In April 2003, the National Conference of State Legislatures (NCSL) issued a report estimating that the collective deficits in state budgets for Fiscal Year (FY) 2003 would be between $22 and $30 billion. The report further indicated that projections for FY 2004 were even worse, with collective deficits estimated at $54 to $78 billion dollars. According to the report a majority of states (26) were forecasting deficits greater than 5% of total expected revenues, and as a result, most states were reported to be undertaking various types of cost-containment measures. A majority of states (27) specifically identified Medicaid as the target of cost-reduction or cost-containment measures.

Medicaid has two programs of long-term services and supports (LTSS) that are managed specifically for persons with intellectual and developmental disabilities (ID/DD). These are the Medicaid Intermediate Care Facilities [for Persons With] Mental Retardation (ICF/MR) and Medicaid Home and Community Based Services (HCBS). The ICF/ MR program funds congregate care settings for persons with ID/DD. The HCBS program funds home and community services for persons who, without these funds, would be at the risk of ICF/MR placement.

As states examined their Medicaid programs, the ICF/MR and HCBS programs often received attention based on their relatively high cost per Medicaid recipient. Nationally, in FY 2003, persons with ID/DD made an average of 9.8% of all Medicaid expenditures while supporting only 1.3% of Medicaid service recipients, raising the possibility that the ICF/MR and HCBS programs would be visible and potentially vulnerable to state budget reduction and spending constraint initiatives.

In the decade prior to FY 2003, Medicaid LTSS programs for persons with ID/DD went through a period of steady growth in expenditures and recipients.

Combined ICF/MR and HCBS recipients increased from 208,689 to 489,138 (134%) between June 1992 and June 2002. Combined ICF/MR and HCBS expenditures increased from $10.485 billion in FY 1992 to $23.847 billion in FY 2002 (127%). These increases represent average annual increases of 28,045 in service to recipients and $1.336 billion in expenditures. Figures 1 and 2 show these annual increases with the addition FY 2003 Medicaid LTSS recipients (Figure 1) and expenditures (Figure 2).

Figure 1

Medicaid ICF/MR and HCBS recipients, FY 1992–FY 2003

Figure 1

Medicaid ICF/MR and HCBS recipients, FY 1992–FY 2003

Figure 2

Medicaid ICF/MR and HCBS expenditures, FY 1992–FY2003

Figure 2

Medicaid ICF/MR and HCBS expenditures, FY 1992–FY2003

In FY 2003, combined Medicaid ICF/MR and HCBS recipients increased by 20,375 persons. This represented a notably slower numerical and rate of increase (4.2%) than had been achieved in previous years. Expenditures in FY 2003 also increased, but at a slower rate. Combined total ICF/MR and HCBS expenditures increased by 7.3% in FY 2003. This was somewhat less than the rate of increase in the previous decades, but not drastically so. In general the state budget challenges of FY 2003 appear to have affected the growth of Medicaid LTSS for persons with ID/DD, but not in a major or universal manner. Table 1 presents data reported by states on FY 2003 HCBS and ICF/MR service recipients and expenditures. According to these reports only one third of all states had expenditure increases of less than 4% in FY 2003 and only 4 reported reductions in overall expenditures. Although states increased combined Medicaid LTSS recipients by 4.2% in FY 2003, the average Medicaid expenditure per recipient increased only 3.0%, from $48,754 in FY 2002 to $50,237 in FY 2003.

Table 1

Medicaid HCBS and ICF/MR Recipients and Expenditures in FY 2003 and Changes in FY 2004

Medicaid HCBS and ICF/MR Recipients and Expenditures in FY 2003 and Changes in FY 2004
Medicaid HCBS and ICF/MR Recipients and Expenditures in FY 2003 and Changes in FY 2004

Sources: R. Prouty, G. Smith, & K. C. Lakin (Eds.), (2004). Residential services for persons with developmental disabilities: Status and trends through 2003. Minneapolis: University of Minnesota, Research and Training Center on Community Living/ ICI (http://rtc.umn.edu/risp/index.html) and National Conference of State Legislatures (2003). State budget update: April 2003. Denver: Author.

Table 1

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