Medicaid long-term care is well on its way to destroying state budgets, according to a new study by the international consulting firm Deloitte LLC. By 2030, according to estimates by the firm’s Center for Health Solutions, Medicaid long-term care benefits for both home and nursing facility care will absorb a staggering 18 percent of total state budgets if current trends continue. Overall state Medicaid spending will almost double by 2030 and the total program, including acute care benefits for young mothers and children, will swallow nearly 35 percent of state revenues. That would make it by far the biggest single state program, eclipsing even education.

This outcome is, honestly, impossible. Long before states face these costs, they will slash the program, either by cutting benefits, limiting eligibility, or both. We can already see this happening in the current recession, where state home and community programs are being cut and nursing home payments frozen or trimmed.

As the report notes, states are facing “a catastrophic fiscal left hook” from Medicaid. On one hand, the new health law requires them to provide Medicaid medical coverage for 14 million near-poor Americans. While the federal government promises to cover all of those extra costs until 2016, states will be on their own after that. At the same time, a rapidly growing and long-lived aging population that will suffer increased chronic disease and demand more long-term care under Medicaid.

What will states do about this? The Deloitte report suggests more efficient delivery focused on better care coordination for those receiving both Medicare and Medicaid, more home care services, and further incentives to encourage middle-class people to buy private long-term care insurance. But the real solution, I fear, will be global budgets where total Medicaid spending is capped at a certain level.  

The Deloitte study is more evidence that, in the long run, we need to get Medicaid out of the long-term care business. And to do that, we need to build on the just-passed CLASS Act and make long-term care an insurance program, not a welfare program. Trying to preserve the broken Medicaid system will only bankrupt states even as it provides families with the wrong care, at the wrong time, and in the wrong place.