LITTLE ROCK — L.R. Petty is able to recognize his wife and other immediate family members, but otherwise he is virtually a blank slate.

Petty, 87, remembers nothing about his life before being admitted to Greenhurst Nursing Center in Charleston in June 2011 after suffering the second of two strokes six months apart. He is often confused and sometimes has trouble feeding himself.

"When he was at home, before he came out here, he would want to get up in the middle of the night and go do things," said his wife of 66 years, Sue Petty of Lavaca. "I have congestive heart failure. I’m not physically able to care for him."

L.R. Petty is receiving what Medicaid classifies as Level 3 nursing home care, the lowest of three tiers of nursing home care for which the state Medicaid program provides benefits. Gov. Mike Beebe has proposed eliminating the benefits, along with equivalent benefits for people in in-home care, as part of a plan to address a looming shortfall in the state Medicaid budget.

"I have no idea what we’d do. I cannot take care of him at home," Sue Petty said. "We’d be in one big mess."

The state Department of Human Services estimates that between 10,000 and 15,000 Arkansans would be affected if Level 3 coverage is eliminated. DHS officials have said that in choosing where to propose cuts, they sought to protect children and people who would be at risk of immediate harm or death if they lost their benefits.

"(That is) not to say that we don’t anticipate that some harm could fall to these people in the Level 3 were they not able for us to continue to cover their care, but this is the least level of harm," said DHS spokeswoman Amy Webb.

Greenhurst owner and administrator Jonas Schaffer said the level of harm that DHS considers "the least" is still very serious. He said about 35 residents of his nursing home are on Level 3 care, many of them because they have Alzheimer’s disease.

"If these people returned home they would wander out and get hurt and injure themselves — break a hip, get in a car wreck. And that’s going to cost the state more money in the long run," he said.

Schaffer said it is "sad" that no one is even talking about the possibility of raising taxes rather than denying care to seniors.

Under Medicaid rules, Level 1 nursing home care is for people who are totally dependent on or require extensive assistance from another person in mobility, feeding and going to the bathroom. Level 2 care is for people who are totally dependent on or require extensive assistance from another person in two of those daily activities. The state Medicaid program is required by the federal government to cover both levels of care.

Level 3 care is for people who are totally dependent on or require extensive assistance from another person in one of the activities; require limited assistance in two of the activities; require minimum assistance at least three times a week; have Alzheimer’s or related dementia; or have a medical condition that requires daily monitoring and assessment and would be life-threatening if untreated. Coverage at this level is optional for states.

Eliminating Level 3 coverage is projected to save the state $42 million in the next fiscal year and $101 million in the following year. It is part of a package of $319 million in projected cuts and efficiency measures the governor is proposing over the next two years.

The proposed cuts also would eliminate coverage for adult dental services; shut down ARHealthNetworks, which provides coverage for about 20,000 low-income adults with full-time jobs; and limit coverage for adults in home- and community-based care to the current participants.

Beebe also has proposed using $312 million in general revenue and $140 million in budget surplus funds to help to balance Medicaid’s budget over the next two years.

Beebe said Wednesday that if the state pursues expanding Medicaid coverage to include people earning up to 138 percent of the federal poverty level, an option under the Affordable Care Act that would be mostly funded by the federal government, the cut in nursing home care would not be necessary.

Republican legislators, who will control both chambers of the Legislature next year for the first time since Reconstruction, have complained that Beebe is trying to link two separate issues in order to win support for the expansion. Some have accused the governor of making a proposal that is not serious.

"I don’t think anybody thinks we’re going to throw senior citizens out of nursing homes," state Sen. Michael Lamoureux, R-Russellville, the incoming Senate president pro tem, said last week.

Beebe insisted that "all of it is serious."

"I tasked the department to come up with a series of cuts that they think legally they could do … but that minimized the hurt for the folks that could least afford to be hurt," Beebe said. "While all of those things are important, whether it’s adult dental or whatever it may be, the one that bothers me the most and the one that we would work the hardest to try to keep from occurring is the Level 3 nursing home folks."

Republican legislators have suggested other ways to address the shortfall, such as looking for ways to cut fraud, waste and abuse in the system or creating a a system of co-pays.

Martha Deaver, president of Arkansas Advocates for Nursing Home Residents, called the governor’s proposal "appalling" and said the state should crack down on Medicaid abuses by some nursing homes before it cuts services to vulnerable seniors.

Deaver noted that according to a report released Tuesday by the inspector general of the federal Department of Health and Human Services, overcharging by nursing homes adds $1.5 billion to Medicaid costs in the U.S. every year.

She said that if the state is proposing denying coverage to nursing home residents, "I guess I would have to ask, what are they going to do with them?"