PHCA Urges Stronger Medicaid Investment in Governor Shapiro’s Budget Proposal to Protect Access, Staffing, and Quality in Nursing Homes

Harrisburg, Pennsylvania (February 4, 2026) - The Pennsylvania Health Care Association (PHCA) – a statewide long-term care advocacy organization for Pennsylvania’s most vulnerable residents and their providers of care – has issued the following statement in response to Governor Josh Shapiro’s budget address. The statement can be attributed to Michael Jacobs, president and CEO of the Pennsylvania Health Care Association.

“Governor Shapiro’s budget proposal sends a clear message to Pennsylvania’s seniors, people with disabilities, and the caregivers who serve them: in the face of rising costs, persistent workforce shortages, and growing need, his administration has decided to flat-fund Medicaid for nursing homes.

“Long-term care providers are not asking for special treatment—we are asking the Commonwealth to stop ignoring the math. Even in national analyses, Medicaid fails to cover the actual cost of nursing home care, paying about 82 cents on the dollar, with 92% of facilities paid below cost while 40% of providers are paid less than 80% of costs. In Pennsylvania, the budget adjustment factor (BAF) continues to punish providers and ensure that they remain in the 40% category.

“Flat funding, or ignoring the punitive impacts of the BAF, locks in that shortfall and forces providers to keep doing the impossible: deliver more care, meet higher expectations, and compete for workers—while being told to survive on a reimbursement system that does not pay for the care the state itself requires.

“Pennsylvania cannot credibly talk about staffing and quality while proposing a budget that fails to invest in the very funding stream that drives staffing and quality. The research is clear: higher Medicaid rates are associated with better staffing and better overall performance, including a greater likelihood of earning higher Five-Star ratings—regardless of ownership type.

“And when Medicaid payments are closer to costs, facilities have greater capacity to invest in compensation, training, and quality improvement—exactly what policymakers claim they want.

“Meanwhile, the sector is already facing serious financial peril. Bankruptcy filings in senior living and care increased 18% year-over-year in 2025, with 13 filings—more than hospitals—according to a healthcare restructuring advisory report.

“Flat funding does not ‘hold steady.’ It pushes more providers toward the edge, accelerates closures and disruptive ownership changes, and ultimately reduces access to local care for families across Pennsylvania.

“PHCA is calling on Governor Shapiro and the General Assembly to correct the course before this budget is finalized. Pennsylvania must make meaningful, sustained Medicaid investments that:

“This budget proposal marks the beginning of a months-long process, and PHCA will be vocal, persistent, and unapologetic in fighting for the providers and caregivers who show up every day for Pennsylvania’s most vulnerable residents.”