The Balanced Budget Act of 1997 dramatically decreased reimbursements for traditional Medicare home health patients. A multivariate analysis of Medicare Current Beneficiary Survey data showed that African American and “other” users experienced greater decreases in home care between 1996 and 1998 than did White users. These results suggest (a) race/ethnicity is an independent factor in determining service use post-BBA and (b) health policy has a disparate impact on minority older adults. Capitated payment systems must be pursued cautiously to avoid negative effects on vulnerable populations. The potential for current and future Medicare policy changes to negatively affect vulnerable populations is also discussed.