August 2001 marked the 20th anniversary of the enactment of the Medicaid Home and Community-Based Services (HCBS) Waiver authority. In 1981, Congress, with the support and blessing of President Ronald Reagan, gave states the option to use Medicaid institutional dollars to underwrite “alternative” home and community services for people with disabilities otherwise judged as requiring institutional services in facilities such as nursing homes or Intermediate Care Facilities for the Mentally Retarded (ICFs/MR). Two decades ago, whether many people with severe disabilities could be supported in their homes and communities was an open question. As a consequence, federal law dictated that states apply for waivers in order to offer these “experimental” services.
The experience during the 1980s with the HCBS Waiver authority in supporting people with developmental disabilities was “promising.” Most states quickly seized on this new opportunity to employ Medicaid dollars to pay for community services and supports. By 1990, all but a handful of states were operating HCBS Waiver programs. Several states abandoned ICF/MR development in favor of expanding HCBS Waiver services; but, in 1990, the simple fact was that—by a wide margin—most people with developmental disabilities whose services were underwritten with Medicaid dollars resided in ICFs/MR, including large state-run facilities. That was then.
But this is now. In 2000, 407,000 people with developmental disabilities benefited from Medicaid long-term services (i.e., they participated in the HCBS Waiver program or resided in an ICFs/MR) (Prouty & Lakin, 2001). Some 291,000 of these individuals participated in the HCBS waiver program; only 116,000 were served in ICFs/MR. In the span of 10 years, “experimental” home and community services have become commonplace but rarer for individuals to be served in an ICF/MR, public institution, or otherwise.
Figure 1 shows the number of persons who received Medicaid long-term services over the period 1990 to 2000. As can be seen, the number of individuals participating in HCBS Waiver programs for people with developmental disabilities has increased at a remarkable pace year-over-year. Starting in 1993, however, the number of individuals served in ICFs/MR began to decline after reaching nearly 148,000. Between 1996 and 2000, about 96,000 more people were added to HCBS Waiver programs nationwide.
Overall, between 1990 and 2000, the total number of people benefiting from Medicaid long-term services more than doubled, increasing from approximately 190,000 in 1990 to over 400,000 in 2000, a year-over-year rate of increase of 8.0 per annum. The HCBS waiver authority afforded states the opportunity to access federal Medicaid dollars to underwrite a significant increase in the total number of people receiving services.
In 2000, spending for HCBS Waiver services ($9.6 billion) nearly reached parity with ICF/MR spending ($9.9 billion). Taking into account related spending, more dollars were spent on behalf of Waiver participants than ICF/MR residents (Smith, 2001). In 1990, ICF/MR spending was more than eight times greater than HCBS Waiver expenditures. Between 1990 and 2000, total Medicaid long-term services spending for people with developmental disabilities grew by 80.6 (adjusted for inflation) and grew at the year-over-year rate of 6.1. In 2000, there were considerably more Medicaid dollars buying services and supports for a much greater number of people with developmental disabilities.
Going forward, growth in HCBS Waiver services for people with developmental disabilities is likely to continue to be quite strong. This expansion is central to initiatives in many states to reduce waiting lists. Several states also are positioning their HCBS Waiver programs to play a larger role in underwriting services and supports for individuals who live with their families.
As shown in Table 1, however, there continues to be considerable variation among the states with respect to (a) the number of people receiving Medicaid long-term services, (b) the percentage participating in the HCBS Waiver program, (c) spending for these services (relative to state population), and (d) the percentage of expenditures devoted to HCBS Waiver services.
In 13 states, 90 or more of all individuals who received Medicaid long-term services participated in the HCBS Waiver program—ICF/MR services were furnished to very few persons in these states. In fact, in 2000 there were only 7 states where more than one half of all individuals still were served in ICFs/MR. In more than one half of the states, the HCBS Waiver program accounted for 58 or more of all Medicaid long-term services spending. In most states today, the majority of individuals and most Medicaid dollars are spent under the umbrella of the HCBS Waiver program.
The HCBS Waiver “experiment” has been going on for over 20 years. Based on where Medicaid services for people with developmental disabilities stand today, the experiment is now the mainstream in terms of how the substantial majority of states use Medicaid funding in support of people with developmental disabilities. Federal policy, however, still dictates that states continue to seek waivers to offer these services, and states still must evaluate individuals for HCBS services against institutional eligibility criteria, even though ICF/MR services no longer are predominant; and this strongly suggests that the time has come to declare the experiment complete and revamp federal policy to recognize today's reality. namely, that people can and should be supported in the home and community.
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