WASHINGTON, D.C. — A new survey of nursing home providers has revealed widespread concerns about the potential impact of proposed Medicaid spending reductions, with more than one-quarter of facilities indicating they would be forced to close their doors if significant cuts are enacted.
According to a survey conducted by the American Health Care Association and National Center for Assisted Living in May 2025, 27% of nursing home operators said they would have to close facilities in response to Medicaid reductions, while 58% indicated they would cut existing staff positions. The survey of 363 nursing home providers found that 92% are concerned about potential Medicaid cuts, 44% would limit new hiring, and 55% would reduce the number of Medicaid-funded residents they accept.
The findings come as Congress has advanced legislation that could significantly reshape Medicaid funding for long-term care. The Congressional Budget Office has estimated that proposed changes would reduce Medicaid and CHIP spending by approximately $863 to $911 billion over a ten-year period, according to analyses by legal and policy research organizations.
"The consequences are undeniable," stated Clif Porter, President and CEO of AHCA, in remarks reported by industry publications. "Restricting provider taxes is restricting resources to seniors and their caregivers."
The Medicaid-Nursing Home Funding Gap
Medicaid currently covers approximately two out of every three nursing home residents nationwide, making it the primary funding source for long-term institutional care in the United States. However, facilities have long reported that reimbursement rates fall short of actual care costs.
According to data cited by PBS NewsHour, nursing home care cost an average of $253 per day for Medicaid recipients in 2019, while the program reimbursed facilities only $198 per day—covering just 78% of expenses. Nearly two-thirds of survey respondents reported that their Medicaid reimbursement covers less than 80% of actual care costs, as reported by industry news outlets.
The gap between costs and reimbursement has contributed to ongoing facility closures. Between February 2020 and July 2024, 774 nursing facilities closed nationwide while only 243 new facilities opened, according to data reported by PBS.
Of the facilities surveyed in May 2025, 52% were independent single-facility operators and 60% were located in rural communities—settings where facility closures would leave residents with fewer care options and potentially require families to relocate loved ones significant distances.
Proposed Policy Changes
The legislative proposals under consideration include several provisions that would affect nursing home financing. According to legal analysis published by healthcare attorneys, H.R. 1, known as the "One Big Beautiful Bill Act," includes a ten-year moratorium on new provider taxes—levies that states impose on healthcare facilities to help fund Medicaid programs.
Provider taxes have grown as a share of Medicaid financing over the past two decades, increasing from 7% in 2008 to 17% in 2018, according to policy research. All states except Alaska currently utilize some form of provider tax to help finance their Medicaid programs, making this funding mechanism a critical component of long-term care financing nationwide.
The legislation would also reduce retroactive Medicaid coverage from 90 days to 30 days and impose a moratorium on the federal nursing home staffing mandate, according to legal analyses of the bill.
Economic Impact on Families
Beyond facility operations, researchers have warned that Medicaid reductions would shift substantial financial and caregiving burdens onto families. More than 5 million older Americans and adults with disabilities rely on Medicaid for long-term care services, while 4.5 million receive Medicaid-covered home care, according to research published by The New School's Schwartz Center for Economic Policy Analysis.
Nursing home care currently costs more than $111,000 annually on average, with monthly expenses ranging from $9,000 to $11,000, according to data cited in multiple reports. In 2021, Medicaid funded $207 billion in long-term services and supports across all settings.
Approximately 59 million Americans currently serve as family caregivers, with 40% providing high-intensity care, according to 2025 research data. Policy analysts have cautioned that reductions in Medicaid-funded professional care could substantially increase the time and financial burdens on family caregivers who would need to fill gaps in services.
Scrutiny of Industry Claims
The nursing home industry's warnings about potential closures and service reductions have drawn some scrutiny. Fact-checking organizations have examined the methodology and framing of survey findings, noting that survey questions asked what facilities "would" do rather than definitively measuring what "will" occur if legislation is enacted.
The survey responses reflect stated intentions from nursing home operators at a specific point in time, rather than binding commitments or independent projections of actual outcomes. However, the consistency of concerns across the 363 surveyed facilities—particularly among independent and rural operators—suggests widespread financial stress within the sector.
What This Means for Residents and Families
Federal regulations establish minimum standards for nursing home care, including requirements for adequate staffing, comprehensive care planning, and protection of resident rights. Facilities that fail to meet these standards face potential enforcement actions, including civil monetary penalties and termination from Medicare and Medicaid programs.
Families with loved ones in nursing homes should monitor their facility's quality ratings through Medicare's Care Compare website and stay informed about any changes in staffing levels or services offered. Signs that a facility may be experiencing financial stress include increased staff turnover, unfilled positions, delays in responding to resident needs, or announcements about service reductions.
Resources for Families
Families concerned about nursing home quality or considering long-term care options can access assistance through their state's Long-Term Care Ombudsman program. Ombudsmen advocate for residents in nursing homes, assisted living, and other long-term care settings.
The National Long-Term Care Ombudsman Resource Center operates a hotline at 1-800-677-1116 that can connect families with their local ombudsman program. Additional information is available at ltcombudsman.org.
Residents and families can also file complaints about nursing home quality directly with their state survey agency, which conducts inspections and investigates allegations of substandard care. Contact information for state survey agencies is available through Medicare.gov.
💬 Join the Discussion
Comments are moderated. Please keep discussions respectful and relevant to nursing home care quality.