A common strategy for dealing with late-stage care is to exhaust one's finances and rely on Medicaid to pay for nursing home care. But how realistic is that, and how bad are Medicaid nursing homes?

The Centers for Medicare and Medicaid Services, a U.S. federal agency under the Department of Health and Human Services, administers the Medicare and Medicaid programs. They developed a rating system for nursing homes that's as simple as typing a zip code into a website. On the five-star rating scale, 5 is the best and 1 is the worst. Using this well-designed site you can quickly evaluate and compare nursing homes in your area.

Several factors go into the ratings including how often residents fall, get infected, or go to the hospital. Other measures include the ratio of staff to patients, daily care hours per resident, and health inspection records.

The Nursing Home Spectrum

Studies have shown that nursing homes with the highest ratings have the lowest percent of Medicaid patients, and those with the lowest ratings have the highest percent of Medicaid patients. Medicaid pays less than market value for nursing home care. In 2021 the average cost for a nursing home is $100,000 per year.

According to a study by Kaiser Health News, the highest-rated nursing homes have an average of 49% Medicaid residents, while the worst-performing nursing homes have an average of 69% Medicaid residents. The same study found that on average, each patient in a 5-star facility receives 5.4 hours of care per day, while patients in 1-star facilities receive 3.0 hours of care per day. The numbers support their conclusions, however the differences are shades of gray, not night and day.

Conclusion

As we pointed out in Long-Term Care Insurance is a Waste of Money, less than one percent of the U.S. population resides in nursing homes. For ourselves and our loved ones, the prospect of ending up in a nursing home is a possibility, but not a probability. 

If it comes down to exhausting your resources and letting Medicaid take over, it's nice to know that there really is no such thing as Medicaid nursing homes, just varying degrees in the number of Medicaid patients. Finally, while there's no place like home, residing in a nursing home on Medicaid's dime is not as bad as you might imagine.

Photo credit: Mike Ballew Eggstack News will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.