Gao: Medicaid, Medicare Spent At Least $12b On Assisted Living But Affordability And Access Gaps Persist

The number of older adults using Medicaid and Medicare to access certain assisted living services continues to grow, but access remains an uneven barrier for connecting older adults with assisted living services based on geographic and coverage limitations.

At least $12 billion in combined Medicaid and Medicare spending was used on assisted living services in 2024, and 44 states now cover assisted living services, according to a new report by the U.S. Government Accountability Office (GAO).

Healthcare stakeholders said Medicaid payment rates could hinder broader adoption, along with affordability challenges. Roughly one-third of private pay reimbursement was from Medicaid rates in assisted living in 2024.

State and national organizations told GAO that Medicaid’s inability to cover room and board costs is a primary barrier to more older adults using federal and state healthcare dollars for assisted living services. With this gap, Medicaid access to assisted living exists “on paper, but not in practice.”

The report highlights the growing number of older adults relying on Medicaid and Medicare to fund assisted living services, as older adults are waiting longer to join senior living communities and bring with them more chronic health conditions. Assisted living is increasingly integrated into publicly funded healthcare, despite senior living being perceived as a predominantly private-pay industry.

Medicaid-funded assisted living is no longer limited to a handful of states as 44 states cover assisted living services and 29 states use Home and Community Based Services Waiver Programs. The waiver programs allow states to place a cap on enrollment, target certain demographics and restrict services by location.

Combined federal and state Medicaid spending averaged approximately $23,000 per beneficiary receiving services in assisted living in 2024.

But limited coverage outside of Medicaid affects access to assisted living services. The report cites interviews with national organizations who noted that the lack of coverage of assisted living services by federal programs negatively impacted the “forgotten middle.”

The “forgotten middle” is a term used to describe a cohort of over 11.5 million Americans 75 and older who will be unable to afford assisted living in the years ahead, as affordability continues to remain a top issue for senior living providers today. The report also cited the concern that many consumers are simply unaware that Medicare generally does not cover assisted living services.

Medicare might cover medical expenses within assisted living facilities, but not the room and board.

Another challenge is the fact that in some states, there is no path to receive federal funding for assisted living services as state Medicaid programs are not required to cover such services. In states that do not cover Medicaid assisted living services, awareness and lack of participation from assisted living companies could hinder adoption.

A growing number of individuals will face affordability concerns as they age, and the access to assisted living by Medicare is “limited by the high cost of services,” the report states.

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