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Medicaid Expansion Boosts Coverage and Services for People With Disabilities, Despite Critics’ Claims

Policymakers in states that haven’t expanded Medicaid are giving it new consideration, in part because of the American Rescue Plan’s large new financial incentive to do so. Expansion opponents have turned to a familiar, and debunked, talking point in response: that funding expansion harms the “truly needy” by forcing seniors and people with disabilities onto waiting lists for services.

The reality is that the Affordable Care Act’s (ACA) Medicaid expansion has significant benefits for states and enrollees. That’s particularly true for people with disabilities: in expansion states they’ve seen increased health coverage and employment rates and these states have been able to provide more services critical to many of them, such as specialized services for behavioral health and other chronic conditions.

It’s wrong on several fronts to claim that expansion puts pressure on state budgets and forces states to create waiting lists for seniors and people with disabilities to receive home- and community-based services (HCBS) — that is, care provided in the community to people who would otherwise have to go into a nursing home or other institution.

First, there are no waiting lists to enroll in Medicaid. States must enroll all eligible beneficiaries, including children, seniors, people with disabilities, and adults, in coverage — without exception. While states can (and many do) have waiting lists for HCBS, there is no connection between a state having a waiting list and its expansion status, a recent report from the Kaiser Family Foundation found. In fact, all ten states without an HCBS waiting list have expanded Medicaid.

If anything, Medicaid expansion often improves the services provided to seniors and people with disabilities. “In some cases, a state’s choice to adopt the ACA expansion is associated with state take-up of options to expand eligibility and services for seniors and people with disabilities,” according to the Kaiser report.

Second, Medicaid expansion and HCBS aren’t a zero-sum game; expansion doesn’t force states to spend money they would otherwise use to fund HCBS. State and independent analyses have consistently shown that expansion produced net savings for many states. And expansion is associated with a 4 percent reduction in state spending on states’ traditional Medicaid programs, a Commonwealth Fund analysis found.

The Rescue Plan makes this good deal even better. States that newly expand Medicaid will get substantial federal funding through a two-year, 5-percentage-point increase in their federal medical assistance percentage (FMAP) for all non-expansion enrollees, who account for most of a state’s Medicaid enrollment and costs. The additional federal dollars from this increase would exceed the full state cost of covering the expansion group in each of the holdout states, we and others estimate. States could use these funds to enhance the services they provide to people with disabilities.

Moreover, under the Rescue Plan all states can receive, for one year starting this month, a 10-percentage-point bump in their FMAP for home- and community-based services. To qualify, states must use the increased federal funds to supplement their current spending on HCBS and to enhance, expand, or strengthen their HCBS programs, which would likely also move people off HCBS waiting lists. This provision will provide more than $11 billion in additional federal funds over the coming year, according to Kaiser Family Foundation estimates.

And as part of his American Jobs Plan, President Biden proposed a $400 billion increase in federal funding for Medicaid HCBS. If enacted, this would further boost HCBS by allowing states to clear waiting lists and increase caregivers’ wages.

The main group pushing false claims about Medicaid waiting lists is the Foundation for Government Accountability, an organization known for producing misleading information about Medicaid and other public programs. The group itself acknowledged the claim has no basis in reality: at a House hearing in 2017, one of its analysts admitted “there is no correlation” between state decisions to expand Medicaid and HCBS waiting lists.