Long-Term Care at a Breaking Point in New York

City & State: Medicaid reimbursement underpins much of New York’s long-term care system. How would you describe the current funding environment?

Stephen B. Hanse, President & CEO, NYS Health Facilities Association / NYS Center for Assisted Living: The current Medicaid funding model is fundamentally outdated. Nursing home rates are still largely based on 2007 costs and have not been meaningfully rebased to reflect today’s economic realities. Inflation, labor costs, and operating expenses have risen dramatically, while reimbursement has not kept pace. With approximately 75 percent of nursing home residents relying on Medicaid, chronic underfunding threatens both access to care and the system's stability.

Sebrina Barrett, President, LeadingAge New York: From the nonprofit perspective, this underfunding directly undermines mission. Nonprofit homes reinvest every available dollar into resident care. Our members lose about $150 per day, per resident, which has led to thousands of bed closures and thousands more at risk of closure. When Medicaid rates fall short, it limits our ability to serve vulnerable populations, particularly in rural and underserved communities where nonprofit providers are the primary safety net.

City & State: Staffing shortages have become one of the most visible challenges. What is driving the workforce crisis?

Hanse: Nursing homes compete in the same labor market as hospitals but without comparable reimbursement. At the same time, the state’s 3.5-hour staffing mandate was implemented without sufficient funding. To remain compliant, many facilities have been forced to close beds or limit admissions, which creates ripple effects across the health care system, including hospital discharge delays.

Barrett: Inadequate rates make it hard to recruit and retain. Most nursing home jobs require specialized training and certifications. Without proper reimbursement from government payers, it is challenging to provide competitive compensation that will attract qualified staff and retain them. Nursing homes prioritize long-term staff retention because continuity of care directly benefits residents.

City & State: New York’s population is aging rapidly. How is that demographic shift reshaping demand for long-term care?

Hanse: By 2030, New York’s 80-and-older population will exceed 1.2 million, and older adults will make up as much as 25 to 30 percent of residents in many counties. At the same time, people entering nursing homes today present with far more complex medical and behavioral health needs than in the past. That combination places enormous pressure on providers to deliver higher-acuity care without commensurate resources.

Barrett: The need for long-term care is rising, while our workforce is shrinking. Residents are arriving with more complex needs and staying longer. We’re also seeing more residents with significant behavioral health needs. Meeting those needs requires investment in staff, technology, and integrated services. Without adequate funding that covers the actual cost of care, mission-driven providers face difficult choices about the future viability of their facilities and services. 

City & State: Beyond funding and workforce issues, providers cite regulatory uncertainty as a growing concern. What are the most pressing challenges?

Hanse: Uncertainty around federal reimbursement changes, including Medicare payment models like PDPM, combined with the risk of Medicaid cuts elsewhere in the system, makes long-term planning extremely difficult. At the state level, strict liability standards and expanding compliance requirements add cost and risk at a time when margins are already thin.

Barrett: For nonprofit homes, regulatory uncertainty can stall long-term investments. Boards are cautious about approving capital projects,  service expansions, or new affiliations, when the financial and regulatory outlook is unclear. Predictability is essential if providers seek to modernize facilities, pursue collaborations that strengthen their long-term viability, or expand access.

City & State: What message should policymakers take from this moment?

Hanse: Long-term care is foundational to New York’s health care system. Without adequate Medicaid funding, realistic workforce policies, and regulatory clarity, access to care will continue to erode as the population ages. 

Barrett: Policymakers must recognize that long-term care is not optional, and a collapsing long-term care system negatively impacts hospitals and healthcare for everyone, young and old. Policy and funding decisions made today will determine whether New York’s older adults can age with dignity in their preferred setting or face few options when they need care most.