woman putting hand on hand of man resting on cane

The Medicaid program is largely responsible for problems in long-term care, according to a paper recently published by the Paragon Institute.

“Medicaid is the primary reason aging Americans have had few other choices [than nursing homes] for decades,” Stephen Moses, president of the Center for Long-Term Care Reform, wrote in Long-Term Care: The Problem.

Calling Medicaid “a welfare program,” Moses contends that the program “incentivizes states to maximize federal Medicaid dollars without ensuring cost efficiency, value, or quality.” 

Because the federal government reimburses about two-thirds of state Medicaid spending, Moses asserts that it has become the dominant long-term care funding source for the poor and middle class. “Medicaid serves neither population well,” he wrote. 

Public financing created and worsened inherent problems in long-term care, according to Moses. Medicare and Medicaid programs have both thwarted private sector financing and services tailored to consumer preferences, he said. 

Further, according to the author, Medicaid disincentivizes individuals from financially planning for long-term care. Medicaid, therefore, presents a “moral hazard that discourages responsible LTC planning when people are still young, healthy, and affluent enough to save, invest, or insure for the risk,” Moses said.

Alternatives to nursing homes, such as assisted living and private-pay home care, he said, “have struggled due to the bias in government policy toward Medicaid-financed nursing homes.

Moses’ next paper, Long-Term Care: The Solution, is expected to be published next year and will suggest reforms to address the problems caused by what he considers misguided government policies.