Donna Nickerson spent her last working years as the activity and social services director at a Turlock, Calif., nursing home.
But when she developed Alzheimer's disease and needed that kind of care herself, she and her husband couldn't afford it: A bed at a nearby home cost several thousand dollars a month.
"I'm not a wealthy man," said Nickerson's husband Mel, a retired California State University-Stanislaus professor. "There's no way I could pay for that."
Experts estimate that about half of all people turning 65 today will need daily help as they get older, either at home or in nursing homes. Such long-term care will cost an average of about $91,000 for men and double that for women, who live longer.
In California and across the U.S., many people can't afford that, so they turn to Medicaid, the nation's public health insurance program for low-income people. As a result, Medicaid has become the safety net for millions of people who are unable to pay for nursing home beds or in-home caregivers. That includes middle-class Americans, who often must spend down or transfer their assets to qualify for Medicaid coverage.
About 1.4 million people are in nursing homes nationwide, and about 62 percent of those beds are paid for by Medicaid.
Medicaid was never intended to cover long-term care for everyone. Now it pays for nearly 40 percent of the nation's long-term care expenses, and the share is growing. As baby boomers age, federal Medicaid spending on long-term care is widely expected to rise by nearly 50 percent by 2026.
The pressure will intensify as people age, so both state and federal officials are trying to control spending.
State Medicaid directors are closely watching as long-term care spending takes up larger shares of their budgets and squeezes out other programs, said Matt Salo, executive director of the National Association of Medicaid Directors.
"There isn't a day that goes by they are not thinking about long-term care," Salo said. "It makes up a huge portion of the entire budget and it's growing. ... It is absolutely not sustainable."
In the meantime, people who need long-term care are depleting their savings or transferring their assets to others so they can qualify for Medicaid. Long-term care insurance rates are rising, and many seniors find they can no longer afford policies they purchased long ago.
In California, seniors typically can qualify for Medi-Cal — as Medicaid is called in that state — if their yearly incomes are under $16,395. To get long-term care through Medi-Cal, they also must show a need for assistance with certain "activities of daily living," such as dressing or bathing. Incomes can be higher if seniors can demonstrate medical need and have spent much of their savings, with some exemptions for homes and other assets.
About 21 percent of the state's over-65 population is enrolled in Medi-Cal, according to the state Department of Health Care Services. Medi-Cal paid for long-term care for an estimated 716,000 people who were elderly, blind or disabled in 2013, the most recent year for which data are available. In 2014, nearly a quarter of Medi-Cal's money went to pay for long-term care — about $14.7 billion, according to the California Health Care Foundation.
When Mel Nickerson, 85, realized a nursing home bed was too expensive, he sought guidance from an attorney, who helped him take his wife's name off their home and take her name off their assets. Then Nickerson applied for her to receive Medi-Cal, and he helped her move into a nursing home.
Now, Nickerson said he pays about $1,700 a month from her Social Security, and Medi-Cal picks up the rest of the cost, he said. Nickerson said his wife, now 84, is getting the care she needs, and he can't imagine having her anywhere else.
"It is absolutely the best place for her," he said. "She needs help 24 hours a day."
If more middle-class Californians like the Nickersons seek help from Medi-Cal, however, the program could be overwhelmed and unable to help the people who need it most, said Joanne Handy, CEO of LeadingAge California, an advocacy group that represents nonprofit nursing homes.
"The pressure on the state Medicaid budget, not only here in California but across the country, is just going up, up, up," she said. "If you put on top of that more and more what we call middle-income Californians spending down and then going onto Medi-Cal, it is just a crazy policy."
Salo, of the National Association of Medicaid Directors, said people shouldn't have to impoverish themselves to get financial help paying for long-term care, but states cannot afford to cover the care for everyone who needs it and are trying to come up with ways to control spending.
More than a dozen states are contracting with managed care companies to provide both medical care and long-term care services to their Medicaid beneficiaries.
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