Declining Nursing Home Supply Linked to Medicaid Underpayment and Staffing Woes
The number of certified nursing homes in the U.S. fell by 900 between 2015 and 2025, according to CMS data. Medicaid reimbursement often falls short of daily care costs, and low pay makes it hard to retain workers, prompting many facilities to limit admissions. More seniors are turning to assisted living or home-based care as a result.
Medicaid's reimbursement rates, which typically fall below the actual daily cost of providing skilled nursing care, create persistent financial pressure on facilities. Combined with the difficulty of hiring and retaining workers due to low wages and demanding conditions, many operators have chosen to restrict new admissions even when beds sit empty. This dynamic has contributed to the net loss of 900 certified facilities over the past decade.
The shift in long-term care delivery is also reflected in spending patterns. Medicaid's allocation for home- and community-based services has grown dramatically, from roughly one-tenth of long-term-care expenditures in 1988 to over three-fifths by 2020. This indicates a broader structural transition away from institutional care, though assisted living and home care may not fully replicate the level of medical oversight nursing homes provide.
The shrinking nursing home supply could place significant strain on families seeking skilled care for elderly or disabled relatives, particularly in rural areas where alternatives are scarce. Seniors may face longer waitlists or travel farther for services, while those who transition to assisted living or home care might receive less intensive medical supervision. The trend may also intensify pressure on family caregivers and could reshape how states allocate Medicaid resources, potentially affecting access to care for lower-income populations who rely most heavily on institutional coverage.