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Pennsylvania is facing a long-term care funding crisis at the very moment demand is accelerating. With 3.4 million residents age 60 and older—the fifth-largest older adult population in the nation—and one in three Pennsylvanians projected to be over 60 by 2030, the Commonwealth must prepare for unprecedented demand for skilled nursing care.

Yet the financial foundation supporting that care is eroding. More than 70% of Pennsylvania nursing home residents rely on Medicaid, and over 90% of occupied beds are funded by the program. Despite this dependence, Medicaid reimbursement rates fall well below the actual cost of providing care.

Today, 70% of Pennsylvania nursing homes operate at a loss, and facilities must reach an unsustainable 93% occupancy just to break even. Rising labor costs, inflation, and new staffing requirements have intensified these pressures without corresponding increases in funding.

At the center of the crisis is the Budget Adjustment Factor (BAF), a little-known reduction applied to Medicaid reimbursements. Currently set at 0.78, the BAF means nursing facilities receive only 78 cents for every dollar of calculated costs.

Based on outdated data and disconnected from current economic conditions, the BAF has created an $893 million statewide funding shortfall. It obscures the true cost of care, turns quality mandates into unfunded requirements, and destabilizes an industry already strained by workforce shortages.

Pennsylvania must pursue transparent, sustainable solutions that ensure seniors receive the care they deserve. Immediate legislative action to establish a 0.90 BAF floor, alongside long-term investment to close the funding gap, would stabilize facilities, protect jobs, unlock federal funding, and preserve access to care across the Commonwealth.

This is not a partisan issue. It is a matter of fiscal responsibility and moral obligation. Pennsylvania’s aging population demands action now—to preserve quality care for our parents, grandparents, and for ourselves in the years ahead.