LTC Bullet: So What If The Government Pays For Most LTC, 2024 Data Update

Friday, February 27, 2026

Seattle--

LTC Comment: Heads up! We're about to explain why long-term care insurance sales have disappointed, why people don't "use their homes to stay at home" and why LTC providers who depend on public financing are at risk. Details after the ***news.***

*** ILTCI CONFERENCE: The big annual LTC insurance conference is coming up March 8-11 at the Rosen Shingle Creek Resort in Orlando, Florida. Get all the latest information here. You’ll find the Session Schedule Matrix, and information on the Keynote Speaker, the Alzheimer’s Association Session, and much more. Read the session descriptions and get a general conference schedule outline. Get details on the CLTC Master Class and the Future Leaders Program. Organizers say:

Over the past 25 years: The ILTCI Conference has grown to be the nation’s largest gathering of the extended care industry’s top thought leaders. Professionals from all disciplines attend and participate in a concerted effort to broaden their knowledge, network, and bring more consumers to the table to plan for their long term care needs. Contributors and speakers share cutting-edge expert opinions and analysis covering diverse fields in our 7 tracks while exhibitors and sponsors showcase a broad range of solutions and advancements.

Register here.***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2024 DATA UPDATE

LTC Comment: Once a year, the Centers for Medicare and Medicaid Services (CMS) reports health care expenditure data for the latest year of record. In January, CMS posted 2024 statistics on its website here. Click on this link NHE Tables (ZIP) to download the tables. Then, click on the ones of interest, Tables 13, 14 and 15 for our purposes here.

Health Affairs has published a summary and analysis of this new data titled “National Health Care Spending Increased 7.2 Percent In 2024 As Utilization Remained Elevated." The article is “open access” so available free here. Unfortunately, the Health Affairs article has little to say about long-term care beyond the raw data. This was the extent of it:

In 2024, mainly as a result of declining enrollment, all Medicaid services except home health care and nursing and residential care facilities experienced growth that was slower than growth in 2023. … Services used for long-term care (the population most likely to use this type of care was more likely to retain Medicaid coverage)—including other health, residential, and personal care services; home health care; and nursing and continuing care retirement communities—continued to experience strong growth in 2023 and 2024 (8.9 percent and 9.5 percent, respectively; data not shown).

Not much on LTC, but more than in past years. Note the surge in nursing home, home care, and residential care expenditures. Read on to get the rest of the story.

Following is our annual analysis of the latest long-term care expenditure data. Note that we added Table 13, “Other Health, Residential, and Personal Care Expenditures,” to our analysis starting two years ago. This category includes Medicaid home and community based waivers and care provided in residential care facilities, so it is a vital part of the LTC marketplace. We focused only on nursing home[1] and home health expenditures before.

Heads Up: This may be the most important LTC Bullet we publish all year. It is the twenty-fourth in a row we’ve done annually to analyze the federal government’s enormous, and we argue, often detrimental, impact on long-term care financing. If you'd like to see the earlier versions, go here and search for “So What if the Government Pays.” You’ll find our yearly analyses of the data going all the way back to "So What If the Government Pays for Most LTC, 2002 Data Update."

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"So What If the Government Pays for Most LTC, 2024 Data Update"
by
Stephen A. Moses

Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care? Read on.

Nursing Homes

America spent 219.9 billion on nursing facilities and continuing care retirement communities in 2024, a 7.3% increase compared to 2023. The percentage of these costs paid by Medicaid and Medicare has gone up over the past half century (from 26.8% in 1970 to 57.4% in 2024, up 30.6% of the total) while out-of-pocket costs have declined in the same period (from 49.2% in 1970 to 22.1% in 2024, down 27.1% of the total). Source: Table 15: Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2024.

So What? Consumers' liability for nursing home and CCRC costs has declined by almost half, down 44.9% in the past five decades while the share paid by Medicaid and Medicare has more than doubled, up 114.2%.

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care! No wonder they don't use home equity for LTC when Medicaid exempts at least $752,000 and in some states up to $1,130,000 of home equity (as of 1/1/26. The "One Big Beautiful Bill Act" (OBBBA) set a nationwide limit at $1 million starting January 1, 2028.) No wonder nursing homes struggle financially—their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid. These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially vulnerable government program. Thus, although Medicaid pays a little more than one-third of the cost of nursing home (and CCRC) care (35.9% of the dollars in 2024), it covers over two-thirds (67.0%) of all nursing home patient days.

