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New Study: Medicaid Pays Nursing Homes Less Than Minimum Wage  
New Study: Medicaid Pays Nursing Homes Less Than Minimum Wage
Trend will only worsen as Baby Boomers age, says AHCA CEO

Katherine Lehman
Manager, Public Affairs

Washington, DC – A new study released today finds that Medicaid programs in states across the country underfunded nursing facility care by $5.6 billion in 2010, paying on average $7.17 per hour per patient, less than the nation’s current minimum wage of $7.25 per hour. A lifeline for many elderly and disabled, Medicaid funds 64 percent of the care provided in America’s skilled nursing facilities nationally.

“This report reveals a truth many would not believe – today’s nursing facilities are paid less than the minimum wage,” stated Mark Parkinson, President & CEO of the American Health Care Association (AHCA). “That must change if we ever hope to serve the needs of a Baby Boom generation that will only stress our care delivery system further.”

Compiled by the research group Eljay -- a nationally-recognized expert in long term care -- the report identifies which states are most affected by the rising pressure on state Medicaid budgets, both in terms of highest aggregate Medicaid underfunding and highest per patient per day underfunding. States topping those lists are New York, Illinois, Massachusetts, Minnesota, New Jersey and Wisconsin.

Nursing home providers are often forced to rely on funding from other sources – primarily Medicare – to fill in the funding gaps resulting from inadequate Medicaid payments. With so many of the nation’s governors facing difficult choices surrounding budget cuts, Parkinson cautioned at the danger of allowing an already squeezed Medicare system to prop up Medicaid payment rates.

“There is a vast gap between the actual cost of providing quality eldercare and what the Medicaid program truly finances,” Parkinson stated. “As Baby Boomers begin to ponder their long term care needs in the future, it is simply unsustainable for Medicare to continue filling that financial gap. As current trends indicate, this problem will only grow worse in the coming years.”

The following charts highlight the states with the largest aggregate Medicaid underfunding and largest per patient per day underfunding:

Largest aggregate Medicaid underfunding

  1. New York - $1,396,494,595
  2. Illinois - $378,779,709
  3. Massachusetts - $310,871,237
  4. New Jersey - $304,430,314
  5. California - $288,599,289
  6. Pennsylvania - $277,609,403
  7. Ohio - $248,513,290
  8. Wisconsin - $181,237,562
  9. Minnesota - $151,611,752
  10. Missouri - $137,412,649

Largest Medicaid per patient day underfunding:

  1. New York - $47.95
  2. New Hampshire - $31.25
  3. Massachusetts - $31.22
  4. New Jersey - $29.29
  5. Washington - $28.18
  6. Wisconsin - $26.54
  7. Minnesota - $24.70
  8. Wyoming - $23.67
  9. Delaware - $22.86
  10. Illinois - $21.95

To access the full analysis from Eljay, A Report on Shortfalls in Medicaid Funding For Nursing Home Care, please visit