirements. Another potential saving includes $690 billion from equalizing Medicaid payments for able-bodied adults with traditional enrollment categories. The ACA’s health insurance subsidies could be reduced by $46 billion, while $146 billion in savings could come from Medicare’s so-called site-neutral payment policy that has bipartisan support.
“In recent weeks, both President Trump and House leadership have expressed their reluctance to cut Medicare and Social Security benefits. That leaves Medicaid squarely in the crosshairs as far as entitlement reform goes,” Ellsworth said.
Kathy Gallin, vice president of legislative affairs and health policy at Signature HealthCARE, told SNN that it was imperative to preserve Medicaid to sustain access to nursing home care.
“We must continue to advocate for protecting Medicaid and addressing regulatory environment improvements that will be very critical to our success [and] always staying focused on quality measures. It is also important to protect beneficiaries’ access to care and services while ensuring provider sustainability,” she said.
Headquartered in Kentucky, Signature HealthCARE is a provider of long-term care, offering services across the health care continuum, including skilled nursing, home health, assisted living, and in-home care, with more than 60 locations across Indiana, North Carolina, Virginia, Kentucky, and Tennessee.
The proposed cuts include block grants, changes to the federal matching formula, and work requirements. These changes would disproportionately affect high-income states like New York and California, particularly if the matching floor is removed.
“Block grants, while potentially providing flexibility in the administration of Medicaid at the state level, may also harm states unless population demographic growth is sufficiently factored in, or the cuts are too high. It is unclear how viable these cuts will be given the narrow Congressional majorities that we are operating under,” Ellsworth said.
These proposals, especially the Medicaid and ACA reductions, are likely to face significant opposition from Democrats and some GOP members, making it uncertain whether all cuts will pass. House Speaker Mike Johnson must also secure party-line support without defections to advance the measures. Republicans also aim to balance spending reductions with Trump’s domestic policy agenda, estimated at $10 trillion over the next decade.
Advocacy efforts
Linda Couch, senior vice president of policy at LeadingAge said that Medicaid is indeed a major target in 2025 for cuts as “Republicans focus on federal spending reductions to comply with budget reconciliation parameters as well as implement their party’s policy agenda.”
And yet, these cuts can bear major financial consequences for the sector.
“All changes being considered in Congress are intended to limit the federal government’s financial obligation; they would shift significant costs to states that could, in turn, have a number of possible downstream effects such as provider reimbursement reductions, decreases in covered populations, or cuts to covered services in optional programs,” Couch told SNN. “Most states nor their residents nor their provider communities, including our nonprofit, mission-driven nursing home members, can sustain significant cuts in an already under-resourced system.”
Couch said LeadingAge is encouraging its members to push Congress to preserve Medicaid.
“Tell them your state can’t afford federal cost shifts or reductions in federal spending on Medicaid,” she said in an emailed statement.
Meanwhile, the American Health Care Association’s (AHCA) Michael Bassett, senior vice president of government relations, said the sheer volume of nursing homes dependent on Medicaid means that the impact from cuts to an already underfunded program is sure to have deep reverberations.
“It’s no secret that Medicaid is already woefully underfunded, so any further cuts would be devastating. We will continue to urge lawmakers that there’s a better way to create government efficiencies while upholding the promise made to our nation’s most vulnerable,” Bassett said in an emailed statement. “More than six out of 10 nursing home residents and nearly one in five assisted living residents rely on Medicaid to cover their daily care. This program is a critical safety net for America’s seniors to make sure they can access the long term care they need.”
Companies featured in this article:
AHCA/NCAL, Health Dimensions Group, LeadingAge, Signature HealthCARE