Biden’s nursing homes proposal ignores COVID risks and increases costs

Instead of proposing the most direct and immediate way to reduce COVID deaths in nursing homes by mandating and/or strongly encouraging needed vaccinations and boosters for residents, visitors and staff, the Biden administration has proposed several new federal regulations affecting the operation of nursing homes. These include new reporting requirements, a budget increase for inspections, a critical examination of the role of private equity in the sector and encouraging states to intervene in the level and structure of staff compensation in nursing homes. 

The administration’s stated motivation for these major changes is that in “the past two years, more than 200,000 residents and staff in nursing homes have died from COVID-19 — nearly a quarter of all COVID-19 deaths in the United States.”  

The administration’s connection from this motivation to its goals and proposals seems illogical as it is surprisingly weak on the proven most effective way to protect the elderly from COVID: a near-universal penetration of COVID vaccines and boosters among nursing home residents and staff. The Biden administration does cite various studies as supports for its proposals, but it is highly selective, ignoring other studies adverse to its policies. 

The government’s proposals would establish a federal minimum nursing home staffing requirement. Because labor is the largest component of expense in operating a nursing home — and presuming that this requirement will be tougher than current state minimums and prevalent employment practices — costs to Medicare, Medicaid, other government programs and private paying residents and their families would surely increase. Moreover, this requirement would amount to an unfunded mandate because Medicaid payments to nursing homes are set and substantially funded by the states, and non-Medicaid residents pay for their care out of pocket. 

Other proposed cost-increasing policies include phasing out multi-occupancy rooms (despite the fact that social isolation has been identified as the biggest unmet care need of the elderly), expanding home inspections and penalties and other enforcement sanctions, restricting investments and tying state Medicaid payments to home staffing metrics and higher staff wages and benefits, including seniority pay. These interventions, besides increasing costs, also represent a substantial expansion of the federal role in this sector, where heretofore state and local oversight, rulemaking and funding had reflected the highly varied and changing conditions across a large country over time. 

Based on the results of a couple of studies, the administration is also highly critical of the role of private equity investment in this sector, claiming that it harms care and increases costs. Though any statistical relationship found is suspect given the poor quality of data, narrow application to short-stay care (paid by Medicare) rather than long-stay care (paid jointly by federal and state funding) and the difficulty of controlling for selection bias because outside large investors are more likely to select troubled and declining nursing homes to turn their performance around.  

In addition to mandating a federal study of private equity, which will surely support the administration’s claims, officials want to track corporate ownership of nursing homes and impose a minimum corporate competency to participate in Medicare and Medicaid programs. These moves could slow the movement of investment capital to the sector, which will be increasingly needed as the baby boom generation ages and needs more care. Besides, one would expect that firm and fair application and enforcement of standards of care and operation should make the identity of ownership irrelevant to the public interest. 

While these proposed nursing homes regulations may or may not result in an improved resident quality of life and safety, the administration provides little justification for them besides the COVID epidemic. And that connection is tenuous. Studies have found that there are not fewer or excess COVID deaths in nursing homes with a higher Centers for Medicare and Medicaid Services (CMS) quality rating or in those owned by private equity investors. Studies do find, however, that the vector of infection to nursing home residents is often through staff and contractors.  

So it is surprising that the Biden administration is not focusing on the most direct and immediate way to reduce COVID deaths in nursing homes: vaccinations and boosters for residents, visitors and staff, as I have proposed. Most especially, vaccinations should be mandated for new residents, staff, contractors and visitors. Staff should be incentivized to get boosters and aggressive nudge campaigns to get boosters should be waged among the older population in general. 

Mark J. Warshawsky is a senior fellow at the American Enterprise Institute. He is a former deputy commissioner for Retirement and Disability Policy at the Social Security Administration, and served as vice-chairman of the 2013 Long-term Care Commission.