The demand for long-term services and supports (LTSS), which include home-based care, is rising. The payment for these services is also changing, in part due to decreases in the proportion of Medicare and other public funding.
Instead, Medicaid increasingly pays for LTSS, according to a report from the Congressional Research Service. The share of Medicaid LTSS spending increased from 42.1% to 45.6% in the last decade.
Private payment sources have slightly increased their share of payments for LTSS. In 2023, private sources accounted for 30.5% of LTSS spending, a slight increase from 29.6% in 2022.
“Out-of-pocket spending remained the largest component (14.4%), followed by private insurance, which includes both health and long-term care insurance (8.7%), and other private funding, which largely includes philanthropic contributions (7.5%),” the report’s authors wrote.
In 2023, out-of-pocket spending accounted for 14.4%, or $81 billion, of total LTSS spend. Private insurance and long-term care insurance paid for 8.7% of total LTSS spending that same year, representing $49.1 billion.
Medicaid is still the single largest payer of LTSS in the U.S., however. In 2023, total Medicaid LTSS spending, which includes federal and state dollars, reached $257 billion, representing 45.6% of all LTSS spending.
Medicare, which is not intended to be a primary funding source for LTSS, doled out $101.7 billion for skilled nursing facility (SNF) and home health services combined in 2023. That amounts to 18% of all LTSS spending. That same year, more than half of Medicare spending was for home health services, to the tune of $53.6 billion.
While Medicaid remains the top payer of LTSS, the health of Medicaid has been a concern for many in the home-based care community. The One Big Beautiful Bill Act (OBBA) slashed Medicaid’s budget, driving states to make difficult decisions regarding which services they can continue to fund.
Some providers of home-based care services have already felt the effects. Providence St. Joseph Health, a national faith-based health system, estimated that it would lose $500 million due to the OBBA and closed its home companionship program.
Despite these concerns, investors remain interested in home-based services for Medicaid beneficiaries. In August, Medicaid-focused in-home primary care provider Nest Health raised $12.5 million in a Series A funding round.
