Study Reveals Medicaid Spend-Down Trends Among U.S. Nursing Home Residents

A recent study published in JAMA Network Open highlights that nearly 1 in 6 nursing home residents in the U.S., admitted under Medicare or private pay, subsequently enroll in Medicaid by depleting their financial assets. The research tracked 191,416 traditional Medicare beneficiaries who entered nursing homes in 2018, following them up to five years to analyze their rate of Medicaid spend-down during extended stays. Approximately 33.9% of residents were Medicaid-enrolled at admission or shortly after, while of those entering without Medicaid, 16.4% spent down their assets, typically within 6 months, to qualify for Medicaid. The study underscores the significant economic burden long-term care places on older adults and their families. It reveals that longer nursing home stays increase the likelihood of Medicaid spend-down, with 61.8% of private-pay residents transitioning to Medicaid after four years. There are notable disparities by race, age, and marital status, with Black, Hispanic, and Native American residents, as well as women and unmarried individuals, more likely to experience spend-down. These differences are linked to preexisting wealth disparities. Medicaid eligibility criteria require individuals to spend down assets to meet state financial thresholds, although spousal protections exist for those remaining in the community. The escalating cost of long-term services and supports (LTSS), ranging from $24,700 to over $288,000 annually, often exceeds seniors' median income and savings, leading to financial exhaustion. The study also acknowledges shifts in spend-down patterns due to the growth of private pay assisted living, which can deplete assets before nursing home admission. Limitations of the study include its focus on traditional Medicare beneficiaries only, excluding those with Medicare Advantage or private long-term care insurance. It also does not capture pre-admission financial strategies such as asset sheltering. The study calls for enhanced research into Medicaid spend-down dynamics and suggests that policymakers explore new approaches to mitigate financial hardship for families and reinforce Medicaid’s fiscal sustainability. This research adds vital contemporary data to the longstanding challenge of financing long-term care, emphasizing the intersection of health insurance coverage, demographic disparities, and the economic pressures placed on Medicaid as the primary payer for nursing home services in the United States.