New York’s nursing homes are facing a funding crisis, and as state budget negotiations get underway, advocates are warning that without increased investment, those who rely on nursing homes will suffer.
Medicaid is essential to funding nursing home care in New York State; it covers about 85% of residents, far above the national average of 63%. Yet Medicaid reimbursement covers only 75-80% of actual expenses, which leads nursing homes to have to cut beds and reduce care.
Stephen Hanse, president and CEO of the New York State Health Facilities Association, said, “Across the state, loved ones leave their elderly and fragile family members in the care of nursing homes that rely on Medicaid to cover the costs.” He represents more than 450 member facilities and is actively advocating for Medicaid reform, sustainable funding, and workforce solutions in Albany.
When nursing homes have a shortfall, it’s felt throughout New York’s healthcare networks. As Hanse described, “With underfunded Medicaid and staffing mandates in New York State, you run into situations where nursing homes have to close beds or units because they don’t have sufficient staff. Hospitals who have patients needing subacute care at a nursing home can’t place them, or can’t place them close to their loved ones, because there are no beds available.”
This creates longer emergency room waits, delays elective procedures, and increases costs as patients remain in high-acuity hospital beds longer than necessary. Families are left in limbo, facing extended stays, higher complication risks, and fewer choices for their loved ones’ care.
Despite the push toward home-based elder care, Hanse noted that the clinical needs of many nursing home residents are too complex for home settings. “If you were to close your eyes and open them in a nursing home, you’d say you were in a hospital. The clinical nature of our residents is so significant — their needs cannot be met at home. We have ventilator operations, high acuity residents, and with the staffing crisis, we’re seeing backups in hospitals,” he said.
Gov. Kathy Hochul has emphasized the urgent need for funding in her fiscal year 2026–2027 budget proposal, proposing $1.5 billion for nursing homes and hospitals. Hanse’s association is pushing for $750 million of that amount specifically for nursing homes as an essential initial step: “It’s not in the base, so it’s not continual, but it is a down payment investment to help turn the tide of the financial situation nursing homes are facing now. We’re very grateful to the governor for recognizing that nursing homes need investment, and that the state has to reverse the course of disinvestment.”
Staffing and operational needs are themselves a critical challenge. Nursing homes struggle to recruit and retain skilled nurses and caregivers, especially as Medicaid rates underfund care by nearly $100 per resident per day. Hanse emphasized that “once we increase the investment in nursing homes and recruit and retain essential healthcare staff, we can start turning this around. But over 15 years, it’s going to take work, it’s going to take a multi-year commitment by the state of New York to really invest in nursing homes.”