The government was totally enmeshed in the business of providing nursing home care by the end of the decade. Various studies in the 1950's found that about half of the residents in private nursing homes were public assistance recipients, and that the federal, state, and local governments were paying about half the total cost of all nursing home care in the country. Federal and state reimbursement for the cost of nursing home care continued to increase throughout the decade.
"A 1953-54 survey of nursing homes found that 90 percent of the patients in proprietary nursing homes were aged 65 or over. Two-thirds of the aged patients were women. Only one-half could walk alone and one-fifth were completely bedfast. Public assistance financed, in whole or in part, the cost of care of one-half of all patients in proprietary nursing homes. Stated another way: The proprietary nursing homes of the United States are almost exclusively geared to caring for old people and to a great extent to old people on public-assistance." Charles M Schottland, Medical Care through Social Security: What Lies Ahead?, Journal of the American Public Welfare Association, Volume 18, Number 3, 1960.
In 1956, amendments to the Social Security Act created a new, and separate, matching program for medical services like nursing home services, a program which would prove to be far more expensive than first anticipated. In 1958, Federal grants to the states for public assistance were further liberalized. Up to that time, all grants were split 50/50 with the state paying half and the federal government paying half. In 1958, the amount the government provided was based on the per capita income in the state, so that the federal government paid more than half of the cost of OAA in the poor states, and continued to pay half of the cost in richer states.