Medicaid's Home- and Community-Based Waiver

NCSL LegisBrief

Briefing Papers On the Important Issues of the Day

Medicaid's Home- and Community-Based Waiver

By Richard Hemp and Martha King

February 2001
Volume 9, Number 10

States spend at least one-third of their Medicaid budgets on long-term care services for people with disabilities. Most of it is spent in institutions such as nursing homes and intermediate care facilities for people with mental retardation or other developmental disabilities.

The recent U.S. Supreme Court decision, Olmstead vs. L.C., based on the 1990 Americans with Disabilities Act, requires states to administer services, programs and activities in the "most integrated setting appropriate." To address this, states can provide a range of community-based services and supports, including small group homes and family support.

Funding for community-based services is available to states under the Medicaid home- and community-based services waiver. The waiver, which refers to "waiving" Medicaid's usual requirement of funding care only in institutions, is designed to meet the needs of people with disabilities as called for by Olmstead, such as homemaker services and personal care. Established in 1981 to help contain Medicaid costs, the waiver also added flexibility for states to provide services favored by consumers, their families and state policymakers.

State Actions

Today, all states and the District of Columbia use waivers to some extent to finance a wide range of community-based services for more than 467,000 people with all types of disabilities who otherwise would be in an institution. Waiver services include case management, homemaker assistance, home health aides, personal care, residential and day treatment and therapies, respite care, transportation, supported employment, adapted equipment, home modification, and occupational, speech, physical and behavioral therapy. Although states use the waivers to serve people with a variety of disabilities, three-fourths of waiver spending has been used on services for people with mental retardation or other developmental disabilities.

States vary in the extent to which they use the waiver and in the types of services provided. Federal and state waiver spending across the country for mental retardation and other developmental disabilities totaled $7.2 billion in 1998, or 28 percent of the total $25.6 billion spent for services and support.

States that have used the waiver to shift the bulk of their Medicaid long-term care funding to community-based programs for people with mental retardation and other disabilities will have an easier time complying with the Olmstead decision requirements. Other states that still rely heavily on institutional care can take advantage of the waiver to develop community services, learning from states that have successfully done so. A number of states have aggressively used the waiver to close state institutions or significantly reduce their institutional populations, including Alaska, Arizona, Colorado, Hawaii, Maine, Minnesota, New Hampshire, New Mexico, Rhode Island, South Dakota, Vermont, West Virginia and Wyoming.

Use of the waiver helps states establish a solid funding foundation for the types of services and supports that consumers need. This is especially important given the growing number of baby boomers with disabilities living with aging caregivers. The federal government in recent years has made it substantially easier for the states to obtain, or reapply for, waivers. The Balanced Budget Act of 1997 also greatly expanded the availability of waiver funding for supported employment. Even states in the development stages of their waiver program can still enhance their systems of services with this flexible federal resource.

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"Federal/State HCBS Waiver Spending as a Percent of Total Mental Retardation/Development Disability Spending, 1998" is not available online. Please contact the author for a copy or view the Adobe Acrobat version. Adobe Version

Selected References

Braddock, D. "Aging and Developmental Disabilities: Demographic and Policy Issues Affecting American Families." Mental Retardation, 37, pp. 155-161, 1999.

Braddock, D., R. Hemp, S. Parish, and M.C. Rizzolo. The State of the States in Developmental Disabilities: 2000 Study Summary. Chicago: University of Illinois at Chicago, Department of Disability and Human Development, 2000.

Contacts for More Information

Martha King
NCSL-Denver
(303) 364-7700, ext. 193
martha.king@ncsl.org

Wendy Fox-Grage
NCSL-Washington, D.C.
(202) 624-3572
wendy.fox-grage@ncsl.org

Richard Hemp
State of the States in Developmental Disabilities
Project, University of Illinois at Chicago
(312) 413-1976
http://www.uic.edu/depts/idhd/StateoftheStates

Health Care Financing Administration, HCBS Waiver: http://www.hcfa.gov/medicaid/hpg4.htm
Olmstead information:
http://www.hcfa.gov/medicaid/olmstead/olmshome.htm

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