These are difficult days for the six million U.S. seniors who rely on Medicaid for long-term care. It’s also an uncertain time for anyone who is counting on Medicaid for care as they age.
A few weeks back here on the Blog, we featured this article warning us about Medicaid cuts included in the One Big Beautiful Bill Act passed last year. Now comes this analysis from Skilled Nursing News alerting us to the scarcity of Medicaid beds in nursing facilities around the country. One of the major causes for this attrition, says the article: years of steadily-reduced Medicaid reimbursement rates.
In at least one state, New York, costs are rising four times faster than reimbursement rates. This is triggering what one expert called “a worsening access crisis” which may leave future Medicaid patients with dwindling options for care.
The article in Skilled Nursing News, written by reporter Zahida Siddiqi, first appeared last spring. Let’s see what else Siddiqi has to say.
Medicaid Payments Aren’t Keeping Pace with Rising Costs
Siddiqi begins with the basic problem: many long-term care facilities that house large numbers of Medicaid residents are hemorrhaging cash, and the availability of Medicaid beds is dropping as a result.
“Low Medicaid reimbursement rates are making it increasingly difficult for hospitals to transfer patients to nursing homes because of beds that are offline,” she writes. “As state Medicaid payments fail to keep pace with rising costs, many skilled nursing facilities are becoming more selective – limiting the number of Medicaid patients they accept and instead prioritizing higher-paying Medicare and privately insured patients.”
New York: 1,200 Nursing Beds Lost in Past Two Years
Siddiqi offers a few specifics from around the nation, beginning in the northeast.
“In states like New York, persistently low Medicaid reimbursement rates have meant that about 10 percent of nursing home beds are closed to admissions,” she writes, quoting Sebrina Barrett, president and CEO of LeadingAge New York. “Barrett told Skilled Nursing News that in just the past two years, 11 nursing homes have closed, resulting in a loss of more than 1,200 beds.”
Barrett added that these closures are just the tip of the iceberg. She told Siddiqi, “We know there are more than 7,000 beds offline” – that is, not accepting Medicaid patients – “and that more than 70,000 beds are operating in financial distress.”
More Closures Inevitable if Reimbursements Not Addressed
The issue, says Barrett of LeadingAge New York, is that facilities are expected to provide costly services without adequate reimbursement. “Unless nursing homes receive Medicaid reimbursement rates that cover the actual cost of care, we expect more closures, which will lead to greater bottlenecks in hospitals,” she told Siddiqi.
Barrett explained that, while operating costs have risen by more than 50 percent in New York in recent years, reimbursement rates have increased by only 12.8 percent. “We need permanent increases to the Medicaid reimbursement rate in order to stabilize the system and prevent further closures,” she told Siddiqi.
Reimbursement Rate Shortfall is a Nationwide Problem
Lest anyone think that the problem of lagging Medicaid reimbursement rates is limited to high-cost states such as New York, Siddiqi shifts her focus west, where she spoke with Idaho-based Steve LaForte, CFO of Cascadia Healthcare. Cascadia operates more than 25 facilities in Idaho, plus 33 more facilities across Washington, Montana, Oregon, Arizona and New Mexico.
Siddiqi writes, “[LaForte] told Skilled Nursing News that each admission at Cascadia facilities is weighed against whether the facility will be able to recover the costs of care, which have risen due to inflationary pressures outpacing reimbursement, among other factors.” He explained that, while Cascadia has not had blanket cuts across the board, the chain has been forced to scrutinize each admission with extreme caution.
“In response to the cuts in Idaho, we have had to take an approach which has our facilities flipping different switches to ensure financial sustainability in order to ensure long-term care access and the quality we strive to deliver,” LaForte states. He is warning Idaho lawmakers that “admission criteria will have to change, access to care for Medicaid admissions will be more limited, and unfortunately hospital bottlenecks will occur” if reimbursement is not addressed.
Medicaid Cuts Trigger a Legal Battle in Washington State
Here in Washington State, home to AgingOptions and Life Point Law, Medicaid cuts have prompted at least one lawsuit.
As reported last June in the Washington State Standard, Washington’s leading assisted living organizations – the Washington Health Care Association and LeadingAge Washington – have filed suit against the State. They accuse the Democrat-led legislature of cutting tens of millions of dollars earmarked for assisted living facilities from the Washington budget. The cuts, the lawsuit contends, were made during the budgeting process in a manner that violated State law.
Writing for the Washington State Standard, reporter Jake Goldstein-Street explained that assisted living facilities had been counting on higher reimbursement rates. “Providers expected the new, higher rates this summer would help them deal with significant increases in labor and operating costs,” he writes. “Some had already planned on wage hikes for staff.”
Instead, the cuts could trim $21 million from Medicaid reimbursement to Washington assisted living facilities. However, the actual impact is more than twice that amount – roughly $45 million in lost reimbursement – when federal matching funds are included. We’ll keep an eye on this story for future developments.
Loss of Medicaid Access Compounded by Staffing Crisis
According to the Skilled Nursing News article, declining reimbursement rates aren’t the only issue affecting Medicaid access. The long-term care industry is also in the throes of a staffing crisis.
Back in January 2026, another article in Skilled Nursing News spotlighted a study reported in JAMA Internal Medicine revealing that operating capacity in U.S. skilled nursing facilities actually declined by at least 5 percent nationwide from 2019 to 2024. The study further showed that, across the country, one in four counties lost 15 percent or more capacity.
“Losses were greatest in rural areas and counties with severe staffing shortages,” says Skilled Nursing News. “Pandemic-driven workforce declines forced many facilities to reduce beds or limit admissions, leading to longer hospital stays and patients traveling farther for care.”
“Worsening Access Crisis” Forces Families Into Tough Decisions
Reporter Siddiqi writes, “The findings highlighted a worsening access crisis, with industry leaders urging policymakers to strengthen Medicaid funding and invest in workforce recruitment and retention to stabilize long-term care capacity.”
She quotes Clif Porter, CEO of the American Health Care Association, who warns that families will face tough choices as care options shrink. “This study confirms what we have been saying for years,” he states – “that when nursing homes can’t find caregivers, residents and families must wait longer or look farther for the care they need.”
Porter adds that the new data validates years of anecdotal reports about care shortages – and that the problem is actually worse than many in the industry had realized.
“The rippling effect on families, hospitals, and rural communities is real,” he warns. “This should be a signal to policymakers that when nursing homes say they need help with workforce challenges, believe them.”
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