So What? Medicaid pays in full or subsidizes over two-thirds of all nursing home patient days. Even if Medicaid pays nothing, with the entire amount due contributed from the recipient's income, the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. Consider this for example: “We found that Medicaid payment rates for the average or median nursing home covered about 82 cents per every dollar of reported cost nursing homes incurred caring for Medicaid residents. For approximately 40% of nursing homes, Medicaid per diem payments covered 80% or less of their estimated per diem Medicaid costs." (Source: “In Case You Missed It: New HHS Report Reveals Significant Medicaid Shortfall For Nursing Homes,” AHCA/NCAL, October 22, 2024)

Private Health Insurance

Don't be fooled by the 8.8% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2024. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because “In most cases, private long-term care insurance reimburses people for the expenses they pay out-of-pocket and would be classified as out-of-pocket spending in the NHE data.” (Priya Chidambaram and Alice Burns, “10 Things About Long-Term Services and Supports (LTSS),” KFF, July 8, 2024) Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? According to the Genworth Cost of Care Survey for 2024, median ALF cost was $70,800 per year ($5,900 per month), up 1.1% from 2023, but up 37.2% since 2020. Although assisted living facilities remain mostly private pay, almost half of ALFs were “authorized or certified” to participate in Medicaid and only “a small minority of state Medicaid programs do not cover services in assisted living.” Furthermore, “Almost 1 in 5 residents relies on Medicaid to pay for daily services (18%).” (Find these latter two quotes under the source’s “Finance” tab.) Over time, assisted living facilities have followed nursing homes down the primrose path of accepting more and more revenue from Medicaid.

Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to $752,000 or $1,130,000 depending on the state), plus—in unlimited dollar amounts—one business, one automobile, prepaid burials, term life insurance, household furnishings, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

So What? For most people, Medicaid nursing home benefits are easy to obtain without spending down assets significantly and Medicaid's income contribution requirement is usually much less expensive than paying the full cost of assisted living.

No wonder ALFs are struggling to attract enough private payers to be profitable. No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care. This problem has radically worsened in recent years because more and more state Medicaid programs are paying for assisted living as well as nursing home care, which makes Medicaid eligibility more desirable than ever.

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $169.4 billion on home health care in 2024, 10.3% more than in 2023 ($153.6). Medicare (32.9%) and Medicaid (22.5%) paid 55.4% of this total and private health insurance (not LTC insurance) paid 22.0%. Only 17.9% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2024.

So What? Only one out of every six dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more personally at risk for the cost of their care.

Other Health, Residential, and Personal Care

This category includes a lot of long-term care spending that is not encompassed by the nursing home and home health NHE categories, such as Medicaid home and community based waivers and care provided in residential care facilities. The trends are very similar. Americans spent $320.5 billion on these services in 2024, up 9.1% from $293.7 billion in 2023. Medicare (1.4%) and Medicaid (62.4%) paid 63.8% of that total; private health insurance and other third parties contributed 31.5%; out-of-pocket expenditures amounted to only 3.5%. Data Source: Table 13: Other Health, Residential, and Personal Care Services Expenditures: Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2022

So what? Only one dollar out of $29 spent on these important LTC services comes out of the pocket of a private payer.

No wonder the public feels so little sense of worry about planning, saving, investing or insuring for long-term care.

Summary

Source: National Health Expenditures[2]

Across all three kinds of LTC services out-of-pocket expenditures account for only $1 in $7.87 spent. Half of this spending comes from income of people already on Medicaid. Thus only 6.35%, or $1 in $15.74 could have come from spend down of savings.

Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in denial about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.

The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care. For ideas and recommendations on how to implement this solution, see www.centerltc.com.

Note especially:

“Better Long-Term Care for Billions Less,” Cato Institute (2025)

“Medicaid’s $100 Billion Plus Leak,” Paragon Health Institute (2024)

“Long-Term Care: The Solution” (2023) with the Paragon Health Institute at https://paragoninstitute.org/research-paper-page-moses-ltc-solution-20231002/

“Long-Term Care: The Problem” (2022) with the Paragon Health Institute at https://paragoninstitute.org/long-term-care-the-problem/

“Medicaid and Long-Term Care” (2020) at http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf

“How to Fix Long-Term Care Financing” (2017), at http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf

In the Deficit Reduction Act of 2005, Congress took some significant steps toward addressing these problems. A cap was placed for the first time on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave cresting and threatening to crash over the next two decades, we can only hope it isn't too late already.

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington and a Visiting Fellow with The Paragon Health Institute. The LTC Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. Learn more at www.centerltc.com or email smoses@centerltc.com.

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