Burcum: Medicaid cuts in ‘Big, Beautiful Bill’ will hit Minnesota nursing homes hard

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One of the most difficult moments in my dad’s long and losing battle with Parkinson’s disease is how suddenly his care needs escalated.

He’d lived with this debilitating condition for 14 years at home, with my mom providing assistance. But that changed after he was hospitalized in late February. His needs were now beyond our family’s capacity. It was time to move him to a skilled nursing facility.

That abrupt transition brought us face to face with long-term care’s brutal reality. It is staggeringly expensive. In Minnesota, the average monthly cost for a private nursing home room in the metro is $12,805. You can shave a little off the bill by choosing semiprivate accommodations, but the 30-day tab for that is still $12,167.

Yes, we’d talked about this transition in advance. But it’s one thing to know the care costs in theory and another to actually confront that monthly bill in real life.

The amount of resources required for long-term care — which you or someone in your family will almost certainly need at some point — is a monumental challenge facing our society. Many need help paying for it and rely on Medicaid, which is the primary payer for 53% of nursing home residents in Minnesota. That figure rises to over 60% of nursing home residents nationally.

It’s through this lens that I followed the reconciliation bill that has now cleared both congressional chambers, with final passage squeaking through the U.S. House on Thursday. It cuts about $1 trillion out of the Medicaid program over the next decade, the “largest ever cuts to the nation’s safety net in modern history," according to a Health Affairs journal analysis.

Minnesota’s state Medicaid director, John Connolly, estimated that the reconciliation bill will result in a loss of $500 million annually for a program that covers 1.2 million adults and children in our state. This is a sum not easily backfilled with state dollars.

While the congressional cuts generally take more direct aim at younger people on Medicaid, pulling this much money out of a program is a concern when it is already struggling at current levels of funding to meet the needs of all those it serves.

Health care is an ecosystem and cuts in one area can have ripple effects systemwide. The big-not-beautiful bill also puts new limits on states’ ability to pull down additional federal dollars to fund long-term care and other needs.

It’s important to put a spotlight on this when Medicaid is the nation’s long-term care payment work horse. That’s especially true when many mistakenly believe that Medicare, the program providing medical coverage mainly for those 65 and up, will cover long-term nursing home stays.

Instead, it’s Medicaid that ensures access to this care when family finances don’t permit it and eligibility requirements (generally spending down personal resources) are met. Medicaid dollars also play a vital role in providing home and community-based services for those who want to age in place.

Nationally, the American Health Care Association (AHCA), a long-term care industry group, is sounding the alarm about Medicaid funding reductions. “More than half of nursing homes would be forced to cut staff, and more than one-quarter would have to close their doors,” the organization reported after surveying providers.

Finances are always a challenge for long-term care providers, with the AHCA noting that Medicaid reimbursement already falls short of the actual cost of care. Yet when cuts of this magnitude are coming, lowering that reimbursement further has to be one of the options on the table for states trying to close a new budget hole. Other obvious options: raising taxes or restricting Medicaid eligibility or benefits, none of which will be appetizing for state lawmakers left to grapple with congressional cuts.

Kari Thurlow leads LeadingAge Minnesota, a long-term care trade group. In an interview, she said her organization is still reviewing the newly passed bill but said its cuts come at a difficult time.

Nursing homes are already in a “fragile” state financially, she said, noting that Minnesota has had 25 nursing facilities close since 2019. Three-quarters were in greater Minnesota.

State legislators in the 2025 session added to financial pressures. Belt-tightening measures passed included a new cap on reimbursements to nursing homes, which Thurlow contended jeopardizes providers’ bottom lines.

The Minnesota Department of Human Services described the measure this way:

“In the past nine years, the statewide weighted average daily rate paid for Nursing Facilities has increased from $222.41 in 2016 to $362.25 in 2025, an annualized growth rate of 5.6%,” officials said. “Under the new cap, operating rate increases will be limited to changes in the CPI-U, up to 4% per year,” with CPI standing for consumer price index.

No matter if it’s a cut or reduction in the rate of growth, Thurlow is understandably alarmed about the congressional cuts’ timing. Federal funding reductions on top of the state’s move puts new pressures on this vital industry and in turn, those who need help paying for its services.

“I think we’re cutting to the bone,” Thurlow responded when I asked if the federal changes were simply going to eliminate waste, fraud and abuse.

“I think what we are really doing is erecting barriers to accessing health care and making it more difficult for providers to provide the care and services that people need,” she said.

Thurlow also raised another important timing concern. In less than five years, more than 1 in 4 Minnesotans will be over 65, she said. In a few short years, the median age of baby boomers will be 80.

What was needed was a thoughtful plan for caring for our rapidly aging population of older adults, and how to pay for it. Instead, Congress took aim at the program so many depend on or will soon depend on.

“We have really taken a step back,” Thurlow said. “Unfortunately, we’re going to be in a little bit of a crisis management mode when we should really be in a strategic planning and implementation mode.”