In response to the economic slump, growth of the Baby Boom population and pressure on state budgets, the federal government will allow states to begin charging premiums and increasing co-pays for those on Medicaid. This is another warning sign to seniors and their families that they need to be preparing to take on more and more of the financial burden to cover the costs of senior housing and long term care. As the increasing population of Baby Boomers and seniors hits in concert with a shrinking economy, the pressure on the federal budget to support entitlement programs such as Social Security and Medicare and on state budgets to fund Medicaid programs is creating more pressure to push back on citizens to carry more of the load in the form of premiums.
Medicaid pays the vast majority of costs associated with the almost 1.5 million people receiving housing and long term care in skilled nursing facilities. Medicaid is now moving in the direction of operating more like health insurance and by charging premiums will deflect a portion of the costs back on the individual. And by charging higher co-pays, they hope to motivate people to be more cost conscious when spending Medicaid dollars. Each state runs its own Medicaid program and will have discretion to set premium and co-pay amounts as they wish.

It is important that people understand these early warning signs of what is to come. Federal and state budgets can only accommodate so much, and when dollars are shrinking while populations are growing it becomes pretty simple math to see that something has to give. If history is our guide, then it will be the individual who ends up giving the most. Now is the time to be preparing by understanding the funding options that are available to help cover these costs as they become more and more the responsibility of the individual.

Click here to read the New York Times article about increasing Medicaid premiums.