By Danyell Punelli, 651-296-5058
Medicaid Long-Term
Care Costs
September 2023
Under Medicaid, states can offer home- and community-based long-term care for
people who would otherwise be institutionalized. This brief provides a short overview of
Medicaid long-term care services and information related to Medical Assistance long-
term care funding, expenditures, and recipients.
Medicaid Overview
Medicaid, or Medical Assistance (MA) as it is called in Minnesota, is a joint federal-state health
care program that provides necessary medical services for low-income families, children,
pregnant women, and people who are elderly (65 or older) or have disabilities.
1
Medicaid home- and community-based waivers were established under section 1915(c) of the
federal Social Security Act of 1981. The waivers were intended to correct a bias toward
institutional care in the Medicaid program. They allow states to offer a broad range of home-
and community-based services to people who may otherwise be institutionalized in facilities
such as a nursing facility or intermediate care facility for persons with developmental
disabilities or related conditions (ICF/DD).
2
In 1999, the U.S. Supreme Court ruled in Olmstead vs. L.C. that states have an obligation to
ensure that people with disabilities are not forced to remain institutionalized when a more
integrated setting is appropriate and the affected people do not object to the community
placement. The Court also indicated that states should have comprehensive, effective working
plans for placing qualified people in less restrictive settings. This ruling prompted states,
including Minnesota, to review their policies and practices and to determine whether they were
most effectively supporting the relocation and diversion of people from institutional settings.
MA Long-Term Care Services Funding
The federal government pays a share of the cost of state MA expenditures. This is referred to as
the federal medical assistance percentage (FMAP). Minnesota’s usual federal match is 50
percent. The state pays the remaining 50 percent for most services (some services have a
county share, such as long-term placements in ICF/DD facilities with seven or more beds). In
fiscal year 2024, the projected total expenditure for all long-term care services was $7.2 billion,
with a state share of $3.3 billion.
1
For more on the Medical Assistance program, see the House Research publication Medical Assistance.
2
For more on the waiver programs, see the House Research publication Medicaid Home- and Community-Based
Waiver Programs.
Medicaid Long-Term Care Costs
Minnesota House Research Department Page 2
Long-Term Care Facilities Expenditures vs. Waivers
and Home Care Expenditures
The average monthly payment per recipient for long-term care facilities (nursing facilities,
county nursing facilities, ICF/DD facilities, and the State-Operated Services mental illness
program) is estimated to be $8,859 in fiscal year 2024. This is higher than the estimated
average monthly payment per recipient of $5,558 for MA home and community-based waiver
and home care (BI, CAC, CADI, DD, and elderly waiver and home health agency services,
personal care, and home care nursing services).
As shown in the graph below, the total expenditures for the long-term care facilities decreased
for several fiscal years in the 2010s before increasing again, while total expenditures for long-
term care waivers and home care have been increasing rapidly, and the average monthly
payments for both types of services have increased over time. These expenditure changes are
due to changes in participation rates between programs and a new nursing facility payment
rate methodology that was implemented in fiscal year 2016.
Total Annual Payments for LTC Facilities vs. Waivers/Home Care
Fiscal Years 2000 to 2024
Source: February 2023 Department of Human Services Forecast of Revenues and Expenditures
Note: Fiscal year 2023 and 2024 numbers are projected.
Medicaid Long-Term Care Costs
Minnesota House Research Department Page 3
Number of MA Long-Term Care Services Recipients
In fiscal year 2024, the projected monthly average number of recipients for MA long-term care
facilities and waiver/home care services was 100,216. As shown in the graph below, the
average number of recipients each month has declined in MA long-term care facilities but
increased for MA long-term care waivers and home care during the same time period.
Monthly Average Recipients for LTC Facilities vs. Waivers/Home Care
Fiscal Years 2000 to 2024
Source: February 2023 Department of Human Services Forecast of Revenues and Expenditures
Note: Fiscal year 2023 and 2024 numbers are projected.
Minnesota House Research Department provides nonpartisan legislative, legal, and
information services to the Minnesota House of Representatives. This document
can be made available in alternative formats.
www.house.mn.gov/hrd| 651-296-6753 | 155 State Office Building | St. Paul, MN 55155
